The American Recovery and Reinvestment Act of 2009 that was recently signed into law includes an $8,000 tax credit for first-time home buyers, available through November 30, 2009. 
As leading advocates for homeownership, Realtors® have been advocating stimulus measures like buyer tax credits and higher loan limits to support a housing recovery, because a larger economic recovery depends on it.
For detailed information about the legislation and what it means for the housing market, visit www.realtor.org/government_affairs/gapublic/american_recovery_reinvestment_act_home.
A True Incentive
It has been my quest to speak to Realtors® across the country about how the $8,000 tax credit will help or has helped buyers to see if it really will make a difference!
Dave Fish, a Realtor® out of Boulder comments, “We are seeing a great deal of interest in this within our market here in Colorado. As you know, last years “credit” was effectively a zero interest loan which was to be paid back over 15 years or when the home sold. This new bill, is a true $8K credit / benefit to first time Buyers and it does NOT need to be paid back unless they sell within the first 36 months. It will encourage 1st time Buyers to jump into the market, begin building wealth and it provides huge incentive for them to do whats best – hold the property for 3 years. I feel its a fantastic tool that will help a huge amount of people get into a home.”
Another Realtor® from the Greater Minneapolis-St. Paul area made note that he personally would love to see the “tax credit” be available at closing as some form of down payment assistance whether or not it would need to be paid back. He said that until then he still foresee the tax credit as being underutilized and far from being a true incentive. However those buyers with stable jobs, great credit, cash and most importantly the willingness to commit to a home for 5+ years will see great returns.
From the West Coast, Arn Cenedella writes, “I recently represented a young first-time buyer couple who were former tenants of mine. They purchased a home for $225,000 with FHA financing and put 3.5% down. We had the seller pick up their non recurring closing costs so my buyers were out of pocket $10,000 to close escrow. They obtained a 30 year fixed rate mortgage with TOTAL payments being $1638 per month. They will benefit with the $8000 credit and essentially get back almost all of the money they spent to purchase the property. I would say that is a benefit.
I disagree with some of the other writers who suggest this credit be given at close. If this approach was to be adopted, it would spur more unqualified buyers to purchase. I say let the buyer come up with the cash to buy by SAVING it and then get the credit back the next year.”
Vicki Lloyd, a Realtor® also commented that expect more buyers to learn about this and to try to take advantage soon. The IRS just announced yesterday that the $8,000 credit can be taken on the 2008 tax return, so they will not have to wait until next year’s tax return to claim it! (This will probably lead to a record number of tax filing extension requests!)
She included the following link to the IRS announcement in the link below.
Links:
While there will always be questions about any piece of legislation in terms of implementation, it seems evident from these real estate professionals, as well as the myrid of others that also offered comments which would have made this post way to long to be readable or enjoyable, that the tax credit will help stimulate the economy and foster added home sales. It is only with regret that the Isakson Bill, which would have provided a $15,000 tax credit to any and all home buyers, did not pass its final rounds through the House.
