By Robert Pore
Grand Island Independent
It may be the right time to buy a house.
The government is providing a number of tax incentives that could help not only first-time home buyers but also those existing homeowners who would like to upgrade their residence.
Under the guidelines of the 2009-10 Home Buyer Federal Tax Credit program, first-time home buyers who have not owned a principal residence during the three years prior to the purchase may be eligible for a tax credit of 10 percent of the home’s purchase price, up to a maximum of $8,000.
Existing homeowners — who have been residing in their principal residence for five consecutive years out of the last eight and are purchasing a home to be their principal residence — or a repeat buyer may be eligible for a tax credit of 10 percent of the home’s purchase price, up to $6,500.
The eligibility period is for homes purchased after Nov. 6, 2009, and before May 1, 2010. However, home purchases subject to a binding sales contract signed by April 30 will qualify for the tax credit provided that closing occurs prior to July 1.
For more information about the Home Buyer Federal Tax Credit, visit www.federalhousingtaxcredit.com.
Pat Schmit of Woods Bros Realty, president of the Grand Island Board of Realtors, said the federal Home Buyers Tax Credit program has generated a lot of interest from potential home buyers.
“Many, many buyers have benefitted from this credit,” Schmit said, “mostly young people who are first-time home buyers.”
But interest has also been strong for the tax credit available for existing homeowners looking to upgrade, Schmit said.
Homes that qualify are all less than $800,000, including newly constructed homes or resale, and single-family detached, town homes or condominiums, provided that the home will be used as the buyer’s principal residence. Vacation home and rental property purchases do no qualify.
There are income limits to the program.
For example, home buyers who file as single or head of household can claim the full credit if their modified adjusted gross income is less than $125,000. For married couples filing a joint return, the combined income is $225,000. Single or head-of-household taxpayers who earn between $125,000 and $145,000, and married couples who earn between $225,000 and $245,000, are eligible to receive a partial credit.
The credit is not available for single taxpayers whose modified adjusted grossed income is greater than $145,000 or married couples whose modified adjusted grossed income exceeds $245,000.
The tax credit is refundable, which means that, if the amount of income taxes you owe is less than the credit amount you qualify for, the government will send you a check for the difference. Under the program, the tax credit does not have to be repaid unless the homeowner sells or stops using the home as his or her principal residence within three years after the purchase.
The Home Buyer Federal Tax Credit was started to stimulate the housing market following the recent economic recession that slowed home buying and home construction.
While the housing market suffered throughout the country as a result of the economic downturn, the effects were not as great in Central Nebraska, Schmit said.
“Our housing market fell to some extent, but this (tax credit) has definitely improved it and has sparked an interest in buying again,” she said. “We have had a very strong housing market, and we saw a small decline, nothing like other communities.”
Schmit described Grand Island’s housing market as “stable,” but the number of listings are down, “and that is hurting us.”
“Normally, this time of year, we have about 350 listings, and now we are down to about 280,” she said. “There are just not as many houses to choose from, and it’s taking buyers longer to find a house.”
The number of listings may be down because people are not ready to sell their homes because of the economic climate nationwide, Schmit said.
“They feel that maybe it is just not the right time to move up,” she said.
Also, with lower housing prices, people who purchased homes several years ago may be reluctant to place them on the market for less than what they paid.
Once those home prices become more competitive as the number of buyers increases, owners may be more willing to put those homes on the market.
Schmit said there is a wide range of homes on the market — from older homes to new construction. She said the current price range averages between $100,000 to $150,000.
“It’s a very dynamic market, and we have people of all ages looking,” she said. “We have had calls from people moving back from Oregon and California.”
Another incentive is that interest rates are low. Schmit said there’s also strong demand for rental properties in Grand Island, which may contribute to tighter lending practices for those wanting to buy a new home.
For the rest of the article, visit the Grand Island Independent web site.