Cash Incentive to Stop Renting!

The economic stimulus package that was signed into law here in Denver, has been watered down, and filled with pork projects from our illustrious representatives.  However, the first time home buyer tax credit piece of the legislation, should inject some movement for those home buyer’s currently wondering if this is the time for them to buy.

A first time buyer is defined as anyone not having an ownership interest in real property for the past three years.  A tax credit in the amount of $8000 is available to any first time buyer who closes on a home before December 1, 2009.

Here are the details, as reported by CNN.

There’s a nice windfall for some homebuyers in the economic stimulus bill awaiting President Obama’s signature on Tuesday. First-time buyers can claim a credit worth $8,000 – or 10% of the home’s value, whichever is less – on their 2008 or 2009 taxes. A big plus is that the credit is refundable, meaning tax filers see a refund of the full $8,000 even if their total tax bill – the amount of witholding they paid during the year plus anything extra they had to pony up when they filed their returns – was less than that amount.

If his total tax liability came to $6,000, but he had $7,000 withheld from his payroll, he would normally receive a $1,000 refund. With this credit, his refund would total $8,000.

To qualify for the credit, the purchase must be made between Jan. 1, 2009 and Nov. 30, 2009. Buyers may not have owned a home for the past three years to qualify as “first time” buyer. They must also live in the house for at least three years, or they will be obligated to pay back the credit.

Additionally, there are income restrictions: To qualify, buyers must make less than $75,000 for singles or $150,000 for couples. (Higher-income buyers may receive a partial credit.)

Applying for the credit will be easy – or at least as easy as doing your income taxes. Just claim it on your return. No other forms or papers have to be filed. Taxpayers who have already completed their returns can file amended returns for 2008 to claim the credit.

In my opinion, this will be newsworthy for the Denver Metro Area, as it relates to housing sales.  The increase in property sales under $250,000 by these first time buyers, will create the opportunity for those looking to move up and into their second or third home.  There is a pent up demand from homeowner’s who have been waiting until conditions improved to sell their home, and move up into something larger.  This influx of new buyer’s should allow the move up process to begin in earnest.