$8000 Tax Credit is a Hit With First Time Home Buyers!
Preliminary figures from the Internal Revenue Service suggest that 1.4 million home buyers are taking advantage of the $8000 tax credit that the government is giving to people to purchase their first home, and claiming it on their 2008 tax return. It looks like the program will meet and most likely surpass the goal set by lawmakers of providing 2 million home buyers with the credit. The tax credit expires on November 30, 2009.
A first time buyer buyer is defined by the IRS as someone who has not owned a primary home in the last 3 years. Someone who owns a vacation home or income property may still qualify for the tax credit.
IRS Form 5405 will allow qualifying buyers to claim the credit on either their 2008 (through an amendment) or 2009 tax returns, so many people purchasing homes this year won't be claiming the credit until next year. The credit is equal to 10 percent of the purchase price of the home, and is capped at $8,000 for homes purchased this year.
On the North Shore of Massachusetts we are seeing a incredible increase in activity from home buyers, with properties under agreement up 32% over last month. The driving force is the bottoming of home prices combined with mortgage interest rates in the 4's and the fact that the $8000 tax incentive will be gone before you know it.
Smart home sellers are placing their properties on the market now, knowing that after November 30th most home buyers will have already made their purchase and will be living in their new home with their $8000 tax credit check in hand. If you have a home on the market after November 30, 2009 - Good Luck! It will be a tough sell unless you have a home that is not something that a first time home buyer would purchase. That would mean most properties priced above $400,000. The most active properties are those that are priced below $325,000.
Jim Armstrong
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