What is the Fate of the First Time Home Buyer Federal Tax Credit?

By
Real Estate Agent with Mason Real Estate CA BRE 01444168

Currently, one of the most driving forces in the Hemet - San Jacinto Valley Real Estate Market has been first time homebuyers scrambling to take advantage of the $8,000 tax credit  (10% of Purchase Price - Max $8,000) that was created as a stimulus to the economy.

In my opinion, the program is very definitely a success.  Yes the IRS may be out a few dollars; but look at the trickle down economics that is stimulating local economies.  Not only are houses selling quicker than any time during the current housing crises, but new homeowners are spending thousands of dollars fixing these homes so they are habitable with everything from fresh paint, new flooring, revitalizing landscapes and so much more.

It doesn't matter if the new homeowners are the handy do-it-yourselfer or the 10 left thumbs (that would be me) that are better off leaving this type of work to trained professionals. 

Truth is, money is being spent and people are working - either in the field or at Home Depot or Lowe's where the supplies and rehab materials are sold locally. 

CURRENT PROGRAM 

The current $8,000 tax credit has some very specific rules - each knocks out serious segments of the local Hemet - San Jacinto Valley population.  In this article, I am highlighting what I believe to be some of the most restrictive guidelines - there are, of course, other guidelines that must be adhered to...just don't have enough room here to cover them all.  If you need to know more, contact my office for our free booklet on the subject. 

First, the tax credit is strictly for first time buyers - as defined by the IRS which basically means the buyer cannot have had a mortgage interest deduction for the 3 tax years preceding the purchase and credit. 

The second qualifying element that plays havoc in this Southern California real estate market is the income levels of the taxpayer.  The restrictions for a single homebuyer are $75,000 and if married (regardless of the number of children) the income level doubles to $150,000.  Although many people and families in the Hemet - San Jacinto Valley fall into this earnings limit...many more do not.

Of course, the most crippling aspect of the current $8000 tax credit for first time homebuyers is that it is set to expire on November 30th, 2009.  This DOES NOT mean you must write an offer and open an escrow by then.  No, what it means is that you MUST CLOSE ESCROW no later than November 30th, 2009.  Considering that the Average Days in Escrow in July of 2009 for the Hemet - San Jacinto Valley Real Estate market, across the board, was 54 days one can only assume that the rush to enter escrow before the end of September will play havoc on the staffs of escrow offices across the country as they all do everything they can to close as many escrows as they can, as quick as they can.  My advise is a first time home buyer in the Hemet - San Jacinto Valley MUST plan on entering escrow before the end of September - anything after will be a nail biter to the very end.

CHANGES HAVE BEEN PROPOSED

There is one proposal before our legislature that would extend the existing program for three (3) years - pretty much as it is.  When Congress returns from their Labor Day break, they are expected to give this topic a top priority - even before the dreaded health care debates that have dominated the news cycle recently.

A huge change that is in the bill proposes that the first time home buyer criteria be removed and open the credit up to all American citizens. 

There are other bills before both the Congress and the Senate that would modify the current law and give it more teeth so that more Americans can take advantage and do their part in further stimulating the economy. 

HR2801, known as the Home Ownership Moves the Economy (HOME) Act will extend the availability of a tax credit through the next year.  Perhaps the most significant change would be the income levels that would be increased to $95,000 for single homebuyers and $170,000 for couples who file jointly. 

Another bill, S.1230 would extend the tax credit to $15,000.  HR 2606 is very similar to HR 2801.  Then there is another similar bill, HR 2905 that would seek to extend the same credit found in HR 2801, for an extra year - 2011. 

ACT NOW - YOUR CONGRESSMAN IN HOME - STOP IN AND SAY HELLO                       

Now is a great time to make contact with your elected officials.  They are all on a break and most should be home with their constituents.  This is when they want to hear from you to help them form their opinions on the important issues facing our government today.  

Please don't be bashful - your voice does count if used in a positive manner.  One of the most powerful acts any citizen can do is make an appointment at the local office.  Go prepared to discuss what is on your mind and share it.  Not disrespectfully or demanding...but share how different legislations have effected the quality of your life and how the proposed ones will also effect you - either positively or negatively.  It is the faces and human stories that leaders remember.  Yes, they are driven by ‘the polls' - but put a face to the numbers. 

If you don't know whom your congressperson is or how to reach them, check out this link

Blessings to all who read, 

John Occhi, REALTOR®
www.JohnOcchi.Com
Hemet - San Jacinto Valley
951-6564-5550

Servicing THE REO Needs of Asset Managers, Servicers, Banks and Lending Institutions in the Hemet - San Jacinto Valley, Temecula, Murrieta, Winchester, Wildomar, Menifee, Sun Valley, Perris, Moreno Valley, Romoland, Homeland, Nuevo, Banning, Beaumont, Cherry Valley, Yucaipa, Redlands, Mentone, Loma Linda and throughout South West Riverside County and The Pass Areas of The Inland Empire in Southern California.  If you are a buyer, investor, first time home buyer or are just interested in REO real estate, please contact us at the above phone number.

Serving California and Riverside County zip codes of 92501, 92503 , 92551, 92555 , 92562, 92563, 92504, 92505, 92557, 92553, 92506, 92507, 92590 92591, 92508, 92509, 92570, 92571, 92592, 92399 , 92584 , 92596, 92820 , 92571 , 92543, 92544, 92545, 92583, 92582, 92879, 92580 , 92530, 92532, 92881, 92882, 92567, 92518, 92883 , 92549, 92561, 92220, 92223, 92028, 92088

Posted by

Until Next Time, Have a Blessed Day,

John Occhi, ePRO, REALTOR®
DRE Lic No: 01444168


ePro,John Occhi,www.johnocchi.com,realtor      Certified Probate Real Estate Specialist Logo Awarded to John OcchiFive Star Logo,Certification,REO,Five Star Institute     

Excellence in Real Estate,Team Log,John Occhi,www.johnocchi.com,hemet,san jacinto,CA  

This blog and the contents written here is the intellectual property of John Occhi, Temecula - Murrieta, CA REALTOR® in the South West Riverside County region of the Inland Empire of Southern California.  The views and opinions expressed are just that - views and opinions of John Occhi and those who comment.  Please note that I am not an attorney or a tax professional and any time I discuss either topic, I suggest you consult with the proper professional for relevant assistance. 


I am proud to be a full time REALTOR® who is proud to be a contributing member of the ActiveRain community.

 Protected by Copyscape plagiarism checker - duplicate content and unique article detection software.

close

This entry hasn't been re-blogged:

Re-Blogged By Re-Blogged At
Topic:
ActiveRain Community
Location:
California Riverside County San Jacinto
Groups:
1st Time Buyers
CALIFORNIA REAL ESTATE
Everything California
Free Real Estate Tips and Information
Inland Empire Marketing
Tags:
8000 tax credit
hemet
san jacinto
first time homebuyer
congress
real estate
income
escrow
hr 2801

Spam prevention
Show All Comments
Rainer
14,210
Eric Bennett
Capitis Real Estate - Palm Springs, CA

Great blog - full of useful information.

I'm contacting my representatives now - go $15K!!!

Aug 27, 2009 03:35 AM #1
Ambassador
380,749
Karen Hurst
RICOASTALLIVING.COM - Warwick, RI
Rhode Island Waterfront!

John,

This credit has definitely made an impact in Rhode Island where we have been flooded with foreclosures! First time buyers are out in droves and trying to find the right house and get it closed before December 1st is overwhelmingly tough.  I hope they do extend it to everyone and raise the income limits because it would definitely have an impact on which homes are selling. Anything under 200K is selling quickly, but anything over that is stagnating.

From what I have heard, the next group of foreclosures will be in the $200 and over range. Raising these guidelines will attract different buyers and hopefully domino.

Aug 27, 2009 03:48 AM #2
Rainer
157,179
Tom Boos
Sine & Monaghan Realtors, Real Living - Grosse Pointe Farms, MI
Providing the very best of service to Sellers and

I don't think Congress has the stomach for additional credit programs.  It may be time for the "market" to make it's corrections without further Government interference.

Aug 29, 2009 01:09 AM #3
Show All Comments

What's the reason you're reporting this blog entry?

Are you sure you want to report this blog entry as spam?