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The $8,000 Tax Credit Expires November 30th 2009

With the $8,000 tax credit scheduled to end Nov. 30, the number of home buyers looking to take advantage of the credit (as well as the historically low prices and low interest rates) is starting to increase as the year winds down, especially as we start seeing glimmers of an economic upturn for the real estate market. If you’ve been waiting for the right window of opportunity to purchase your first home, (or put your home on the market) this might be the time. I’d be happy to answer any questions you might have. Feel free to call me or email me any time. For more information on the Tax Credit, visit http://www.federalhousingtaxcredit.com/2009/faq.php.

The President of the Washington Realtors, Greg Wright just shared this interesting article on Facebook. I know, he’s so hip!

Answering criticisms that all of the relief for the housing and economic crisis have been targeted at big banks and other large corporations, lawmakers are working on a bill that would make it possible for buyers to apply their $8,000 tax credit to their downpayment.

The proposal would make a federal tax credit for first-time homebuyers go farther by allowing it to be put toward the actual home purchase. A provision of the federal stimulus package offers a credit of up to $8,000 to buyers who haven’t owned a home in the past three years — buyers must also have incomes of no more than $75,000 for an individual or $150,000 for a married couple to qualify — but it’s a refundable credit. In other words, you don’t get the money until weeks or months after the home purchase has closed.

A budget proviso authored by the state Treasurer’s Office and pushed by Sen. Steve Hobbs (D-Lake Stevens) and the state Realtors would set up a mechanism to get the tax-credit money to buyers at closing, removing the lack of a sufficient down payment as an obstacle. 

This is really exciting news.  The article goes on to talk about how the state will be ensuring that they get their money- but I thought this was interesting:

The state Realtors would put up $400,000 as security against unforeseen losses.

Now I know why my Realtor Dues are so high. Ah well, that’s a good use for them!

Homebuyers, Rejoice.  Buying a house in 2009 just got even easier.

The President signed the American Recovery and Reinvestment Act of 2009 this week.  The bill is a $780 billion package, with about 35% of the package devoted to tax cuts (mostly for 2009) and the rest to spending intended to occur in 2009 and 2010. 

The major part that agents have been watching for, (especially agents like me- 80% of my clients are buyers) is the tax credit.  Previously, there was a credit of $7500 that had to be paid back. Not anymore!

 – The bill provides for a $8,000 tax credit that would be available to first-time home buyers for the purchase of a principal residence on or after January 1, 2009 and before December 1, 2009.  The credit does not require repayment.  Most of the mechanics of the credit will be the same as under the 2008 rules:  the credit will be claimed on a tax return to reduce the purchaser’s income tax liability.  If any credit amount remains unused, then the unused amount will be refunded as a check to the purchaser.      Source: Realtor.com

This is very exciting.  I have a client right now who just bought a 3 bedroom, 1 bath house for $120,000.  The seller (a bank) is paying his closing costs.  His downpayment is $3,600.  His house payment will be $897.00/month including taxes, insurance, and everything else.  When he receives his tax return this year, he will be getting an extra $8,000 back that he will NOT have to repay.  Thats enough for him to pay his mortgage for almost 9 months, or make some improvements to his house, or….put 6 months expenses in the bank like Suze Orman tells us all we should!

The New York Times has a great article out about some of the new tax breaks available to people buying, selling, and improving their homes!

Among the highlights, more information about the $7500 home buyer credit, a new tax break for widows & widowers, residential energy credits, and more.  It also points out which tax breaks are being looked over by congress that might be coming down the pike soon.

Tax time is getting closer, if you own a home (or plan to buy one this coming year) this is essential information.  So read this article and then call your tax professional.

Thanks to my #1 Client Matt for sending this my way!