Erin's Sidebar
Hi Everyone! I’ll be the first to admit it – I’ve had writer’s block
this month. There is literally so much going on right now in the Real
Estate Industry - particularly residential sales - that I was literally
overwhelmed with too many potential topics to write about.
Real estate sales are up approximately 300% for the first two months of
2009 over the same two months in 2008. If the Pending Sales Index is a
good indicator, it’s only gaining velocity in March & April.
However, as an agent, my perspective is fueled by my daily experiences
and here’s what I can tell you…
Buyers who were paralyzed with fear last October & November no
longer have that “deer in the headlights” look on their faces. Instead,
they are now out there making offers in droves. I have been burning the
midnight oil writing up offers until 2:00 a.m. a few nights this week
and it’s only getting busier.
I think there are three main reasons for this: the rock bottom price
points on homes; the low interest rates; and the government incentives
like the Neighborhood Stabilization Program & the First Time Buyer
Tax Credit.
I decided to write about the Tax Credit in this issue and if you know
someone who can take advantage of this – please pass it on. Your
referrals are always appreciated and mean a lot to Nathan and me.
FIRST-TIME HOME BUYER TAX CREDIT
It’s so exciting to be a Buyer’s Agent helping first-time home buyers
fulfill their dream of home-ownership. If you think about it, the
silver-lining on the dark cloud of this market is being able to get
these young hard-working buyers into a home, when just a few years ago
they were completely priced-out of the market. Many times, first time
home-buyers don’t have a lot of extra cash on-hand, especially after
doing some of the basic repairs required on today’s foreclosures –
which now comprises 50% of total home sales here in the valley. That’s
where this new Tax Credit comes in pretty handy.
First, some history. The 2008 Tax Credit Program was created in July
2008 and covered home purchases (by qualified “First Time Buyers”)
which took place from April 9th, 2008 through December 31st, 2008. It
basically provided up to a $7,500 tax credit which was structured as a
loan. This $7,500.00 “interest free loan” from the government is
structured with a 15-year repayment program of $500.00 per year that
begins in the 2010 tax year.
The new 2009 Tax Credit Program is much better than the old one (to the
chagrin of many who purchased in 2008). First of all, the maximum
credit amount was increased to $8,000.00. Second, it doesn’t have to be
paid back as long as you stay in the house for 36 months. It covers any
qualified buyer who purchases a home after January 1st, 2009 and before
December 1st, 2009. Like the 2008 credit, it defines a “First Time
Buyer” as someone who has not owned a principle residence in the past
three years (and that includes spouses). Also, just like the 2008
credit, there are income restrictions (i.e. it starts to phase-out if
your adjusted gross income exceeds $75K for individuals/$150K for
married couples). The cap (where the credit fades to zero) is at 95K
for individuals/$170K for married couples.
There’s a lot more to it, obviously, but some of the details I found interesting were:
• It’s the closing date that counts – so if you plan to take advantage
of this before it expires on December 1st, you should really plan to
close before mid-November to be on the safe side. I’m sure the lenders
and title companies will be swamped right before it expires so don’t be
like everyone else – or you’ll have a stressful Thanksgiving!
• Even if your income exceeds the limits, it’s still possible to you
might qualify for some type of credit, so check with your tax
professional.
• You can use the 1040X form to amend your 2008 tax return if you
purchased a home after January 1st, 2009 and weren’t aware of the new
tax credit! Consult with your tax advisor.
• Non-resident aliens cannot claim this tax credit.
• These tax credits are refundable. For example, if you only owe
$2,000.00 in taxes, you will receive a check back from the government
for $6,000.00. That’s what they mean by “refundable”. EH
