The $6,500 home buyer tax credit applies only to people who have previously owned their homes for at least 5 years and are planning to purchase a new home by or before April 30, 2010. For those who previously owned a home and purchased another one this year, the tax credit will not apply. It won’t start until the bill is signed, and it is not retroactive. So if you closed on that new home today…sorry, you’re not getting anything from the government except the standard IRS refund based on your mortgage payments and property taxes.
Most people are likely to claim the $8,000 or $6,500 dollar tax credit in their 2009 tax returns. But, an immediate refund is available to those who amend their 2008 tax returns. This time around, in order to avoid fraudulent refunds, the IRS will require those claiming the tax credit to attach proof of their new home purchase. Also, all purchasers must prove that they are over 18 years of age.
The new homebuyers tax credit also expands the income limits for buyers. The adjusted gross income limit for single taxpayers to receive full benefits has risen to $125,000, and to $225,000 for joint income tax payers.
The estimated cost of the extended tax credit bill is likely to be around $11 billion. However, according to the National Association of Realtors, the tax credit has already added more than $22 billion to the nation’s economy and will result in more than 2 million home sales.
While the National Association of Realtors claims that the tax credit stimulates jobs and acts as a stabilizer for the housing market, others argue that the tax credit is merely an artificial inflator of home prices. They cite the cash for clunkers program that pushed cars out the door during its month-long tenure, then resulted in empty showrooms after it ended.
The Christian Science Monitor suggests that the $6,500 credit may help to move houses in the higher price ranges, because the tax credit now applies to residences priced up $800,000. The majority of homes sold during the initial tax credit program were priced at under $300,000. Only 20% were priced between $300,000 and $400,000
Since its inception in 2008, close to a million and half people have filed for the home buyer tax credit. However, despite whatever economic stimulation it may have caused, and regardless of what its costs in lost tax revenues may have been, legislators have signaled that this is likely to be the last time the tax credit will be extended.
Written by Marc Jablon, Realty Associates
marcjablon@yahoo.com / 561 / 213 – 6139
www.MarcJablonHomes.com
Posted November 6th, 2009 by Armen Hareyan
