Extended Tax Credit Benefits Buyers
View the article here or read below: Tax Credit Article 12.7.09
“It’s not just a first-time buyer tax credit anymore,” says Joe Robson, chairman of the National Association of Home Builders, in a recent press release. “Moveup buyers, move-down buyers and others who have previously owned a home can now qualify as well. In fact, close to 70 percent of all potential home buyers should now qualify for some form of the credit.”
According to the NAHB, the new law extends the $8,000 first-time home buyer credit through April 30, 2010, which gives buyers who have signed a sales contract by that deadline until June 30 to close their deal. In addition, a new credit of up to $6,500 was created for repeat home buyers who buy a principle residence if they have lived in the home they currently own (or previously owned) for five consecutive years out of the eight years preceding the urchase of the new home.
“I think there are a lot of people out there who don’t want to sell their homes in the current market because they will not fully realize their equity, but the $6,500 credit will help alleviate that,” says Jeff Jolly, a Realtor with Crye-Leike Realtors in Mt. Juliet.
Most Realtors agree that the new program will continue to stimulate the sluggish industry and that both credits will benefit buyers. “The tax credit extension is a great thing. It is taking what is normally a slower time on the market — the fall and winter months — and making it a very attractive time to buy a house,” says Allen Perry, a Realtor with Keller Williams in Green Hills.
Terry Booth, a Realtor with Keller Williams Realty in Franklin, agrees that the credits will not only enhance the economy but may also influence pricing. “Because we have had so many first-time buyers buying, the supply of homes priced at $250,000 and less dwindled, creating a demand, which in turn stabilized prices,” says Booth. “With the new extension of the tax credit, more buyers will be able to benefit from the historically low interest rates and the current low prices of homes.”
Although there’s a lot of positive buzz about the tax credit, homeowners should have realistic expectations; not everyone will qualify and many stipulations are in place. According to the NAHB, the new credit applies to single-family detached homes, attached homes (like town houses and condominiums), manufactured homes (also known as mobile homes) and houseboats — provided the home is purchased for a price less than or equal to $800,000. And the purchased home does not qualify for credit when purchased from lineal descendants (like children) or ancestors (such as grandparents).
In addition, income limits for eligible buyers have also been increased to allow more consumers to qualify, particularly those in markets with a higher cost of living. Now, single taxpayers with incomes up to $125,000 and married couples earning up to $225,000 may be eligible. Partial credits are available to home buyers who earn up to $20,000 more than the limits.
The tax credit and its restrictions can be complicated, so if consumers have questions they should talk to a tax advisor or Realtor to learn more. More information is also available at www.irs.gov.