First Time Buyers Tax Credit

The tax credit may be enough of an incentive for potential buyers to jump off the fence. That is, if they know about it.
By Robert Freedman | November 2008
The $7,500 home ownership tax credit that the federal government created earlier this year as part of the Housing and Economic Recovery Act (H.R. 3221) is another tool at your disposal to encourage potential buyers to jump off the fence and get into the real estate market.

When you combine the tax credit with today’s low interest rates, wide selection of for-sale inventory, and affordable home prices, many of the pieces are in place for your customers to buy now. But tax credits can be confusing. To help your clients understand how the credit works and why it would help them, you must learn the details.

Here are 6 things you should be able to explain to prospects and clients:

1. Buyers have until July 2009 to make a purchase that qualifies.

The tax credit was passed in July of this year as part of the Housing and Economic Recovery Act (H.R. 3221). It’s worth up to $7,500 and can be taken in a single tax year. Authorization for the credit ends July 1, 2009, so if your customers wait to buy in the first half of 2009 they can take the credit on their 2009 tax return. Taxpayers can take the credit on their 2008 tax return if they bought their house this year after April 9.


2. Buyers don't really have to be "first-timers."

The tax credit is actually available to any individual or household that hasn’t owned a home for at least three years. And the NATIONAL ASSOCIATION OF REALTORS® has asked Congress to expand the credit to all buyers, not just those who haven't owned a primary residence in recent years.


3. Even if buyers exceed the income limit, they can benefit from the credit.

The actual credit amount is set as a percentage of the home purchase amount. That percentage amount is 10 percent, so your customers can get 10 percent of the home price credited against their tax liability, up to a maximum $7,500. Sounds like a great deal. But what if your clients make more money than the income limit of $75,000 for individuals and $150,000 for households? Good news: Individuals whose income exceeds the $75,000 limit but don't make more than $95,000 can still take the credit but on a reduced basis. The same thing applies to households earning up to $170,000. By the way, any house is eligible as long as it’s a primary residence and is in the United States.


4. Think of it as an interest-free loan.

The federal government requires the tax credit to be paid back in small, 6.67-percent increments over 15 years, although repayment will be no more than $500 yearly and payments will not start until 2011. For that reason, some analysts have likened the credit to a 15-year, interest-free loan to help make home buying affordable. NAR is pushing congress to remove the repayment provision, making this tax credit a true tax credit rather than an interest-free loan.


5. You don't have to be authorized before making a home purchase.

There is no pre-purchase authorization, application, or other approval process. Eligible buyers simply have to claim the credit on their IRS Form 1040 tax return and/or any form that the IRS might devise.


6. New-home construction qualifies.

For a home that a buyer constructs, the purchase date is the first date the buyer occupies the home.However, any home that is not a primary residence, such as a vacation home or income property, does not qualify.


NAR Asking Congress to Expand Credit

As mentioned above, NAR has asked Congress to do away with the repayment provision of the first-time buyer tax credit and expand the credit to all home buyers, not just first-timers. The proposals were part of a four-point housing stimulus plan the association submitted in mid-October.

“Housing has always lifted the economy out of downturns, and it is imperative to get the housing market moving forward as quickly as possible,” said NAR President Richard F. Gaylord. “It is vital to the economy that Congress take specific actions to boost the confidence of potential homebuyers in the housing market and make it easier for qualified buyers to get safe and affordable mortgage loans.

Article courtesy of Realtor Magazine

Newest Case Shiller Data shows only slight change for Dallas Market

The latest data from the Case-Shiller report on home prices shows that while home prices in the 20 largest markets continues to decline, the Dallas market has shown a slow down in the rate of decline and is in fact up for the year to date. The Dallas market continues to be one of the most stable markets in the country.

The Dallas market enjoys a 2.3% job growth rate which is well above last year's U.S growth rate of 1.5% . The Dallas area leads the nation along with other Texas cities. The job growth rate would appear to be strong for the remainder of 2008 and into 2009.

Dallas new home starts are down 34.8%. This represents a concerted effort by builders to keep inventories at low levels when compared to years past. This will continue to support the re-sale market in the area. When looking at existing home sales it is important to break the Dallas metroplex into it's smaller community parts. When we do this we see that there can be a wide swing in home sales from north to south or east to west.

The DFW foreclosure rate is also low at 1.4%. Again, you must look at particular communities in order to get a true picture of how the foreclosure rate is affecting the area.

The pink elephant that is in the room with us is the U.S economy. Many consumers are frozen because of the media's portrait of an economy where credit is unattainable. This is not the case at all. Frankly, it is no harder to obtain a mortgage today than it was two months ago. If you are a borrower with good credit, a job, and have some money for a down payment then you can obtain a mortgage at historically low interest rates. With home prices on the lower end when compared to recent years, it is an excellent time to make a purchase or to move up into a larger home. If you have specific questions about your personal situation please contact your local Keller Williams Office. We will be more than happy to help with the decision making process.

-Taken from http://www.planomarketwatch.com/ as posted by Bill Webb

DFW is a LOW Risk Market!

This listing of the U.S. real estate markets ranks each on the likelihood for future price devaluation. DFW’s strong local economy, continued employment growth, housing affordability, stable home prices and steadily increasing home appreciation make it a very low risk real estate market.

Republic Title Happy Hour

Thanks to Republic Title!!! They hosted Happy Hour for our office on September 30th at Culpepper Steak House. We had a great time. Here are some pictures of the event...

Stumped about the ever-shifting market?

Hello Rockwall!


Wow, when they called today’s real estate market a "shifting market," they were right on target. It keeps shifting, and shifting, and shifting ... Every time we turn on the news there’s a new development that affects our economy and therefore the ability of buyers to "buy" and the sellers to "sell."

SHIFT, the most recent book by Gary Keller, co-founder and Chairman of Keller Williams Realty Inc., begins with the following paragraph: "The Real Estate Market has shifted drastically and dramatically. Sales volume and the number of transactions have dropped significantly. Inventory has reached an all-time high. Buyers have never been more reluctant. Fear is rampant, anxiety is high, and people are getting out of the business left and right. Sounds familiar? Sure it does. The year was 1979!"

Does it make us feel better to know that this has happened before? What did we learn from it in 1979? Fast forward to 1987 and it happened again. Changing tax laws this time had a disastrous affect again. Well guess what? History repeats itself. Now we are faced with this again, in 2008 but this time there are real differences.

In 1979 mortgage interest rates topped 18 percent. Last week buyers were still getting approved at under 6 percent through local lenders. That is a huge difference! Today’s sellers, with the help of their real estate agents, are becoming realistic with today’s pricing, bringing our market back on track.

The real estate business is "cyclical." An experienced real estate agent and a mortgage broker will understand this and be prepared to give counsel that is in tune with the current market. Remember though, the news you heard last week is "old news," so stay in touch with your local, trusted real estate agent for updates on this ever changing market.

We are participating in seminars, conference calls, webinars, and many other training events to stay on top of the game to better assist you.

Real estate remains your single most valuable asset if handled correctly.

We are experienced and ready to help. Give our office a call today for a free consultation at 972-772-7000!

Amber