Homebuyers probably don’t see themselves this way, but as they step up to take advantage of the best housing values in more than a decade each becomes their own personal economic stimulus package, securing for themselves a fabulous long term investment even as they help rescue the economy from the mess it’s in. More likely, they see themselves as grand prize winners in the housing sweepstakes; smartly timing the market just as prices are bottoming, interest rates are at an all-time low and the first time homebuyer tax credit is on hand to add an extra dollop of icing to the cake. Moreover, if you also happen to be a newcomer to Florida your decision to move your primary residence to one of the least-taxed states in America will be the gift that keeps on giving.
For the stragglers among us—not to mention many would-be buyers who didn’t quite qualify for the first round of housing tax credits—Congress has just rolled back the clock by about six months to allow one last opportunity to take advantage of what has been an enormously popular and effective incentive. Judging by the number of homes sold since the tax credit first went into effect; this is one of the few economic stimulus measures that have truly found its way down to the grass roots level. We applaud Congress for not only renewing the credit in a landslide, bi-partisan vote, but also for broadening its benefits to include a substantially larger pool of potential move-up buyers. At the end of the day, every buyer who uses the credit to sweeten an already great deal moves the housing market one transaction closer to shoring-up the rest of the economy. Indeed, most economists are of the mind that until the housing market regains its footing, the overall economic recovery will simply stumble forward with precious little for anyone to cheer about.
Under the revised rules of the extended tax credit:
- First time home buyers can now receive up to an $8,000 tax credit by entering into a binding contract on or before April 30, 2010; and closing by June 30, 2010.
- Buyers who have lived in their residences for five years may now receive a credit of up to $6,500 (or, up to $3,250 for a married individual filing separately).
- The tax credit is now available to individuals earning up to $125,000—or $250,000 for couples—on homes priced to $800,000
