Congress likely to Extend Tax Credit
October 28, 2009
As a busy real estate agent in Atlanta, Georgia, I have seen a surge of activity in the past week. Many first time home buyers are making offers and trying to secure property so they can take advantage of the First Time Home Buyer Tax Credit that expires Nov 30. Most of my listings have recieved multiple offers, and as I talk to other agents with homes priced in the lower price ranges in our area, they have told me the same thing. Today CNN reported that it is likely that the tax credit will be extended to more than first time buyers.
I am excited about this possibility because this is what our economy needs to get some of the excess inventory off the market. It is all about supply and demand, and as long as supply is high and demand is low, prices will continue to decline. I have already seen the inventory go down in the under $400,000 market in the past month...... especially anything under $300,000.
The housing market will take a HUGE step back next year if this does not happen, and frankly none of us can afford that.
According to the CNN.com story today:
- The tax credit would be $8,000 for first-time home buyers and $6,500 for move-up buyers (from December 1, 2009 to April 30, 2010).
- Move-up buyers will be eligible, so long as the home they are leaving has been used as their principal residence for 5 years or more.
- The tax credit would run through April 30, 2010. However, there would a binding contract rule that will permit those with contracts as of April 30th to qualify for the credit so long as they complete the transaction by the end of June, 2010.
- The income limits for both first-time home buyers and move-up buyers would be $125,000 for single return and $225,000 joint return.
- Cost of the home may not exceed $800,000 to be eligible.
- For purchases made in 2010, taxpayers would be able to claim the credit on their 2009 income tax return.
- Home buyers would not have to repay the credit, provided the home remains their principal residence for 36 months after the purchase date.
- The amendment includes a military waiver provision, meaning the recapture provision would not apply in the case of a member of the Armed Forces, military intelligence or Foreign Service who is on qualified official extended duty. In addition, members of the military who have been deployed overseas for 90 days or more in 2008 or 2009 would have until April 30, 2011, to claim the home buyer tax credit.
- The amendment also includes anti-fraud language that provides math authority to the IRS to do greater oversight during the processing of the return rather than waiting for an audit situation. The amendment requires the taxpayer claiming the credit to be 18 or older as well as requiring a HUD-1 settlement statement to be attached when claiming the credit.
Word is we should know for sure next week if this is all approved.