Home-Buyer Tax Credit May be Extended, Increased to $15,000

Financial lobbyists are pressuring Congress to extend the first-time home buyer tax credit program, and also to increase the credit amount from $8k to $15k.

If you're in the market for a new home, you've probably heard about the tax credit for first-time home buyers. It's a credit for up to $8,000, and it applies to just about anyone who hasn't owned a home in the last three years. It's part of a larger stimulus program designed to get more home buyers into the market, and thus stimulate the real estate market as a whole.

The problem is, the tax credit program is currently set to expire at the end of November 2009. But the program may soon be extended -- and expanded the same time. It's not certain yet, but everything I'm reading suggests that the tax credit may be renewed. I'm also hearing talk that it may be increased to $15,000, instead of the current $8,000 limit.

Several groups are pressing for these changes to the first-time home buyer tax-credit program. Both the Mortgage Bankers Association and the National Association of Realtors are pushing Congress to extend the program, and to increase the credit amount to $15,000 across the board.

Other groups are less enthused about the renewal of the tax credit program. Many economists, for example, point out that this kind of government simulation of real estate markets is what led to the housing crisis in the first place. According to a June 2009 article in Business Week, people with government-subsidized down payments are twice as likely to end up in foreclosure. Essentially, this is what the tax credit program is, a form of government subsidy for home buyers.

Regardless of political and economical differences, we will continue to track these developments in the Congress. I'm usually not one to make predictions on this kind of thing. But frankly, I'd be surprised if the home buyer tax-credit did not get renewed. As for the increase to $15,000 ... well, you can flip a coin.