By Molly Parker
mparker@scbiznews.com
Published Nov. 6, 2009
Charleston-area real estate agents say Congress’s decision to extend and expand the first time home buyer tax credit could help prop up the housing market through the typically slower winter months.
“All signs indicate it will help,” said Rob Woodul, director of growth and development with Carolina One. “I’m absolutely optimistic.”
The $8,000 tax credit for first time home buyers was set to expire Nov. 30. President Barack Obama signed the new measure into law today.
This most-recent tax credit legislation represents a substantial expansion of the original measure. It increases the income threshold for a first time home buyer to qualify for the $8,000 tax credit. For a single person, that limit was increased from $75,000 to $125,000. For married couples, the income threshold increased from $150,000 to $225,000.
In step with the previous measure, the $8,000 tax credit will apply to individuals who have not owned a primary residence in at least three years. A significant eligibility provided by the new bill extends a $6,500 tax credit to individuals who have lived in their primary residence for five out of eight consecutive years.
Real estate agents said the original tax credit helped spur home sales in the $300,000 and under price range. The CMPS Institute, an organization that certifies mortgage bankers and brokers, said in a release that the extended pool of qualified home buyers could spike home sales in areas where the cost of living is higher.
The tax credit applies to homes purchased for less than $800,000 before May 1, 2010.
“The new version of the tax credit has the potential to stimulate the housing market even more than the old version due to the fact that more people will qualify under the new rules,” said CMPS Institute Chairman Gibran Nicholas.
Ross Hamilton, a Realtor with Re/Max Pro Realty based out of the Summerville area, said that more than a third of his clients this year were first time home buyers. He expects the tax credit extension to continue to encourage that clientele base toward home ownership. Further, Hamilton said, he is hopeful that the $6,500 credit for current home owners will move buyers off the fence that have been looking to upgrade.
“I’m ecstatic,” Hamilton said. “I think it’s great.”
Willy Iselin, a Realtor and owner of W.M. Iselin Real Estate Co., said he supports “anything that helps” grow the local market. A tax credit that boosts the private market, Iselin said, is better than “the government just pouring money out there.”
Facts on the tax credit extension:
| FIRST-TIME HOMEBUYERS | An $8,000 tax credit is available to first-time homebuyers. Purchaser (and purchaser’s spouse) may not have owned a principal residence in 3 years prior to purchase to meet first-time homebuyer definition. |
| EXISTING HOMEOWNERS | A $6,500 credit is available to homebuyers who have owned and lived in a home for 5 consecutive years of the last 8 years. |
| ELIGIBLE PROPERTY | Any single family residence (including condos, co-ops and townhouses) that will be used as the principal residence. |
| REFUNDABLE | Yes. Reduces (or, can eliminate) income tax liability for the year of the purchase. Any unused amount of tax credit will be refunded to the homebuyer. |
| INCOME LIMIT | Yes. Full amount of credit available for individuals with adjusted gross income of no more than $125,000 or joint gross income of no more than $225,000. The credit is phased out to lower amounts for individuals and joint filers with higher gross incomes. |
| PURCHASE PRICE LIMITATION | The credit is available only for the purchase of principal residences with a purchase price of $800,000 or less. |
| RECAPTURE | None, unless the home is sold within three years of the purchase. If the home is sold within three years original purchase, the entire amount of credit is recaptured upon sale. Recapture provision is waived for military personnel relocating due to orders. |
| MILITARY PERSONNEL | Credit extended for one year after expiration date for any military personnel that is serving outside United States for at least 90 days in either 2009 or 2010. |
| TERMINATION | Must have a ratified contract on or before April 30, 2010 and close within 60 days of April 30, 2010. |
| ANTI-FRAUD MEASURE | Purchaser must attach documentation of sale to tax return. |
| EFFECTIVE DATE | December 1, 2009 |
Source: Charleston Trident Association of Realtors
Reach Molly Parker at 843-849-3144.
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