Homebuyers have 58 days to obtain a written, binding contract to qualify for the housing tax credits. First-time buyers and buyers who have not owned a primary residence for the past 3 years qualify for an $8,000 tax credit (or 10% percent of the sales price, whichever is less) so long as they are under contract by April 30, 2010 and close on the home by July 1, 2010. Homebuyers who have owned a primary residence consecutively for 5 of the previous 8 years qualify for a $6,500 tax credit. The home being purchased in either scenario must be a primary residence.
Income limits are very generous for those who buy between now until April 30, 2010:
$125,000 – single (Additional $20,000 phase out)
$225,000 – married (Additional $20,000 phase out)
While the $8,000 tax credit is getting a lot of use, Realtors are seeing very few existing homeowners taking advantage of the $6,500 tax credit.
The housing tax credits were extended under the H.R. 3548 Worker Homeownership and Business Assistance Act of 2009
DHW asks: Will you take advantage of the housing tax credits?
Buyers hoping to take advantage of the housing tax credits will need to have a written, binding contract in effect by April 30, 2010. Buyers will have until July 1, 2010 to close.
Press release explaining housing tax credits benefits for the armed service, intelligence service and foreign service personnel (National Association of Realtors).
“SAN DIEGO – Nov. 13, 2009 – According to the National Association of Realtors@ (NAR), the recent homebuyer tax credit extension expands benefits for the U.S. military.
Armed service, intelligence service and foreign service personnel on active duty and out of the U.S. for 90 days during any part of 2009 get an additional year to buy their homes – to May 1, 20ll.
Another benefit is a waiver on the time of occupancy. Most homebuyers using the tax credit must use that home as a principal residence for a period of no fewer than three years or forfeit the entire credit. But military, intelligence and foreign service members do not have to repay the credit if they sell their home in less than three years if they move because of official business.
“NAR is the leading advocate for private property and homeownership issues, and firmly believes that those who are in service to their country should be full participants in the homebuyer tax credit law,” says NAR President Charles McMillan. “These men and women are often hindered by hardships from full participation in the American dream of homeownership because their duty disrupts them in the buying and selling of a home.” NAR was a main advocate for the homebuyer’s tax credit extension into 2010 and its expansion to include present homeowners.
Under the tax credit extension, eligible first-time homebuyers can get a tax credit up to $8,000. Current homeowners are eligible for a $6,500 tax credit, provided they have lived in the home they are selling, or have sold, as their principal residence for five consecutive years in the past eight years.
Income limits for eligible homebuyers are expanded to $125,000 for single buyers and $225,000 for couples. The purchase price of the home cannot exceed $800,000. To help guard against fraud, buyers are required to attach documentation of purchase to their tax return.”
According to the National Association of Realtors, November home sales skyrocketed 7.4 percent. Analysts were predicting an increase of 2.9 percent. The housing tax credits are credited with the spike in sales.
There are 129 days until the housing tax credits run out. For more details about the housing tax credits, visit our Housing Tax Credit page.
DHW asks: Do you think homes sales will continue to exceed expectations?
Before you know it, we’ll be saying goodbye to the beloved housing tax credits that brought new life to sales markets around the country. Here are some helpful links for first-time buyers seeking an $8,000 tax credit and for those taking advantage of the $6,500 tax credit.
The $8,000 Tax Credit (this link is provided by the National Association of Home Builders. However, you do not need to buy a new home to qualify for the tax credit)
A survey released last week by Move.com, a real estate website, shows 1 in 5 Americans plan on purchasing a home within the next year. The survey also revealed these buyers are most likely to be 34 years of age or younger and live in the South or West.
It should be noted this survey was taken before the housing tax credit extensions were announced.
DHW asks: Do you intend to buy a home within the next year?
The Capital published an intriguing article addressing the potential side-effects of expanding the housing tax credits beyond first time homebuyers. The article raises some fair questions with regard to existing homes needing to be liquidated so that current homeowners can take advantage of the housing tax credits now afforded to them. The Capital article focuses on housing inventory in D.C. and its surrounding area. However, this potential side-effect could present itself in other parts of the country.
DHW asks: Do you think expanding the housing tax credits beyond first time homebuyers will increase housing inventories?
Lawrence Yun, chief economist for the National Association of Realtors, predicted on Friday that home prices will rise in 2010. If his prediction holds true, home prices will see their first increase in four years.
Yun pointed to the current price-income ratio of 2.4 as evidence of pent-up demand in the market. The price-income ratio accelerated from a norm of 2.6 in 1984-2001 to 3.3 in 2005. This means the price-income ratio has dipped below its pre-bubble rate.
The housing tax credit extension is also seen as a contributing factor to rising homes prices next year.
DHW asks: Do you think home prices will rise in 2010?