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EXTENDED first time home buyer tax credit, and NEW tax credit for repeat buyer

By Pacita Dimacali

Real Estate Agent with Alain Pinel BRE 01367196

October 28, 2009 04:02 PM

My first time home buyers are whooping it up. Why not? The popular first time home buyer tax credit that was set to expire end of November 2009 may be extended through end of June 2010.

I have buyers who have been looking for months but are getting outbid so many times, or are running out of time waiting for the short sale approval/acceptance of their offers.

Even better, it isn't just first time buyers who have reason to celebrate. A new tax credit was introduced to aid repeat buyers. I wonder if this will apply both for buyers who want to move up as well as buyers who want to downsize.

Although the complete details aren't available yet, here are the key provisions.

First time home buyer tax credit

Buyers must be in contract by April 30, 2010
Buyers have 60 days from that day to close escrow to qualify for the tax credit
Tax credit is $8,000 or UP TO 10% of purchase price

Repeat buyers tax credit

Defined as homeowners who have lived in their residence for five years
Tax credit is $6,500

But wait, there's more! The levels for the home buyers were increased! Good news, indeed, for at least one of my buyers who was making more money than the previous qualifying level. So now, there's a chance that he will qualify for the tax credit after all!

Individuals earning up to $125,000, up from $75,000 for individuals under the current law
Couples earning up to $250,000, up from $150,000 under the current law'

More tax credits.

Additionally, there are other tax credits that the homeowners can explore. Although folks may argue that these tax credits are costing us....think of another way to look at these credits. They will encourage folks to BUY! And when they buy more goods and services, they (and we) do our share to stimulate the economy.

federal tax credits for energy efficiency. Time to replace that old furnace? Want to get double pane windows? Need to get better insulation? Want to replace that leaky roof? Old water heater on its last legs? There's an energy-efficient solution to meet your requirements.
ENERGY (Energy Efficiency & Renewable Energy) STAR appliances that may apply to central air conditions, washers, dishwashers, freezers, refrigerators, and more. More on this as things develop.

Have fun shopping!

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Jon Zolsky, Daytona Beach, FL

Daytona Condo Realty, 386-405-4408 - Daytona Beach, FL

Buy Daytona condos for heavenly good prices

Pacita,

Even after reading your disclaimer at the end, I still tink that this is generally a bad idea. But, of course, if it is implemened, I am not to blame people taking advantage of something legit

Oct 28, 2009 04:09 PM

Pacita Dimacali

Alain Pinel - Oakland, CA

Alameda/Contra Costa Counties CA

Jon

People will always have differing opinions. But my buyers are ecstatic. They were getting so discouraged, and would have decided to keep on renting.

Now, if they buy a house, there's a chance they'll buy more goods and services.....and that's what I hope will happen.

This just gave my clients a much-needed boost and impetus.

Oct 28, 2009 04:13 PM

Raymond Hill

Seattle, WA

I think that the expansion to the move up buyers makes the most since. There are only so many first time home buyers at any given time. However, there are more people with proven track records in their home that could make the move with a little incentive. I believe it still has to go before the Senate for a vote this week.

Oct 28, 2009 04:17 PM

Pacita Dimacali

Alain Pinel - Oakland, CA

Alameda/Contra Costa Counties CA

Raymond, it's a shot in the arm....having an incentive for repeat buyers may stimulate new activity among folks who either are planning to down size or move up. They say the vote may be up as early as tomorrow.

Oct 28, 2009 04:23 PM

Cathy McAlister

Cathy Ashley McAlister, GRI CDPE - Broker / Sacramento - Sacramento, CA

Sacramento DRE#00648507

Pacita: While I am having reservations about aspects of the current tax credit, I can still see reasons for a variation of this going into next year. A lesser amount with some expansion to additional homeowners (this bill looks like it has it) would assist a larger segment of the market.

Now that it is here, and the market still being too sluggish (I still think we may be for a back to back recession) I think it would chill the market too much to just shut it off on November 30th.

A reduced benefit that fades away over next year would work very well. It truly should not continue indefinately. And, I agree with you about assisting the current buyers who just keep losing out. Many of them would buy without or without the credit and just can't win a home. I have ready, willing and able buyers who will be good homeowners - this extension should help reduce the panic and pressure of 11-30.

Oct 28, 2009 06:49 PM

Pacita Dimacali

Alain Pinel - Oakland, CA

Alameda/Contra Costa Counties CA

Cathy ---

I'm getting a split personality on this issue. For my buyers, it's hooray. As a tax payer, it's...unnnnhhh.

But since the National Association of Realtors supports this extension, I am placing my faith and trust on them to push for the things that will benefit us.

I am excited for my repeat buyers.....hopefully, this new tax credit will be applicable for those who want to down size,, too.

Oct 28, 2009 07:12 PM

Richard Weisser

Richard Weisser Realty - Newnan, GA

Richard Weisser Retired Real Estate Professional

Pacita...

This is the best summary of the pending legislation that I have read.

Featured in the Group "Whacked!!!

Oct 28, 2009 11:53 PM

Kathleen Daniels, Probate & Trust Specialist

KD Realty - 408.972.1822 - San Jose, CA

Probate Real Estate Services

Pacita: I caught this news last night ... my buyers are mixed ... some were highly motivated by the credit and others don't think much about it. I do see a correlation in perspectives ... those who are extremely tight on financing and do not make a typical Silicon Valley six figure income think the tax credit is a huge deal ... others who are being helped with $100,000-$200,000 gifts from parents don't give the tax credit much thought!

Oct 29, 2009 01:59 AM

John Pusa

Glendale, CA

Hi Pacita,

Thank you for sharing an informative and helpful article.

John Pusa

Oct 29, 2009 02:18 AM

Pacita Dimacali

Alain Pinel - Oakland, CA

Alameda/Contra Costa Counties CA

Richard --- the article from Bloomberg gets updated, so that's a good link to bookmark.

http://www.bloomberg.com/apps/news?pid=20601087&sid=ayS36Cg5hu5w

Kathleen --- my REPEAT buyers are just as excited. Where I can get buyers who get $100-200K gifts from their parents? Definitely won't find them among my first time buyers looking to buy a home UNDER $250K

John --- mixed reactions or not, our first time buyers and repeat buyers are more inclined to make a move with this extension

Oct 29, 2009 07:01 AM

Lora "Leah" Stern 914-772-4528

Coldwell Banker, 170 N Main Street, New City NY 10956 - New City, NY

Real Estate Salesperson

Pacita, thanks for so clearly laying out all the terms of the suggested tax credit extension. Waiting to hear if it passes.

Oct 29, 2009 11:58 AM

Pacita Dimacali

Alain Pinel - Oakland, CA

Alameda/Contra Costa Counties CA

Leah --- I was hoping that REALTOR.org would have an update later than Bloomberg's. For the time being, we're all watching this very closely. My first time buyers are breathing a sigh of relief, and at the same time a deep sigh of frustration at having to compete over and over again. But they're not giving up!

Oct 29, 2009 06:40 PM

Sally K. & David L. Hanson

EXP Realty 414-525-0563 - Brookfield, WI

WI Real Estate Agents - Luxury - Divorce

It would seem here that first timers are not in much of a hurry...and I applaud the extension....at the same time...it prolongs the people who have a decision not to decide.

Nov 01, 2009 01:23 PM

Pacita Dimacali

Alain Pinel - Oakland, CA

Alameda/Contra Costa Counties CA

Sally and David

Many buyers haven't stopped looking and are grateful for the extension since they couldn't get their offers accepted in multiple-offer situations where the cash buyers win out. I had buyers who started looking in February. Many offers later --- on short sales, REOs, and regular sales --- they finally got their offer accepted in October....due to delays arising from one-at-a-time demands by the underwriters, they didn't close escrow untlil 45 days later although theirs was a conventional loan with 20% down.

That's nealy 10 months of active searching and writing offers. I have other buyers like them....so they are not prolonging their decision at all....

I have other buyers in the same boat.

Dec 08, 2009 11:34 AM