If you have been contemplating purchasing or selling a home, now is THE BEST TIME EVER to do so. Why? Because there are only 6 weeks left before the deadline of April 30 to qualify for the tax credits. Add to that the fact that interest rates are at historical lows, NIFA money is available, and home prices are very attractive. In short, you are getting “more bang for your buck.”
If you are a first time buyer, you may qualify for up to $8,000; repeat buyers may qualify for up to $6,500. This is no small thing. $8,000 represents 3 months wages for a person making $32,000 a year. Imagine receiving a 3-month bonus for buying a house! For many people, this is even better than negotiating the house for $8,000 less. Today’s consumer can qualify for credit, but tends to be “cash poor.” Buying now enables you to actually get the cash and it can be used at your discretion. You may choose to start a home maintenance fund, purchase furniture to put in your new home, buy stainless steel appliances, build a garage, add a deck, or even go to Hawaii. No one is restricting how you use the money – there are no strings attached. (You do need to live in the home for at least three years to avoid repayment.)
People ask “Do I really get the money, or does it just reduce my taxes?” The answer to this depends on how much you owe and how you pay your income tax. The majority of people have their income tax automatically deducted from their paychecks. Many people get a refund. If you purchased a home and qualified for the $8,000 tax credit, and had a $1,000 refund coming, this year you would get your refund plus $8,000 for a total of $9,000! If you had to pay in $1,000, then you would receive $7,000 because the money credits your tax burden first, and then pays you the balance.
Even if you are a seller, this is a HUGE benefit to you. Never before has there been such a sense of urgency on the consumer to locate a home and get it under contract. Buyers want to buy now, so they can receive their tax credit. Last year, it was only a benefit if your home was in the first time buyer’s price range; this year you can benefit from repeat buyers as well. Your market just expanded, making it a great time to sell your home. If you’re thinking about selling, it’s prudent to take advantage of these potential buyers. These buyers are more willing to purchase homes that are less than ideal, because they know they are getting the tax credit, which will enable them to do the improvements they may not otherwise be able to afford. It’s a WIN-WIN situation.
To qualify for the tax credit, you need to have a “signed & accepted” contract by April 30, 2010, and then close on the property and be occupying it no later than June 30. Other qualifications apply – ask your Realtor for details, but take advantage of this once-in-a-lifetime-opportunity!