New buyer tax credit rolls out
Along with the extension of the $8,000 first time homebuyers’ tax credit, Congress passed another tax credit last month designed to stimulate the economy.
The Worker, Homeownership and Business Assistance Act of 2009 allows a federal tax credit of up to $6,500 for qualified repeat buyers who are currently existing homeowners. The purchase of a primary residence must occur after Nov. 6, 2009, and the contract signed by April 30, 2010, with a closing by June 30.
The tax credit helps a new group of people who may be sitting on the fence on making a real estate move, said Sandy Blonsky, broker at ReMax Plus in Brighton.
Empty nesters who are considering moving into a smaller or a one-level home typically research and ponder the decision for some time before buying the next home.
They know they will want something with less maintenance at some point, but they’re comfortable in their current home, Blonsky said. The move is not necessarily age-based. It is usually need-based and varies with each family situation.
Ed and Joann Benoit are in the process of selling their 1,800-square-foot, three-bedroom ranch home to move into Sunflower Landing, a 55-plus community in Brockport.
“We’re at the point where we don’t want to do maintenance anymore,” said Joann Benoit, 73.
They will be moving into a 2,200-square-foot ranch home and will join a homeowner’s association that will take care of the outside maintenance. They had planned to make the move before the new tax credit rolled out. But “in this day and age, anything that can help stimulate sales helps the economy,” Joann Benoit said.
Marc and Debbi Goldfischer plan to put their 1,500-square-foot home in Greece on the market by the end of the year and search for a ranch-style home with first-floor laundry in an eastside suburb. With both their children grown, they no longer needed to stay in the same school district, said Marc Goldfischer, 52.
Buying a ranch home will help them prepare for their aging, he said. While they had been considering the move for a few months, the new tax credit “is a great bonus,” Goldfischer said.
Under the law, those who qualify for this tax credit are people who have owned and resided in the same home for at least five consecutive years in the eight years prior to purchase date.
Repeat homebuyers do not have to purchase a home that is more expensive than their previous home to qualify for the tax credit.
They may also rent out their current home, as long as they make the home they purchase their primary residence.
Other things to know:
Already, Blonsky is seeing more activity in the trade-up and -down market this year compared with last year as people learn about the tax credit. Interested clients include people who are looking for a bigger home as their family is growing or people who are looking to downsize their living space, Blonsky said.
Clients who received the tax credit when they closed after Nov. 6 are now planning on using some of that money to furnish their home or buy new appliances instead of keeping their old ones, Blonsky said.
“It’s about stimulating the economy,” Blonsky said of the tax credit.
