Real Estate Information Archive

Tax Credit To Be Extended!  Or Not, Or Modified, Or What?!?!

Ok, several websites later, I still don't know myself!  However, it does seem likely that the credit will be extended and modified to phase it out over the next year. 

In  a rider to the Unemployment Bill currently before the Senate, there seem to be several options on the table, and none of the news sites or blog destinations seem to agree on much.  Here's what I've seen:

1 - Credit will be extended through October of 2010, but will reduced by $2,000 every quarter, starting with a reduction to $6,000 on 1 January 2010 ($4,000 on April 1, $2,000 on July 1).

2 - Credit will be modified to 10 percent of the sales price, capped at $7,290.  In this modification, step-up buyers will also be able to use the credit - not just first timers.  These moving-on-up folks must have been in their previous home a minimum of five years.

3 - Credit extended as-is through March of 2010, then reduced $2,000 every three months - phased out by December of 2010 (similar to the 1st option).

4 - Raising the salary cap of the credit to $300,000 per family, $150,000 per individual (currently it's half that).  Also, remove the 1st time home buyer requirement and open the credit to all primary residence purchases.

As you can see, there are several options on the table, and this does not cover all of them.  Per Inman, Bloomberg, The Washington Post, and Jay Thompson (probably the best of the bunch - the Phoenix Real Estate Guy), a deal was reached among Senate Democrats last night to re-write the rider to the Unemployment Bill with the #3 option above. 

It seems likely the credit will be extended, but keep in mind this was only an agreement among Senate DEMOCRATS - it must still pass the Senate itself, the House, and the President.  More to come as I find out.

KW "This Month In Real Estate" -  With Great Tips On Purchasing Foreclosure Properties

Here's the October edition of "This Month in Real Estate" with Jay Papasan.  In addition to some national-level statistics and conditions, there's a short segment on purchasing foreclosure properties - with great tips on what to look out for:

I hope you enjoyed today's post - I'll be back to let you know how the whole tax credit deal works out once it's finalized.

HUD Secretary Shaun Donovan - in a much anticipated move, announced on 29 May the approval of the use of the 1st Time Home-buyer $8,000 tax credit as down-payment (or closing costs, etc) for FHA buyers.

Mortgagee letter 2009-15's Qualification guidelines are posted on HUD's website. 

I have mixed feelings about this - on the one hand it can be a great vessel for my VA buyer-clients to use another option and move in with more equity, but on the other it amounts to another down-payment assistance program - which have been proven to result in a higher percentage of foreclosures.

Unlike previous programs like Nehemiah - the use of the tax credit is not intended to be a vehicle for lower-income families to purchase homes.  Instead, it's purpose is primarily to free up frozen FHA credit lines by helping first-time home-buyers come up with the money for their 3.5% down-payment.

My mixed feelings come in whenever I see the government figuring out ways to give us a little money in order to borrow a lot of money.  The guidlines seem stricter, though, so I'm hoping the predators don't come back out of their holes to feast on the uneducated and uninformed. 

I would like to know your thoughts about this - I have a feeling the discussions on some of the great real estate forums will center on this issue for quite some time to come.

On 11 May, Governor Sonny Perdue signed in to law House Bill 261 - authorizing something that went beyond the Federal version.  The Georgia credit does not require one to be a first-time homebuyer, and there are no applicable income limits.  

There are some restrictions - most notably the fact that buyers must purchase single family residences, but it is open to any resident who purchases a home between June 1st and November 30th of 2009.

Another important restriction is that the home purchased MUST have been available for sale on or prior to May 11th of 2009.  A primary intent of the bill is to reduce housing stocks, so I understand the motivation if not the execution.  There are some exceptions from what I understand - you can purchase a home that may not have been on the market providing it was in pre-foreclosure on the May 11th date.

Good news for Georgia buyers!  Another benefit?  This credit has no bearing on receipt of the Federal First Time Homebuyer Credit - so if you meet criteria for both, you get both.