Deadline to Qualify for Federal Tax Credit is Approaching
If you have been paying any attention to the real estate market, you know that sales in the lower-priced end is picking up. First time home buyers are racing to qualify for the $8,000 federal tax credit. The credit will cover up to 10% of a home's purchase price, and is available to U.S. residents who haven't owned a home for at least the past 3 years. In order to qualify, they must also close on a home purchase on or before November 30.
The credit took effect in April and has helped the lower segments of the nation's housing market. The National Association of Realtors estimates that by the end of this year, the credit will have boosted home sales by 350,000 units. As many as 2 million first-time buyers will take advantage of the tax credit. In Minnesota, more than 28,700 taxpayers have requested the credit already just by amending their federal tax returns after buying a house.
In the Twin Cities real estate market, the approaching deadline is fueling demand for homes priced at less than $190,000. Overall sales in that price range are up compared to a year ago, but sales of more expensive homes are still low.
What happens when/if the credit expires? Well, when the $4,500 federal "cash for clunkers" subsidy went away, sales of new vehicles crashed. The housing industry fears a similar impact in housing, so there is a push for an extension on the tax credit. There are at least a dozen proposals to extend the program introduced in Congress.
But for now, people within the real estate and mortgage industry are expecting the deadline, but they're also expecting continued activity. If you're a first time home buyer and you're can take advantage of this tax credit, don't miss the boat!