The National Association of Home Builders (NAHB) has established a web site with some frequently asked questions about the Home Buyer Tax Credits. The site has FAQ's for both first time buyers and repeat home buyers. I thought it was a useful site and found the general information extremely interesting. Two items in particular caught my attention.
The first item said that "Repeat buyers do not have to purchase a home that is more expensive than their previous home to qualify for the credit."
Wow! Seems to me this would be great news for those homeowners who are thinking about downsizing, or relocating to a less expensive part of their region or of the country.
The second attention getter was the statement: ‘Any home that will used as a principal residence will qualify for the credit....' provided that the purchase price is less than $800,000. The item went on to say: ‘The definition of principal residence is identical to the one used to determine whether you may qualify for the $250,000 / $500,000 capital gain tax exclusion for principal residences."
Another Wow! Seems to me that this means - and I have been told - that a current home owner would not have to sell their current residence in order to take advantage of the tax credit. For some it would make sense to consider making it into a rental property, start a real estate investment plan and move into their new principal residence!
Of course there is much to consider: Tax implications for current homeowners, qualifying for the credit in the first place, credit scores, personal goals and life stages to name a few. I am not a tax expert, financial planner or mortgage expert. Each person needs to consult the appropriate expert for insight into their particular situation.
I found myself getting excited at the doors the new, current home owner credit opens. For those qualifying for the full $6500 tax credit, and who do plan to sell their current home, the credit might help soothe the feelings that lower property values have created. For buyers who bought their first homes six and seven years ago, this may be their chance to move up a little sooner than they had thought possible. And for some, those ‘starter homes', depending on variables your realtor can discuss with you, could make great rentals.
These are great options for right now! The window is short. Now through April 30 to be in a solid and binding contract is NOT a long time when you think about it all that goes into getting to that solid place.
Talk to your trusted advisors soon and take advantage of the newly opened doors!
Clip art from Public Domain Clip Art, and used with permission.
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