Yesterday, President Obama signed an extension and expansion of Home Buyer tax credit program. Here is an overview of the new program:
First-timers: Extend the $8,000 homebuyer tax credit to contracts signed by April 30 and closed by June 30. Previously was set to expire after Nov. 30. First-time homebuyer is defined as someone who has not owned a residence within the past three years. The credit is for 10% of the home purchase price up to $8,000
Existing owners: $6,500 credit for those who buy a home after living in their current house at least five of the last eight years.
Extension: Contracts signed by April 30 and closed by June 30 are eligible
Home requirement: principal residences priced at $800,000 or less.
Income limits: Have been raised -Single 125,000, Joint $225,000 for joint filers.
Cost: $10.8 billion over 10 years, according to the Joint Committee on Taxation.
Primary Residences Only: No second home or investment properties are eligible for the tax credit
Members of the Armed Forces: For members of the Armed Forces deployed on duty outside the United States, the tax credits are extended to May 1, 2011 (must close before July 1. 2011) Must be deployed outside the U.S. for at least 90 days between Dec 31, 2008 – May 1, 2010.
Fraud Prevention: “Fraud prevention” measures have been implemented. The tax credit can not be claimed by anyone under 18 years of age, Also, a “properly executed copy of the settlement statement used to complete such purchase” must be attached to the tax return claiming the credit. This probably means the standard HUD-1 Settlement Statement, properly executed. ~I am not an attorney or CPA, so I suggest you consult both the closing attorney and your tax advisor if you have questions about the credit and applying for it.
I have talked with most of my clients who benefited from the First Time Buyer Tax Credit, and they all affirmed that they would have bought a house anyway – but the $8,000 was a nice gift. Other buyers in the pipeline have not shown an unusually urgency to get under contract or get closed to make the deadline of the previous plan.
I was kind of hoping there would not be an extension. A number of non-favorable opinions about the extension can be found in links below from some of the best known US real estate bloggers. My opinion, in short: take out the props and incentives, let the market find a real bottom and then get on the road to a healthy recovery. Buyers need to see the true picture of value.
Below are links with commentary from some of the best known and most read RE bloggers. Read what they have to say before breaking out the champagne. A big hat tip to all.
Why the Extended Home Buyer Tax Credit is a Slap In the Face from http://agentgenius.com
More on Tax Credit from http://bubbleinfo.com
Do you qualify for a homebuyer’s tax credit? It’s not just for first timers anymore… from http://blog.frontdoor.com
Obama Signs Homebuyer, Jobless Bill Assistance Memphis Daily News
Home Buyer Tax Credit Passes Both House and Senate (Update: Has been Signed by President) from the Phoenixrealestateguy.com
Congress extends and expands the home-buyer’s tax credit from the Bloodhound Blog
The Real Estate Bloggers $8000 New Homebuyer Credit, $6500 Old Home buyer Credit
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