Effingham County residents can benefit from the Homebuyer’s Tax Credit Extension legislation, which has been extended to include sales occurring between Jan. 1, 2009 and April 30.
With the economy showing signs of improvement, this tax credit may just be enough incentive for new home buyers and current homeowners to stop at “go” and collect.
“The homebuyer’s tax credit legislation has definitely spurred an increased interest in the real estate market,” said Pam Brandt, senior vice president at The Coastal Bank. “It’s generating hard-to-pass-up advantages to current homeowners looking to ‘step up’ into another home.”
Originally, the home buyer’s tax credit only applied to those individuals with an income of $75,000 for single taxpayers and $150,000 for married taxpayers filing joint returns. The new tax credit extension and expansion now includes individuals with an income up to $125,000 for single taxpayers and $225,000 for married couples filing joint returns. However, homes priced above $800,000 are not eligible for either the first-time home buyer tax credit or the repeat home buyer tax credit.
Current homeowners within the income guidelines will receive a $6,500 tax credit after purchasing a new home and new homeowners will still receive the original credit set at $8,000. In addition, it would seem that President Obama and Congress consider it necessary to cast a broad net by including in the new tax credit legislation special allowances for military service members.
“It’s important that we ensure that members of the military are provided with all the essential information they need to make a smart purchase, including the special rules that apply only to members of the military, the Foreign Service, and the intelligence community,” said Brandt.
Congress acknowledges the unique circumstances affecting members of the country’s military, the Foreign Service, and the intelligence community by making these additional exceptions that apply to both the $8,000 tax credit for first-time home buyers and the $6,500 tax credit for repeat home buyers.
“These special rules are especially beneficial to all military personnel looking for a new home and will not only help balance the fairness of the legislation, but also push the local real estate market in a positive direction,” said Brandt.
The military rules include an extension for one year beyond the current deadline of April 30 and an income expansion to qualified military service members who are ordered on a period of official extended duty. This includes any period of extended duty outside of the United States for at least 90 days during the period beginning after Dec. 31, 2008 and ending before May 1. The homebuyer’s tax credit applies to sales with a binding contract in place on or before April 30, 2011 and closed by June 30, 2011.
“We have a responsibility to spread the word to consumers that homebuyers do in fact have appealing alternatives in today’s changing market,” said Brandt. “If there were ever a time to consider purchasing a home, it would be now while such favorable incentives are available.”
Jennifer Mafera, a partner at HunterMaclean specializing in commercial and residential real estate law, agrees, adding that this tax credit can help revitalize the housing industry and the economy at large.
“The extension of the deadline and expansion to higher income families will hopefully not only give the sluggish housing industry a boost, but also trickle down to benefit other related industries and services such as home furnishings, appliances, landscaping services, home improvement, lawn equipment and so forth,” she said.
Of course, the homebuyer’s tax credit does not make sense for everyone.
“Buyers need to keep in mind that homes that cost more than $800,000 are not eligible for the credit and those who sell their new home or stop using it as their primary residence within three years will be forced to repay the credit,” said Mafera.
For higher income individuals, the tax credit provides an extra incentive to test the waters and take a dip into the market.
“The Senate’s intended goal is obviously to increase sales within the real estate market,” said Brandt, “but I believe the larger question is: What happens next? Will the homebuyer’s tax credit extension and expansion lead to another adjustment?”