There are just 81 days remaining for Homeowners with the desire to take advantage of a new home tax credit worth up to $6,500. The deadline is creeping up on us. You have until April 30, 2010, to get a deal under way. Is it time for you to get moving?
Before you decide, see if you can answer "yes" to these four questions.
1. Are you already in the market? - Let's assume you qualify for the tax break. That means you've been in your current home for at least five of the last eight years consecutively, you're purchasing a new principal residence -- not a vacation home -- that costs no more than $800,000, and you meet the income threshold -- $125,000 for individuals and $225,000 for joint filers -- to get the full $6,500 credit.
Keep in mind that the tax credit is yours unless you sell or stop using the home as your principal residence within three years after the date of purchase. Qualified home-buyers have the option to take the tax credit on their 2009 or 2010 income tax returns, so be sure to consult your tax authority so you get the most bang for your buck.
Here are a few things to consider as you contemplate your decision... If you were already planning to move, the tax credit can help you recoup some of those repairs you've been putting off to get your home ready for sale. Another consideration is the desire or need to up size or downsize, to move closer to family or to make room for an aging parent.
2. Do local market conditions look favorable? - There are three reasons why now is the right time to upgrade your home. First, interest rates are as low as they've ever been in our lifetime. Second, prices are very competitive, and you can buy a lot more home today than you could three years ago. And thirdly, the first-time buyer tax credit. Over the course of the last 12 months, first-time buyers are eating up the majority of good inventory due to its affordability. This is great news for sellers!!!
3. Can you sell your house in time? - You'll have to in contract on the purchase of the new home by April 30, 2010 and closed by June 30, 2010. If you are active in the US Military, this deadline has been extended for an additional 12 months. Certainly nobody wishes to be carrying two mortgages, so your best bet is to get your home on the market a.s.a.p. to take advantage of this great tax incentive before time runs out. Be sure you do your research before taking the plunge. A quick call to a reputable Realtor will provide valuable insight on your market area. If you need a referral, I am happy to point you in the right direction.
4. Can you close the expense gap? - While the tax credit can help offset expenses like home repairs and the seller's commission, $6,500 will only stretch so far. If you are upgrading, keep mindful of your equity position on your existing home and available cash to cover the new down payment. If you're counting on the tax credit to cushion the higher mortgage cost of your new home, that's a red flag. The last thing you want to do is over extend yourself just to take advantage of the tax credit. Planning is essential.
While the tax credit can be a financial boost to many homeowners who are ready to buy again, the purchase of a home should never be a tax-based decision. The $6,500 is a treat; a cherry on a sundae. The sundae is the historically low home prices, substantially low interest rates and sellers willing to bargain.
Remember, the clock is ticking and as of this post, only 81 days left. If you are considering this, DO IT NOW..... We are here to help facilitate the transactions and help successfully market your property.
Until next time..... make it great Wisconsin - big smile.....