Covington County Realtors are excited that Congress voted earlier this week to extend an $8,000 tax credit for first-time homebuyers, as well as offer a new tax credit for people who already own a home but plan to move.

President Barack Obama signed the legislation Friday. The $8,000 tax credit initially began as a part of the 2009 stimulus package, and was set to expire Dec. 1. Congress, citing a housing market that is still down, voted to extend that credit to sales that close by June 30, 2010.

Yet, it is the new tax credit that has most local real estate agents excited. Buyers who have owned their homes for at least five years are now eligible for up to a $6,500 tax credit toward the purchase of a new home; the deadline for this credit is also June 30, 2010.

“There are a lot of people who weren’t eligible for the first-time homebuyer credit but are eligible for this new credit,” said Debra Donaldson, president of the Covington Association of Realtors. “We saw a lot of interest in the first credit, and I’m sure we’ll see just as much excitement for this new credit.”

The extension of the credit program is expected to cost U.S. taxpayers approximately $10.8 billion.

Prospective homebuyers must first qualify for a mortgage in order to get the credit.

A tax credit reduces a payer’s actual tax, as opposed to a deduction that only reduces taxable income. Home purchasers can elect to have the credit returned as a lump sum, or use it toward closing costs or a mortgage balance.

In the same legislation, Congress also increased the annual income limits for both credits. The previous limit for the first-time buyer credit was $75,000 for single people and $150,000 for joint tax filers. The new income limits for both credits will be $125,000 for single people and $225,000 for joint filers. The price limit for eligible homes is $800,000.

“Before, people who already owned a home weren’t eligible for a credit,” said Wes Richards, sales associate at Cedar Creek Realty. “Now, it opens the door for a lot more people.”

Donaldson said some local first-time homebuyers were worried they had missed the deadline to take advantage of the program, but are now still eligible thanks to the extension.

“We saw a lot of people take advantage of the $8,000 tax credit this year,” she said. “Under the old requirements, they had to have a contract in place by Oct. 31, and I know there were a few people upset they didn’t get in under the deadline. Now they have another chance, and it’s going to help those people.”

Richards said he believes the credit program is a good thing, because the real estate market is still sluggish. However, he noted a recent increase.

“There’s been a big rush that started about two months ago,” he said. “I’m sure some of that was from people trying to beat the deadline. I personally only had five first-time homebuyers this year, but every one of them was interested in trying to get the credit.

“It’s not only been a good thing for the real estate business, but it’s also helped out a lot of young couples.”

U.S. Rep. Bobby Bright (D-Ala.) was one of the 402 votes in favor of the legislation; there were 12 votes against.

“The first-time homebuyer’s tax credit has been a successful economic stimulus and has helped stabilize a volatile housing market,” Bright said. “Realtors and homebuyers in my district have expressed strong support for the credit and I am grateful that Congress has acted to extend it.”

The National Association of Realtors estimates home sales will be up approximately 2 percent this year, but would have been down more than 6 percent without the credit program.