Congress has taken a first step toward what could be an extension of the $8,000 federal tax credit for some first-time homebuyers.
On Oct. 8, the House of Representatives passed HR 3590, which extends the popular housing tax credit for eligible military personnel and foreign-service and intelligence officers.
Military and government employees serving overseas or those who have spent at least 90 days deployed outside of the country during the current calendar year are eligible. As many as 350,000 military personnel and an unknown number of federal employees could be covered under the bill, according to office of Rep. Charles Rangel, D-N.Y., who sponsored the legislation.
The bill passed the House on a vote of 416-0 with 16 abstentions. The Senate is expected to approve the legislation.
The bill extends the deadline for taking advantage of the $8,000 first-time homebuyer credit until Dec. 1, 2010. The broader tax credit, which real estate agents and economists have credited with providing a needed boost to the nation’s housing market, expires at the end of November 2009.
Though several pieces of legislation extending and expanding the tax credit for the general public have been filed, for now the tax credit will cease to be available in a matter of weeks.
Should the extension for foreign-service workers and military personnel be made law, it will have particular resonance in the Washington area, where the federal government is a major employer.
“This tax incentive is valuable to a segment of the market that needs all the help it can get,” said Joe Himali, president of the Greater Capital Area Association of Realtors and a principal broker with Best Address Real Estate in Georgetown. “The men and women of our foreign service and our armed services are giving great sacrifice to our nation in a time of war. If this incentive helps even a few of them, it’s well worth the cost.”
Under the bill, service members stationed overseas can take advantage of the credit when they return home. It would also ensure that service members would not have to repay the first-time homebuyer credit if they were ordered to deploy to a different location and, as a result, were forced to sell their home within three years of buying it.
In addition, the legislation provides tax breaks on some mortgage payments under the Defense Housing Assistance Program, which assists military personnel selling a home that has declined in value.
Himali said that though the legislation was important, it may not have the reach and effect some expect.
“The majority of the folks who will qualify for this particular credit extension still won’t be able to make it back to the U.S. for house hunting,” Himali said. “Tours of duty are too long and too frequent to give the potential users of the credit time to find a home.
“As far as significantly helping the D.C. market, I just don’t see that happening,” he said. “The Washington metropolitan area is simply too large a market for the sales to foreign and armed services to make a significant impact. I believe that small areas that are dominated by armed forces bases may well be more impacted by this credit than Washington will be.”
Thomas Shaner, executive director of the Maryland Association of Mortgage Brokers, said any tax credit would have a positive influence on the housing market.
“Tax credits definitely can provide a boost to the housing market,” Shaner said. “We’ve already seen that with the current first-time homebuyers credit.
