On Nov. 6, the $8,000 tax credit for first-time homebuyers was extended beyond the Nov. 30, 2009 deadline. This tax credit provides up to $8,000 in tax credits for individuals purchasing their first home, as well as for those who have not owned a home for three years.
The tax credit was also expanded to provide eligible home buyers who have lived in their current home consecutively for five of the previous eight years with up to $6,500 in tax credits.
Qualified, prospective homebuyers looking to capitalize on either tax incentive will need to have a signed purchase agreement by April 30, 2010, and will need to close on their home by June 30, 2010. For more information about the tax credit, click here.
Key points surrounding the tax credits:
- The $8,000 tax credit has helped move a lot of the foreclosure inventory. In fact, there are roughly only two to three months of inventory in properties priced $120,000 and below, which is a price point in demand among first time homebuyers.
- The expansion will help the next segment of the market – the move-up buyer, who may be more likely to negotiate on the sale of their home with this incentive.
- We expect the foreclosure inventory next year to include more properties in the move-up price range, so this incentive will likely help move that inventory as well.
While concerns about the tax credit creating an artificial market recovery exist, it’s important to acknowledge that the tax credit has provided a tangible opportunity for people who may not have otherwise been able to buy a home. And, additional mortgage regulations and consumer protections have been established to help move us toward long-term market recovery.
