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Does anyone know whether this tax credit will apply the same timeline to purchases? It sounds like it will not. I purchased my home on 6/30/08 which means I'm eligable for the $7500 credit. However, the way it sounds to me, unless I file right now I might not be eligable for anything since the amendment "sunsets" the $7500 credit. Furthermore, the way it reads, it seems that ONLY homes that are bought within 1 year (meaning 1 year forward) of the enactment of the legislation are eligable.
Location: Georgia, on the Florida line, right above Tallahassee
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Quote:
Originally Posted by cohdane
... But if the math works and I see the right house, I'm going to jump on it.....
Aye, same here. I could buy a house today, if I liked. I have the down payment, good credit, etc. Even qualify for a VA loan. Woohoo.
In my locale (Seattle) prices shot up due to a lot of factors. Prices are going to decline due to a lot of factors. They haven't declined far enough for me.
If you find something that is right for you, by all means...go for it! I have a hot rod that I *might* get 5 K for from a collector. I have 20K in it. I'll never see 20K out of it. But every time I get in it, it feels so good. Vroooomm...vroooom. Is it worth 20K to the average Joe? Heck no, it's an old car that makes too much noise, can't corner well, and has a heater that can best be called "barely adequate." But to me, it's a pretty nice thing to have.
I wish you the best with your home purchase. I really do. As I've mentioned in the Seattle forums, if you're not looking to flip the home (and it sounds like you are not) then buying now vs. buying later doesn't make that much difference (there). Seattle has a "clamp down" on how much housing is available. Expansion is limited. So housing prices are more contained. However, looking at the local job market and having a general feel of how many homes there were bought with jumbos and ARMs, I have a feeling the market is due for an implosion around 2011/2012.
That is, unless they figure out some way to artificially prop it up. In which case, I'll still rent.
As mentioned on this forum - ad nauseum - every market is different.
The current $7,500 tax credit is a no interest loan that the tax payer will pay back at the rate of $500 a year for 15 years. If you sell the home before that time it is prorated so that you pay back the balance from the proceeds of the sale. You don't have to make a payment for the first 2 years. After that it is prorated at the $500 a year level. Lets say after the 2 year grace period you live in the home a couple years and then sell. You would owe the IRS $6,500 for the balance on the loan, meaning you paid nothing the first 2 years and you paid $500 a year for the 2 years the loan was in force, leaving a balance of $6,500 to pay back. The problem is that for many they could use the $7,500 for the down payment. One good example is with someone buying a home valued at $250,000. If they qualify for a FHA first time buyer loan and only need to come up with 3% this is ideal for them. The problem is that you need to be in the home prior to accepting the $7,500 amount.
The current $7,500 tax credit is a no interest loan that the tax payer will pay back at the rate of $500 a year for 15 years. If you sell the home before that time it is prorated so that you pay back the balance from the proceeds of the sale. You don't have to make a payment for the first 2 years. After that it is prorated at the $500 a year level. Lets say after the 2 year grace period you live in the home a couple years and then sell. You would owe the IRS $6,500 for the balance on the loan, meaning you paid nothing the first 2 years and you paid $500 a year for the 2 years the loan was in force, leaving a balance of $6,500 to pay back. The problem is that for many they could use the $7,500 for the down payment. One good example is with someone buying a home valued at $250,000. If they qualify for a FHA first time buyer loan and only need to come up with 3% this is ideal for them. The problem is that you need to be in the home prior to accepting the $7,500 amount.
This is what is wrong. If you NEED $7500 to close on a house or NEED $7500 for help with a Down Payment, you are NOT in position to really be buying a house. 3% DP is just setting up people to fail. Or at least be willing to walk away when values dip that much over the next 3 months and when times get tight they just walk away and end up screwing the bank over.
Are there exceptions to this? Sure. But clearly not enough to justify it based on what is going on out there!
Whatever happened to saving enough money to get 10-20% saved before buying a house? Sure prices have made that tough but if people stuck to this concept the bubble would have never happened to such degree if at all.
Found the facts! This is from the press release from Isakson's office. He's the senator that sponsored the proposal:
"Specifically, Isakson’s amendment to the pending economic stimulus bill would provide a direct tax credit to any homebuyer who purchases any home. The amount of the tax credit would be $15,000 or 10 percent of the purchase price, whichever is less. Purchases must be made within one year of the legislation’s enactment, and the tax credit would not have to be repaid."
"The amendment would allow taxpayers to claim the credit on their 2008 income tax return. It also seeks to prevent misuse by only allowing purchases of a principle residence and by recapturing the credit if the home is sold within two years of purchase. The amendment would sunset the current $7,500 housing tax credit on the date of enactment."
Still has to get enacted, though. It won't be real till they say "go."
I just read that PR release. Either someone in Isakson's office is getting fired, or this is a lot bigger - because the bill does not mention "First Time Homebuyer" - it says "ANY" home buyer.
First time home buyers who are buying houses less than $250K benefit the most from this. If I am buying a $100K house and prices go down 10%, I lose $10K, but still get $15K tax credit.
If I am buying $1MM house and prices go down 10%, I lose $100K and get $15K tax credit.
This plan has potential to increase prices on lower priced homes and do nothing to help the sale of homes priced above say $250K.
I predict if this is passed they will eventually extend it to all primary homebuyers, not just first-time homebuyers. This plan is stupid and only prolongs the necessary correction in prices for real estate.
I would rather see prices drop 20% this year and get it over with instead of seeing 5% prolonged decline over the next 4 years.
Obviously, as a buyer I prefer to get a good deal now than have to wait, but I will wait if I have to.
If this goes through it would be a great help to my nephew who is already in contract to buy (so the selling price cannot be increased!) and is looking to close sometime this month. He would have qualified for the original $7500 loan-credit because of his 2008 income but to be able to get double that amount and NOT have to pay it back piecemeal in later tax returns would be even better. That $15,000 would just about cover (reimburse him for) all of his upcoming closing costs.
In my crystal ball today I see many people making phone calls asking to postpone their scheduled February and early March closing dates...... "just in case".
(where we live, the contracts always say "on or about" for the closing date and it is tacitly assumed that "on or about" means "within 30 days one way or the other". His mortgage commitment doesn't expire until March 30th so he's okay there)
So...you're trying to grasp why it makes sense not to buy something that is overpriced? .
haven't you read? I DO NOT believe houses are overpriced, in most situations. I believe they already went through a drop, from small to drastic, depending on how much prices were inflated in each state. At this point, with interest rates where they are, I think it's absolutely crazy not to buy and wish we were in the position to buy a second (vacation) home, but time and distance from where we would like to buy (S.Carolina) prevent us from really doing that at this point in our lives. We wouldn't have the time (4 busy kids, love our community, and not ready to be "away" from it for any length of time) to enjoy it right now and not worth the investment, but boy, how tempting! So in answer to your question, yes, still trying to grasp why potential buyers are so delusioned that houses are overpriced. I can't BELIEVE the incredible deals and beautiful homes out there, at ALL prices. In MOST states!
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All this does is help cheap home buyers
