What does extending the tax credit mean for Charlottesville Area Real Estate?
November 6th, 2009 categories: Financing, First Time Buyers, For Buyers, For Sellers, News, STR Market Info Blitz
This post is part of the Strong Team REALTORS Market Info Blitz. We’re heating up the Winter market by giving you three-months worth of the information you need, November through January. Check out the latest posts in the blitz, here.
Use the homebuyer tax credit to help buy a Charlottesville Area home
Both houses of Congress have voted to extend the first-time homebuyer tax credit, with changes to the bill that include benefits for existing homeowners, as well. You can read more about the bill from Bloomberg.
Expanding and extending the tax credit was part of a bill that included numerous provisions for stimulating the economy. Passage of the bill had long been expected, but the current focus on health care delayed the vote a little longer. As the Nov. 30 deadline loomed, Congress worked to get the bill passed so that it could be signed into law by the President.
What are the new tax credit provisions?
Here are some details about the extension and the new provisions, according to the article:
The legislation approved today will allow the credit for couples earning up to $225,000 a year and individuals earning up to $125,000. That’s up from the current $75,000 limit for individuals and $150,000 for couples.
Current Homeowners
It also will allow homebuyers who have owned their prior residence for at least five years to receive a $6,500 credit. Those who sell their new home or no longer use it as their main residence within three years would have to repay the credit. Homes worth more than $800,000 wouldn’t be eligible.
The big changes to the existing credit were the extension to April 30th, the change in income eligibility limits, and the new credit for existing homeowners.
What does this mean for the Charlottesville Area real estate market?
According to the Treasury Department, 1.4 million Americans have applied for the tax credit, for a cost of about $10 billion to taxpayers. Real estate industry titans and elected officials have been touting the benefits of the tax credit so far. Here is a quote from the Bloomberg article:
“The homebuyers’ credit has helped pave the way for stabilization in the housing market and contributed to three consecutive months of rising home prices,” said Representative Jim McDermott, a Washington Democrat. “Its extension will continue to make homeownership more affordable and bring confidence to a housing market and economy that remain fragile.”
The impact on the Charlottesville area real estate market is much harder to judge. As far as we can find, there no statistics available to tell us how many people have used the tax credit to buy a home. In our experience, we have worked with a few clients who have taken advantage of the credit, but the impact hasn’t been tremendous for us.
The fact that the credit has now been extended to existing homeowners might stimulate a little more activity in the market. While the credit isn’t huge for existing homeowners, and it does have restrictions, there are folks who will surely want to take advantage of it.
The thing that is difficult, if not impossible, to say is whether or not the tax credit will actually lead to a higher number of sales. While people in the Charlottesville area are certainly taking advantage of the tax credit, determining whether those sales are new or simply people who had planned to buy already is very difficult. More than anything, the effect on the Charlottesville area real estate market has been to benefit buyers in such a way that they can keep more of their money, or use the credit to make improvements that they would have had to put off otherwise.
Places like Fluvanna and Lake Monticello have median home prices that are lower of those seen in Charlottesville and Albemarle. Because of the fact that median home prices in Fluvanna and Lake Monticello are lower, it is possible that the tax credit will help more in those areas, as first-time homebuyers are likely to be attracted to those areas.
How can I take advantage of the new homebuyer tax credit
If you are interested in buying a home in the Charlottesville, Albemarle, Lake Monticello, or Fluvanna, and you think you might be eligible to receive the tax credit– let us know! We have worked with many first-time homebuyers over the years, and a few this year have used the tax credit. We can put you in touch with the professionals you need to guide you through the process.
We always love working with new clients and answering questions, so if there is anything you need, just ask! We are happy to help however we can. Helping you take advantage of the homebuyer tax credit in the Charlottesville area is just one way we can help.
Photo Credit: http://www.flickr.com/photos/aimeesblog/ / CC BY-SA 2.0
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