Senate lawmakers stuck an agreement recently to not only extend the existing program but to expand it to allow current homeowners and buyers in a higher income bracket to claim the tax credit. Senators moved to increase its annual limits from $75,000 to $125,000 for single buyers and from $150,000 to $225,000 for married couples.

The deadline for first-time home buyers to claim the $8,000 credit has been extended to April 30, 2010. But the term “deadline” doesn’t mean the same thing as it does in the current program. The Senate agreement requires that buyers must have a sales contract on a house by April 30 to be eligible, but it gives them an additional 60 days to close the purchase. The current credit program requires that transactions must be closed by November 30, 2009. So effectively deadline of the new version credit agreement is the end of June.

The current credit is restricted to home buyers who have not owned a primary residence within the past three years. The expanded agreement also allows current homeowners to claim up to $6,500 as long as the property they are vacating has been their primary residence for at least five years. This is intended to target “move up buyers” . In this market many homeowners are taking advantage of lower prices to move from one house to another of higher value.

I’ve got an appointment with some first time buyers who will be purchasing in January 2010, I can’t wait to tell them the good news!

Aloha from the Hawaii Real Estate Biz!