Does the American Recovery and Reinvestment Act of 2009 benefit the housing market?
It seems that we are bombarded by bad news day in and day out. You open the newspapers and stare at articles about the plummeting property values (Gilroy is at about 31.8%) and the bleak unemployment numbers (at a 25 year high as of January 2009). However, there is also some good news.
Tax credit for first time homeowners: Under the new Stimulus Act of 2009, http://www.llsdc.org/attachments/files/90/H-Rep-111-16.pdf, which was just signed by President Obama, first time homeowners can now qualify for a tax credit of up to $8,000 or 10% of the purchase price of the home not to exceed $8,000. This is only for first time home buyers who file taxes jointly or up to $3,500 for single filers. Under the provisions enacted in 2008 this “so called tax credit” was a “loan” which needed to be paid back over the next 15 years. So the important change here is that repayment is not needed EXCEPT if the buyers decide to sell the home within the first three years. There are some income restrictions in place. Singles must earn less than $75,000 and couples less than $150,000 to receive the full benefit of the tax credit. First time buyers with a higher income can receive a partial tax credit.
(And for those who want to hear the bad news. Congress did not adopt the Senate version of this tax bill which proposed a $15,000 tax credit for all homeowners.)
Who qualifies for first time homebuyers? If you have not owned a home in the last three years or have never purchased a home you qualify.
Are there restrictions? Yes, besides the income restrictions mentioned above homeowners can only qualify if the property will be their primary residence. Thus investment properties and vacation homes will not qualify. The purchase must be between January 1, 2009 and November 30th, 2009.
How does this tax credit benefit the housing market? Lawrence Yun, chief economist for the National Association of Realtors expects an additional 300,000 new homebuyers into the market because of this tax credit.
And there is some more good news. A number of homeowners could be eligible for a temporary reduction in accessed values. The Santa Clara County Assessor's office will review thousands of residential properties which were purchased since 2000 but focus on those purchased between 2005 and 2008. Homeowners should wait for their September tax bill before contacting the assessor's office.
