An $8,000 tax credit continues to spur area residents to shop for and buy their first homes.
And they’re about to get some company.
This week, federal lawmakers are expected to sign off on the extension of a program that gives first-time homebuyers the $8,000 tax credit — a program that started Jan. 1 and continues through Nov. 30. The extension is expected to give buyers until April 30 to have a house under contract, then another 60 days to close.
New with the extension are plans to offer a $6,500 tax credit to a whole new set of homebuyers: People who meet certain income limits and have been in their homes for five of the past eight years.
Both decisions — the extension and the expansion — can’t come soon enough for Mike McGrew, CEO of McGrew Real Estate in Lawrence and chairman of the Federal Taxation Committee for the National Association of Realtors.
“We’ve had several decades of uninterrupted, steady increases in the Lawrence real estate market, both in volume of sales and values of properties, but lately we’ve seen declines in both of these,” McGrew said. “We think the first-time homebuyers tax credit has helped stem that decline, and we think this (expanded) program will help even more.”
While data from specific communities is unavailable, the National Association of Realtors has compiled estimates regarding the effect of the tax credit program in Kansas. In all, the association said, 22,900 first-time buyers will have been able to take advantage of the credit as of Nov. 30.
Of those eligible, the association said, about 1,500 would not have been in the market at all without the credit.
“We know that it has gotten people off the fence,” McGrew said.
That’s why McGrew was part of a team that recently traveled to Washington, D.C., to lobby lawmakers to extend and expand the program. McGrew’s appointments included a stop by the office of Sen. Pat Roberts, R-Kan., who is a member of the Senate Finance Committee.
The committee has since “blessed the concept” of continuing and expanding the program, McGrew said, and approval remains tied up in procedural issues.
“With Congress, things could change in five minutes,” McGrew said. “But the plan is it will drop (today), and the House has indicated a willingness to go along and do this on a very quick basis.
“The stars are still aligned, and it should work out for us.”
The credit is a dollar-for-dollar savings on federal taxes. If a taxpayer owed the government $4,000, for example, the credit would allow the taxpayer to erase that debt and then receive a $4,000 check from Uncle Sam.
One Lawrence homebuyer closed on his first home, then filed an amended tax return and had his $8,000 back within 30 days, McGrew said.
Expect more of the same — and more — once the program is both extended and expanded, McGrew said.
“It will be helpful,” he said. “It has been helpful, and this will be more helpful.”