WASHINGTON --- Missed out on Cash for Clunkers? Congress has another deal for you: Buy a home before May 1 and collect up to $6,500 from the government. If you're a first-time homebuyer, get up to $8,000.
As part of the government's efforts to encourage people to spend money to help revive the economy, the House voted 403-12 Thursday to expand a popular tax credit for homebuyers. The bill, which also extends unemployment benefits and expands a tax break for money-losing businesses, now goes to President Obama, who plans to sign it today.
First-time homebuyers have been getting tax credits of up to $8,000 since January as part of the economic stimulus package. But with that housing program scheduled to expire at the end of November, the House voted to extend it into the spring -- and to expand it to many people who already own homes.
Buyers who have owned their current homes at least five years would be eligible, subject to income limits, for tax credits of up to $6,500. First-time homebuyers -- or people who haven't owned homes in the previous three years -- could get up to $8,000.
To qualify, buyers have to sign purchase agreements before May 1 and close before July 1.
The credit is available for the purchase of principal homes costing $800,000 or less. The credit would be phased out for individuals with annual incomes of more than $125,000 and for joint filers with incomes of more than $225,000.
Real estate agents say the first-time homebuyers' tax credit that's already in effect has boosted sales, much in the same way the Cash for Clunkers program increased auto sales last summer by paying car buyers as much as $4,500 for exchanging their old gas guzzlers for new, more fuel-efficient models.
The agents hope the expanded housing credit will help stabilize housing markets during typically slow sales months in the winter. Today, many would-be buyers are still worried that home values could drop further, said Lawrence Yun, the chief economist at the National Association of Realtors.
"Once the consumer fear factor disappears, then housing can move into a sustainable recovery," Mr. Yun said.
Lawmakers said the program will not be extended again.
Critics say the tax credit is poorly targeted because the vast majority of people receiving it would have bought homes anyway.
"Essentially we're giving money to people for doing nothing different," said Ted Gayer, co-director of economic studies at the Brookings Institution, a Washington think tank.