Tax Credit Ended in April with 25% Increase in Sales
If you are like my clients you are wondering if the tax credit for new and existing home owners made a difference in the marketplace? Locally about 25% of the sales could be attributed to first time buyers. That’s a significant number.
Now, the next question, “how’s the market since the tax credit?”
Well, honestly I’ve been busier since the tax credit ended than before! Go figure? The jury is out on the current activity. Some felt that the 25% that fueled 1Q2010 statistics would be taking away from sales that would have occurred in the second quarter. As stats and analysis become available I’ll blog again.
Low interest rates have a decided affect on buyer behavior. Low rates reduce monthly payments. That adds up through the life of the loan even if the buyers stay the average 3-7 years. The lure of a lower monthly payment attracts more buyers on an ongoing basis than a one time $8K savings. $8K is nothing to discount but lower rates keep on giving!
Tax Credits for New and Current Homeowners
The revised Homebuyer Tax Credit includes existing homeowner. Existing homeowner will be eligible until July 1, 2010. The new provision does not specify the date for the binding contract only the closing date. This means that anyone who has a contract in place in October but does not close until after the law was enacted on November 7th can still benefit.
Mortgage rates are at historic 30 year lows making this an ideal time to buy.
This chart provided by the National Association of Realtors is clear and concise. See the end of this post for links to additional resources.
|Homebuyer Tax Credit – Revised November 2009|
|FEATURE||Jan 1 – Nov 20, 2009Rules as Enacted Feb 2009||Nov 7 – April 30, 2010Rules as Enacted Nov 2009|
|First-time Buyer -Amount of Credit||$8,000 ($4,000 married filing separately)||$8,000 ($4,000 married filing separately)|
|First-time Buyer – Definition of Eligibility||May have have had an interest in a principal residence for 3 years prior to purchase.||Same|
|Current Homeowner – Amount of Credit||No provision||$6,500 ($3,250 married filing separately)|
|Effective Date – Current Owner||No provision||11/07/09|
|Current Homeowner – Definition of Eligibility||No provision||Must have used the home sold or being sold as a princaipal residence consecutively for 5 of the previous 8 years.|
|Termination of Credit||Purchases after November 30, 2009.(Becomes April 30, 2010 on November 7, 2009).||Purchases after April 30, 2010|
|Binding Contract Rule||None||So long as a binding contract to prucases is in effect on April 30, 2010, the purhcaser will have until July 1, 2010 to close.|
|Income Limits(Note: Increased income limits are effective as of November 7, 2009)||$75,000 – single$150,000 – marriedAdditional $20,000 phase out||$125,000 – single$225,000 – marriedAdditional $20,000 phase out|
|Limitation on Cost of Purchased Home||None||$800,000 – November 7, 2009|
|Purchase by a Dependent||No provision||Ineligible – November 7,. 2009|
|Anti-fraud Rule||None||Purchaser must attach documentation of purchase to tax return.|
|SOURCE: National Association of Realtors www.realtor.org|
- Homebuyer Tax Credit Extension Chart by NAR
- Homebuyer Tax Credits the Basics Page by NAR
- FAQ Homebuyer Tax Credit – good questions and answers!
- Homebuyer Tax Credit Resources from the National Association of Home Builders (NAHB)
- Homebuyer Tax Credit on Facebook
- IRS First-Time Homebuyer Credit: Answers
- Current Mortgage Rates from BankRate.com