Editorial
Front Page - Monday, December 14, 2009
ARA president says more information needed about home buyer tax credit
Ethan C. Nobles
For the past couple of years, Realtors in Arkansas have said tax credits for first-time homebuyers have attracted buyers to the housing market, but that a credit for existing home owners would be even better.
The most recent first-time home buyer tax credit was set to expire and offered up to $8,000 to people closing on homes by Nov. 30. At the first of November, that credit was extended to people who purchase homes prior to April 30 and close on them within 60 days.
The credit was also expanded so that existing home owners can claim up to $6,500 if they purchase a primary residence between Nov. 7 and April 30. Under that extended and expanded credit, individuals with incomes up to $125,000 and couples with incomes up to $225,000 are eligible for the credit provided they purchase homes to be used as primary residences.
For individuals, the amount of the credit decreases for individuals making between $125,000 and $145,000 and four couples making between $225,000 and $245,000 per year.
The definitions of what first-time buyers and existing owners can get a bit convoluted. According to the IRS, a first-time buyer is anyone who has not owned a primary residence for the past three years, whereas an existing homeowner is someone who has owned a primary residence for five consecutive years out of the past eight.
Arkansas Realtors Association President and Cabot Realtor Bob Walker said the credit should help boost sales through the first four months of 2010 and that’s particularly true when it comes to the new incentive for people who already own homes.
“I think it’s going to be a good thing,” Walker said. “I think it needs to be talked about more and explained more.”
He said the credit for existing homeowners is so new that a lot of information about the details of it haven’t gotten out to enough potential buyers.
For example, IRS Spokesman David Stell confirmed around the middle of November that sellers don’t have to give up their old homes when they buy another one to qualify for the credit – they just have to use the new home as a primary residence and are free to keep the old one as a second home, rent house, etc.
Walker pointed out it’s essential for people to get the facts about the new credit in a hurry – April 30 isn’t far away so there’s not a whole lot of time to take advantage of the credit.
The impact of the first-time home buyer tax credit this year has been obvious. In September, for example, sales throughout Arkansas were up 9.85 percent – only the second positive housing market report released by the ARA in three years. Walker said a lot of people lined up to buy houses in September and October in hopes of closing on them before the Nov. 30 deadline.
Now that the deadline has been moved and the credit has been expanded to include people who already own homes, Walker said he hopes the new credit will produce similar results this year and through the first four months of 2010.
Share
|