After plenty of rumors and speculation, the details of the government’s economic stimulus package have finally been released. I have read the real estate portion, and would like to give you a summary. There is now an $8,000 tax credit (or 10% of the sale price, whichever is less) for first-time homebuyers. You might have heard about the $7,500 tax credit, which is basically an interest-free loan paid back over 15 years at $500 per year. That credit still applies if you purchased your home between April 9 and December 31, 2008. This new $8,000 tax credit is for home purchases between January 1, and December 1, 2009, and you do not have to pay any of it back (yourself, individually… all of us ultimately will have to pay back the entire $787B… the housing portion is $6.638B).
To qualify for the $8,000 credit, you must meet ALL of the following criteria:
1. You purchase[d] a home between January 1, 2009 and December 1, 2009.
2. You live in your new home for at least 3 years.
3. You are a first-time homebuyer, or have not owned a home in the last 3 years.
As your Realtor, it is my job to ensure that you are informed about any effect that the stimulus package has on the Champaign County real estate market. With this tax credit, expect to see more buyers entering the market, which will increase demand for homes. With the current median home price in the County hovering right around $150K, this credit is like a 5.3%-off sale (average) on homes. Assuming that interest rates remain low and we experience our usual Spring market increase in sales, this credit might even turn the buyer’s market into a temporary seller’s market. I am, of course, talking about Champaign County, which has not seen the extreme economic downturn as some other places in the country.
If you have been been thinking about buying or selling your home, but are unsure about the timing, contact me to further discuss your specific situation. Also, if you have any questions about the specifics of the stimulus package (income limitations, selling your home within the 3-yr requirement, the $7,500 credit, etc.), feel free to leave a question or comment below.