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CONGRESS PASSES EXTENSION, EXPANSION OF HOMEBUYERS' TAX CREDIT
Dear Friends:
I am extremely pleased that my proposal to extend the first-time homebuyers' tax credit has been enacted into law. With a jobless rate that now tops 10 percent, there is no question that the recession still has a grip on our economy and an extension and expansion of the credit is important to our recovery.
The collapse of the housing market was one of the major contributors to the economic downturn and its revival will be one of the factors to pull us out of this recession. In early November, the President signed into law the Workers, Home Owners, and Business Assistance Act, extending the $8,000 first-time homebuyers' tax credit, which was slated to expire on December 1, 2009. The bill also provides a new $6,500 tax credit for homebuyers who have lived in their current home for five years and want to trade up. Both credits run through April 30, 2010 for contracts and June 30, 2010 for settlement.
Last year, I originally introduced the $8,000 first-time homebuyers' tax credit and it has been an enormous success. In October, Internal Revenue Service (IRS) officials testified before Congress that at least 1.5 million individuals or families had applied for the first-time homebuyer tax credit and as many of 40 percent of all homebuyers will qualify for the credit this year. Some 200,000 to 400,000 sales are directly attributable to the credit. According to the National Association of Realtors (NAR), those additional sales have pumped approximately $22 billion into our nation's economy.
In Maryland, NAR officials estimate that 28,600 first-time buyers will claim the credit this year and that 5,900 of those homebuyers account for additional sales that would not have occurred without the credit.
The new legislation has some other important provisions. The credit will now be available for homes costing up to $800,000 and the income limits in which the credit is phased out have been increased from $75,000 to $125,000 for individuals and $150,000 to $225,000 for joint filers. This bill also includes tough, anti-fraud provisions to help the IRS make sure that only those individuals and families who qualify for the credit take advantage of it.
For those who are concerned about the effect of the tax credit on our deficit, I'm pleased to report that the credit is fully paid for by offsetting provisions. It won't add a penny to the deficit.
Best wishes.
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