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Move-Up Homebuyers Getting in on Tax-Credit Incentives

Rather than letting the $8,000 federal tax-credit for first-time homebuyer credit lapse, Congress appears headed to reauthorizing the incentive through April 30 and expanding it to "move-up" buyers with a $6,500 credit on home purchases up to $800,000, based on a Senate vote last night.

If you're a homeowner who's lived in your principal residence for five years and has held off moving into a larger house or relocating to another state or a better school district, you are exactly who the new credit is aimed at.

The first-time buyer program, set to expire as the end of this month, helped reduce the inventory of lower-priced foreclosed homes throughout the country. Fully 70% of homes sold nationwide in September went for less than $250,000.

Congress is now trying to juice the move-up market, which has been constrained due to less and tighter lending from mortgage issuers reluctant to finance higher-dollar purchases. The aim also is spur two sales rather than one as with the existing program.

If you were a homeowner in the past but are not currently, you can still qualify for the credit for first-time buyers, which is a bit of a misnomer. The credit - 10% of a home's purchase price to a maximum of $8,000 -- has been available to buyers who've not owned a principal residence in the last three years, with an income cap of $75,000 for single filers and $150,000 for joint filers.

The income limit for both target groups in the measure that cleared the Senate in an 85-2 vote will rise to $125,000 for single tax filers and $225,000 for joint filers. The respective ceilings enable an overwhelming majority of Americans to avail themselves of the stimulus.

One suggestion: Best not to wait until the traditional spring home-buying season to go shopping. Residential real estate prices soften in many markets from November through early February, and you will need to put a contract in on a property by April 30 and close the sale by June 30 to qualify for the credit.

Carp if you're so inclined about Congress continuing to offer bailout money to the housing industry - but don't miss out on this opportunity if it does present itself.

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