Bills to extend the maximum $8,000 tax credit for first-time home buyers are pending in both the U.S. House and the Senate. The current credit is due to expire on Nov. 30. Sen. Christopher J. Dodd, a Connecticut Democrat and chairman of the Senate Banking, Housing, and Urban Affairs Committee, is co-sponsor of a bill with Georgia Republican Sen. Johnny Isakson that would raise the credit amount to a maximum of $15,000.
The extention of the current tax credit would be a definate boost for the Boston real estate market, especially as we see first-time home buyers try to come up with 15-20 percent downpayments. There is a danger, however, in discussing an increase in the credit. An increase would be helpful, but discussing it will slow the entry-level market as buyers decide to wait to make offers in the hope that they will qualify for an even larger tax credit. If there is going to be an increase, then at least add a clause that will “grandfather” in all purchases made between now and the Nov. 30th deadline.