Buying A Home In Cleveland : Home Buyer Tax Credit Extension Soon To Be Approved

By
Real Estate Agent with Howard Hanna Real Estate Services

Buying A Home In Cleveland : Home Buyer Tax Credit Extension Soon To Be Approved

first time buyer tax credit

In a follow-up to a post we wrote last week, the senate has recently voted, 98-0, to pass the legislation allowing the home buyer tax credit to be extended. The measure is now expected to pass in the House and will soon be brought to the President, where his signature will be merely a formality.

With the current home buyer tax credit about to expire on November 30, 2009, this new measure will continue benefits to first-time buyers and also add a provision to move-up buyers as well.

Here are highlights of the new legislation:

*     Extend the $8000 home buyers tax credit until April 30, 2010

*     Provide a $6500 tax credit to qualified move-up buyers, with a purchase price on a new home not to exceed $800,000

*     Raise qualifying income levels to $125,000 for individual income tax filers to and $225,000 for joint filers

SUMMARY

Overall, the current home buyer tax credit is estimated to have created an additional 200,000 new sales in 2009, although some sources, such as Moodys.com report this figure to be closer to 400,000. Regardless, the tax credit has shown to be effective in helping more first-time buyers buy homes which has been positive for the economy.

Here in Cleveland, the credit has certainly been well received by local area buyers. With continued low interest rates and a large inventory of lower-priced homes, the market should continue to see a rush of buyers through the spring. The winter months, which are typically popular for bargain hunters, should see even more activity thanks in part to the home buyer tax credit extension.

A major part of the extension is the inclusion of current home owners, specifically those who have lived in their home for at least 5 years. Whether or not move-up buyers will be rushing to buy a home over the next few months is yet to be determined. However, those who currently have their homes on the market, or who are on the sidelines waiting for the right time to sell, may be able to greatly benefit from the new legislation. The thought of an extra $6500 may help a current seller feel more comfortable lowering the price on their existing home so they can now sell it. In addition, getting more move-up buyers involved in buying real estate will eventually lead to more money being spent on things such as furniture, landscaping, home improvements, and possibly even automobiles.

The passing of this legislation is a strong signal from the government that they view the housing sector to be a critical part of the overall recovery. If you are a first-time buyer or move-up buyer, now is a great opportunity to move forward as an extension beyond April 30th is probably unlikely as the economy has shown recent signs of life.

In addition, many experts believe that the current extension will be just long enough to prop up the real estate sector until the rest of the economy enters full recover mode. With 2010 being a major election year, many legistlators will probably be reluctant to extend the credit beyond April 30, 2010. Justifying the costs of this type of legislation is becoming more difficult to do as Americans are becoming tired of much of the spending on Capital Hill.

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About The Authors:

This information is provided compliments of Amy and Dan Schuman, The Schuman Team Keller Williams Realty. The Schumans service both the East and West sides of Cleveland and have worked with numerous professional athletes, business owners, and executives who are relocating to Cleveland. They specialize in the Cleveland Ohio luxury home market and also enjoy working with first-time buyers as well.

If you are looking to buy or sell Cleveland real estate, including the surrounding suburbs, please contact the Schuman Team at 216-346-3235. 

SEE ALL CLEVELAND AREA HOMES FOR SALE BY CLICKING BELOW:

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Buying A Home In Cleveland : Home Buyer Tax Credit Extension Soon To Be Approved is the property of The Schuman Team and may not be duplicated or used without their written consent. ©Nov 2009   

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Rainmaker
225,608
Tim Bradford
Cleveland, OH
NMLS 250013

Dan and Amy, This is one of the best write ups I have seen so far.  I do appreciate the way you brought out the fact that with these moneys hopefully it will be spent on improvements.  I may disagree with giving people money to buy a home, I do support the concept of people putting this money into improvements and other goods that can help the economy.  

With respect to the $6500 that is for moving up buyers the question is "DO THEY HAVE TO SELL THEIR CURRENT HOME?"   I suspect the answer is YES.   I suspect that the IRS rules will say to qualify the person can only own ONE property.   If I am correct, timing of the new purchase will be important because you would not want the purchase to occur before the sale.    JUST MY OPINION and I will try to update this post when I find the proper answer.  

Nov 05, 2009 11:42 AM #1
Rainmaker
301,963
Dan and Amy Schuman
Howard Hanna Real Estate Services - Solon, OH
Luxury Home Specialists

Thank you Tim for your kind remarks. I'm not sure if move-up buyers need to sell or simply buy. Let me know if you get some clarification on the rules.

Nov 06, 2009 04:21 AM #2
Rainmaker
225,608
Tim Bradford
Cleveland, OH
NMLS 250013

Dan and Amy,   That is one of the questions to be answerred.   I suspect the sale needs to be completed first.   Then the purchase.   And they are not permitted to own any other property at closing.   JUST MY BELIEF or .02. 

The other question I have is when does this take effect?    Are the income limits retroactive to the 2009 dates and does the upgrading buyer from June qualify.   I have hoped to get these answers before doing my formal announcement.   However I suspect it will take a few days(weeks) to know the answers.  

Nov 06, 2009 04:31 AM #3
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Rainmaker
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