Tax Credit
- FactCheckGOLB@gmail.com
YES! It has been extended!
Let’s jump right into a brief recap of the last years in our real estate market.
According to different sources, real estate represents roughly 10%[1] of the Gross Domestic Product of the US. From 2003 to 2007, the number of real estate transactions skyrocketed due to easier access to credit. Many companies started relaxing their credit guidelines and started offering sub-prime lending, zero-interest loans, zero-down payment and low-interest adjustable rate mortgages to make home buying more affordable. This helped in great part to the boom in 2004 were house prices spiked a 72% increase in comparison to a year before in the country’s main metro areas.[2]
Everyone was living the American Dream, living off of their equity, obtaining credit regardless of past credit history. In a nutshell, we were consuming more than we were earning, thinking that home values would continue to go up forever. Although there were early warning signs and economists, newspapers and magazine outlets were warning that a “burst” to that bubble was closely approaching, nobody listened until the mortgage giants started to fall. Websites like ripoffreport.com, mortgagedaily.com and recession.org started popping up everywhere, tracking down “watch lists” of banks or mortgage companies that were close to going belly up, but no one listened. We all know what happened after that: tighter credit guidelines, less people qualified to buy, home values started to fall, or as many would correct, go back to normal.
The US government decided to act fast and offer an incentive to purchase a house to first time homebuyers. That helped drive an increase of 64% in home sales if you are comparing October 2008 to October 2009[3]
The original tax credit was only applicable to first time homebuyers (people without a mortgage interest write-off within the last three years were considered FTHB) that were acquiring a Primary residence. It was set to expire on November 30, 2009 but was granted an extension until April 30, 2010. This extension not only included FTHB, but “Move-Up” buyers as well.
According to the National Association of Home Builders, these are the Tax Credit parameters.
$8,000 First-time Homebuyer Tax Credit at a Glance
The $6,500 Move-Up/Repeat Homebuyer Tax Credit at a Glance
What do you think about this? Do you think this will spark your interest in buying real estate?
Contact us at FactCheckGOLB@gmail.com with any topics you think are worth discussing in this section. Let’s untwist the facts and get it right, LB!
[1] http://useconomy.about.com/od/grossdomesticproduct/f/Real_estate_faq.htm
[2] http://money.cnn.com/2005/05/03/real_estate/financing/boom_bust/index.htm
[3] http://www.localnews8.com/Global/story.asp?S=11562772
[4] http://www.federalhousingtaxcredit.com/glance.php
Let’s jump right into a brief recap of the last years in our real estate market.
According to different sources, real estate represents roughly 10%[1] of the Gross Domestic Product of the US. From 2003 to 2007, the number of real estate transactions skyrocketed due to easier access to credit. Many companies started relaxing their credit guidelines and started offering sub-prime lending, zero-interest loans, zero-down payment and low-interest adjustable rate mortgages to make home buying more affordable. This helped in great part to the boom in 2004 were house prices spiked a 72% increase in comparison to a year before in the country’s main metro areas.[2]
Everyone was living the American Dream, living off of their equity, obtaining credit regardless of past credit history. In a nutshell, we were consuming more than we were earning, thinking that home values would continue to go up forever. Although there were early warning signs and economists, newspapers and magazine outlets were warning that a “burst” to that bubble was closely approaching, nobody listened until the mortgage giants started to fall. Websites like ripoffreport.com, mortgagedaily.com and recession.org started popping up everywhere, tracking down “watch lists” of banks or mortgage companies that were close to going belly up, but no one listened. We all know what happened after that: tighter credit guidelines, less people qualified to buy, home values started to fall, or as many would correct, go back to normal.
The US government decided to act fast and offer an incentive to purchase a house to first time homebuyers. That helped drive an increase of 64% in home sales if you are comparing October 2008 to October 2009[3]
The original tax credit was only applicable to first time homebuyers (people without a mortgage interest write-off within the last three years were considered FTHB) that were acquiring a Primary residence. It was set to expire on November 30, 2009 but was granted an extension until April 30, 2010. This extension not only included FTHB, but “Move-Up” buyers as well.
According to the National Association of Home Builders, these are the Tax Credit parameters.
$8,000 First-time Homebuyer Tax Credit at a Glance
- The $8,000 tax credit is for first-time homebuyers only. For the tax credit program, the IRS defines a first-time homebuyer as someone who has not owned a principal residence during the three-year period prior to the purchase.
- The tax credit does not have to be repaid unless the home is sold or ceases to be used as the buyer’s principal residence within three years after the initial purchase.
- The tax credit is equal to 10 percent of the home’s purchase price up to a maximum of $8,000.
- The tax credit applies only to homes priced at $800,000 or less.
- The tax credit now applies to sales occurring on or after January 1, 2009 and on or before April 30, 2010. However, in cases where a binding sales contract is signed by April 30, 2010, a home purchase completed by June 30, 2010 will qualify.
- For homes purchased on or after January 1, 2009 and on or before November 6, 2009, the income limits are $75,000 for single taxpayers and $150,000 for married couples filing jointly.
- For homes purchased after November 6, 2009 and on or before April 30, 2010, single taxpayers with incomes up to $125,000 and married couples with incomes up to $225,000 qualify for the full tax credit.
The $6,500 Move-Up/Repeat Homebuyer Tax Credit at a Glance
- To be eligible to claim the tax credit, buyers must have owned and lived in their previous home for five consecutive years out of the last eight years.
- The tax credit does not have to be repaid unless the home is sold or ceases to be used as the buyer’s principal residence within three years after the initial purchase.
- The tax credit is equal to 10 percent of the home’s purchase price up to a maximum of $6,500.
- The tax credit applies only to homes priced at $800,000 or less.
- The credit is available for homes purchased after November 6, 2009 and on or before April 30, 2010. However, in cases where a binding sales contract is signed by April 30, 2010, the home purchase qualifies, provided it is completed by June 30, 2010.
- Single taxpayers with incomes up to $125,000 and married couples with incomes up to $225,000 qualify for the full tax credit. [4]
What do you think about this? Do you think this will spark your interest in buying real estate?
Contact us at FactCheckGOLB@gmail.com with any topics you think are worth discussing in this section. Let’s untwist the facts and get it right, LB!
[1] http://useconomy.about.com/od/grossdomesticproduct/f/Real_estate_faq.htm
[2] http://money.cnn.com/2005/05/03/real_estate/financing/boom_bust/index.htm
[3] http://www.localnews8.com/Global/story.asp?S=11562772
[4] http://www.federalhousingtaxcredit.com/glance.php
