The American Recovery and Reinvestment Act of 2009 signed into law in February includes an $8,000 first-time homebuyer tax credit.According to a February press release from the Internal Revenue Service, qualifying taxpayers who buy a home between Jan. 2 and Dec. 1 can claim 10 percent of the purchase price up to $8,000, or $4,000 for married individuals filing separately, on their 2008 or 2009 tax return.As stated in the press release, buyers who qualify for the $8,000 tax credit “do not have to repay the credit, provided the home remains their main home for 36 months after the purchase date.”The provision eliminating the $8,000 credit repayment sharply contrasts with the $7,500 first-time homebuyer tax credit provided under the Housing and Economic Recovery Act of 2008. The $7,500 tax credit has to be repaid over a period of 15 years.To qualify for the first-time homebuyer credit, the buyer or buyers (in the case of a married couple) must not have owned any other main home during the three-year period ending on the date of purchase.”I wish they had made the credit available to everyone because we need to get inventory down, and then we’ll be on the right track,” said Jill McFeron, a RE/MAX broker associate in Falcon.”There’s an income limit, too, of $75,000 for single taxpayers and $150,000 for married taxpayers, so the government is targeting a very precise group.”The new tax credit should be a big help in the Falcon housing market, which is looking positive, McFeron said.”This time last year, no matter where we put the price, we couldn’t sell the house. From July on, it seemed like prices were going down a percent a month,” she said. “The good thing right now is that prices have stopped dropping.”Right now, I’m doing more distressed sales and compromised sales, but those houses are getting bought up, and as soon as they are off the books, then the process can rebound and prices can move back up,” she said.McFeron said buyers have it tough in this market, too.”The average closing is 60 to 80 days because banks don’t have any incentive to push loans through in a timely manner,” she said. “That can be very discouraging for the buyer, who may not be able to move from one house right to another because we can’t guarantee a closing date. Many buyers have to make temporary living arrangements.”Only a small portion of McFeron’s buyers are military and she hasn’t seen many out-of-state buyers, she said. Most are first-time homebuyers or people who have sold their homes and need to buy another.Investors have for the most part left the market.”Now that there’s no such thing as a stated-income loan, investors, who were mainly self-employed, have lost their leverage,” McFeron said. “They pay a non-owner-occupied interest rate that makes it tough for them to qualify. They also have to put 25 to 30 percent down. It’s really taken the teeth out of their bite.”Is this the right time to buy? Maybe. McFeron said buyers are getting a “tremendous deal because home prices are lower than they’ve been in 20 years.”For more information on the $8,000 first-time homebuyers’ credit, visit www.irs.gov and search for Form 5405, which has been revised to reflect the $8,000 credit.
