Thursday, July 30, 2009
First-Time Home Buyers Find 8000 Reasons To Buy A Home Before December 1st
By: Chris Fisher
As part of “The American Recovery and Reinvestment Act of 2009” first-time home buyers are eligible to receive an $8,000 tax credit. This credit is available to any buyer who has not owned a principal residence during the three-year period prior to the purchase. Their income must not exceed $75,000 for a single taxpayer, $150,000 for married taxpayers who file jointly and $95,000 for married couples who file separately. So for those who qualify as first-time home buyers they may purchase any kind of home (new or resale), as long as the purchase/closing occurs sometime between January 1, 2009 and December 1, 2009. The amount of this credit is equal to 10 percent of the home’s purchase price with the maximum set at $8,000. The most significant difference from the tax credit that Congress enacted last year is that this credit does not have to be repaid.
The goal of this tax credit was to help the housing market bounce back from the worst downturn it’s seen in decades and it has yet to disappoint. A recent government report has stated that during the month of June, U.S. home sales rose by its largest amount since December 2000. These sales rose by a margin of 11 percent and June was the 10th consecutive month that sales activity has improved when compared to the previous year. This increase cannot only be credited to these tax incentives but also the relatively low mortgage rates as well as the abundant amount discounted houses currently available on the market.
In June 2008 the average sale price for a home was nearly $235,000 but now just one year later those prices have declined 12 percent to just over $205,000. These prices are expected to continue their decline until the competition from low-priced foreclosures diminishes.
Although November 30th seems like a long way off, if you’re planning on purchasing a home that is in foreclosure or a short sale you’re time to act may be limited as these sales can sometimes take four months or more to close. This push is what has led the increasing number of houses sold and will continue to do so in the coming months. Even though the real estate market has not fully recovered we are certainly entering a “first-time buyers” market and many are finding out that the price is just right for their potential new homes.