The deal would reduce the size of the tax credit to 10 percent of the sale’s price, capped at $7,290, the people said. The credit would be available on home purchases that are under contract by April 30, and borrowers would have 60 days more to close the sale. The existing credit is due to end Nov. 30.
The income eligibility for first-time homebuyers would remain the same at $75,000 for individuals and $150,000 for couples. The income criteria for step-up buyers would be $125,000 for individuals and $250,000 for couples.
The credit would be limited to homes costing $800,000 or less. There is currently no price cap on home purchases.
I've gone over this a few times in my head and I can't figure out why the income cap for first-time homebuyers is different than the credit for existing homeowners. The best I can come up with is it is a give away to the NAR and NAHB so they can pitch existing homeowners to trade up. But it seems weird to limit the FTHB like that. If you are trying fill empty homes you want to stimulate any new homebuyer not trade up sales. It just seemed designed to increase transactions at a very high cost to taxpayers but not really do any good for the market.