Housing Update & A Few Notes On The First Time Home Buyer’s Credit
While the housing market seems to be bottoming, the latest economic data was a step backwards according to some experts. Sales of existing homes fell slightly in August after a strong number in July. This may be a reflection of the seasonality of home sales or an actual step backwards in the rebound so many are looking for in the housing market. Still, sales were up 3.4% year-over-year when compared to August of last year. Year-over-year numbers are more important because they have nothing to do with seasonality.
The $8,000 First-Time Home Buyer’s Tax Credit
I’ve been receiving a few emails about the $8,000 first-time homebuyer’s tax credit. The Obama administration’s much talked about economic stimulus package includes an $8,000 first-time homebuyer refundable tax credit program for buyers who purchase a home between Jan. 1, 2009 and Nov. 30, 2009.
A big part of this tax credit program depends on eligibility. In order to qualify as a first-time buyer you cannot have owned a primary home within the past three years and you must make less than $75,000 if single or $150,000 if married. Applying for the tax credit is very simple; all you have to do is claim the amount on your tax return. No additional papers or forms are necessary. If you are like most people and have already filed your return, you can file an amended return for 2008 to claim the credit. One important note: you will have to repay the credit if you decide to sell your home within 36 months of the purchase date. The reason for this caveat is to encourage people to buy and live in a home, not to encourage speculators to attempt to “flip” a home.
The tax credit is nearing its deadline of November 30th and while there are talks of congress passing an extension, if you have been waiting to take advantage of the low mortgage rates currently available now would definitely be the time to look at purchasing a home. Customary closing proceedings for a home can sometimes take a month to two months between the signing and the closing date depending on a number of factors. If you’re looking to take advantage of this program, you will probably want to be under contract by mid-October to ensure eligibility.
As I’ve talked about at length on this blog, the government is doing everything they can to prop up this economy and the first time home buyer’s credit is no exception. While I disagree with these programs whole-heartedly on a macro perspective, I don’t blame anyone for taking advantage of such a program. Heck, I probably would if I didn’t already own a home.