Just as "cash for clunkers" boosted auto sales, another federal program introduced this year aimed at first-time home buyers is driving home sales and helping to salvage the nation's beleaguered residential real-estate market. And if you want to get in on the action -- up to $8,000 worth -- you'd better hurry, as the incentive is set to expire Nov. 30.So far, 1.4 million Americans have taken advantage of the first-time home buyer provision, contained with the American Recovery and Reinvestment Act, according to the Internal Revenue Service. It gives those who have never owned a home or haven't owned one within the last three years a credit of 10% of the price of the home, up to an $8,000 maximum.
It's a good deal for consumers since the rebate isn't tied to how much wage earners will have paid in income taxes in 2009. In other words, even if buyers haven't paid a dime in income taxes this year, they will still get a check from Uncle Sam. In most cases, the full $8,000 credit will be available to purchasers of homes costing $80,000 or more.
There are income restrictions, however. Single filers who earn more than $75,000 up to $95,000 in 2009 will receive only a portion of the credit, while households filing a joint return must earn less than $150,000 to qualify for the full credit and less than $170,000 to receive partial credit.
The National Association of Realtors estimates some 1.8 million Americans will take advantage of the first-time home buyer program by the Nov. 30 expiration date.
The looming deadline, which leaves home buyers at this point only about 80 days to find a home, make an accepted offer and get the deal closed, has housing-industry advocates pushing for an extension of the program.
"We're calling for extending the credit until the end of next year and expanding it to all home buyers," said NAR spokesman Walter Molony told CNNMoney.com. "We do think that housing will recover without it but the market will come back faster and stronger with it," he said Molony.
Others aren't so sanguine about the residential housing market's ability to maintain momentum should the tax credit be allowed to sunset. "Just like the 'cash for clunkers' program, there could be a hangover effect," Mike Larson, real-estate analyst at Weiss Research told CNNMoney.
Congress shares concern that the housing market may once again soften should the tax credit expire, which is why there are more than a dozen bills introduced in the House of Representatives and the Senate to extend the program.
On Thursday, Senate Majority Leader Harry Reid endorsed the idea of extending the credit for an additional six months. The Democrat's home state, Nevada, has among the highest rates of home foreclosures in the nation.
Some lawmakers, however, are balking at the cost, which may hit an estimated $15 billion -- more than double the amount projected in the economic stimulus bill that President Obama signed in February.
