As part of the Economic stimulus bill, home buyers can now enjoy a tax credit worth $8,000 or 10% of the home's value, whichever is less. This is definitely an improvement from the current $7,500 tax "credit" which was passed in July 2008 which was really more like a low-interest loan than an actual credit.
So, how can homebuyers qualify for the credit?
- The purchase must be made between January 1, 2009 and November 30, 2009.
- Home buyers cannot have owned a home for the past three years.
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They must also live in the new house for at least three years. If not, the credit will be recaptured on sale.
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Buyers must make less than $75,000 for singles or $150,000 for couples.
Read more here.
I seriously doubt that this will make an impact in sales. But it will cost the government a whole lot of money, making it a poor decision from the government.
Maybe wasting money like this is necessary for people everywhere to get over the fact that house prices are still unsustainable.
If the government wants a plan like this to work, they need to forgo the strings attached to this provision. Instead of making this available to “first-time” home buyers, the tax credit should be given to any and ALL who wish to purchase a home within the next six months. Those that take advantage of the credit should be required to live in the home for a minimum of two years.
“Buyers must make less than $75,000 for singles or $150,000 for couples.”
In higher-cost areas, that provision eliminates most people who could actually qualify for a loan for a decent house.
The housing industry leads all others in jump starting the economy, so let’s hope this gets buyers off the fence and writing up offers. It’s usually the first-time home buyer who is most paralyzed anyway to make a move, so providing the credit only to them probably is not the most effective use of tax payer dollars.