6 Key Facts About the First-Time Buyer Tax Credit

I’ve made my perspective very clear on a previous post about this “tax-credit”, but if you’re up to taking advantage of it, it’s all yours. Here’s a great article I came across thanks to Kimberly D. Mackey, MCSP, CMP, Realtor®.

The $7,500 home ownership tax credit that the federal government created earlier this year as part of the Housing and Economic Recovery Act (H.R. 3221) is another tool at your disposal to encourage potential buyers to jump off the fence and get into the real estate market.

When you combine the tax credit with today’s low interest rates, wide selection of for-sale inventory, and affordable home prices, many of the pieces are in place for your customers to buy now. But tax credits can be confusing. To help your clients understand how the credit works and why it would help them, you must learn the details.

Here are 6 things you should be able to explain to prospects and clients:

via First-time Buyer Tax Credit: REALTOR® Magazine

Ok everyone, grab a shovel!

This space for rent.

Reuters- Fannie, Freddie shares dive on bailout fears, bonds up

In other news, today is Wednesday. (yawn)

The $7500 first-time home buyer tax credit/loan/debt. Thank you, Washington!

Much Ado About Nothing, as always.

Thanks to the most popular overpaid politicians in Washington D.C., the home building industry had a glimmer of hope (for now) thanks to the recent housing bill that was passed granting first-time home buyers a $7500 tax credit. This of course is only a bit of Novocaine on the impending root canal that is the end of Down Payment Assistance. Needless to say, being a FTHB myself, I was pretty excited… at first.

First, let’s take a look at this from the Builder or Realtor perspective. The biggest challenge right now for FTHBs is qualifying for a loan. Unless the buyer has a near spotless record and above average credit score, trying to qualify them is a much fun as watching a reality show on VH1. Another challenge for FTHBs is that they (we) are a generation of debt dependants. They have multiple credit cards, cars they can’t afford, loans they haven’t paid off, etc. In other words, this new generation doesn’t have a very good concept of how to save money. Helloooo? Deposit? Down Payment? Closing costs? A $7500 tax credit is useless if you can’t get them in the home to begin with.

To sum it up, this $7500 FTHB tax credit is no more than a great builder scheme incentive that they didn’t have to come up with or pay for.

From a FTHB’s perspective: again, pretty exciting at first! Then I remembered the one thing I learned in my first career (different industry). Credit=Debt=Bad. I do have to give credit praise to the NAHB for putting together a pretty easy-to-read/understand website. This gracious $7500 tax credit (not deduction, as the website clearly states) is a no-interest loan that is to be paid back over 15 years. 15 years? I didn’t plan on staying in my 2 bedroom townhome for 15 years. You mean I have to pay back the unpaid amount if I sell it? Well fortunately for those FTHBs that have lost 5 or 10 (15) years worth of equity in the past 2 years are forgiven. For those like me who got a great deal and have not seen a price reduction in my community since I purchased my home, this does nothing other than prolong the inevitable. I either pay my taxes upfront, or pay it over a 15-year period.

I’m not denying the fact that this is will be a great benefit for some, but it only feeds the demon that is the debt which serves as the foundation of this country’s economy. Debt is bad, mmm-kay?

Question: Have you actually generated any buyers or moved any fence-sitters because of this? NAHB, Centex, KB, and Lennar think so.

NAHB: Federal Housing Tax Credit

NAHB: Builders Finding Strong Home Buyer Interest in Tax Credit