As a buyer, the market could not be better today.  There are deals (and steals) out there today, of which we have not seen in nearly ten years.  Realistically, home prices in southeast Michigan are at levels roughly equivalent to those from 1999-2000.  I heard a report on the radio this morning that nationally we are at 2004 pricing. This provides truly an unbelievable opportunity for those who did not invest in real estate in the past to essentially jump back in time and take advantage of the best personal wealth builder available to most of us, a home.

I know what you’re thinking, what about the credit crunch?  It’s true, that credit may not be as readily available for any purchase, including a mortgage, today as it was a few years ago.  While the pendulum may have swung a little too far in the tightening direction recently, it’s because it had come from way too far in the loose direction in the years that proceeded.  Is it really a negative thing to think that we should be putting up a significant initial stake in the largest purchase most of us will ever make?  The bottom line is that there are still many options available for those who are looking to make a purchase.

So far this discussion has focused on the buying side of the equation.  And I know that my initial comment stated that your view point on the market depended on your role.  So I guess the natural assumption would be that if you are selling the market is not pretty.  That’s not necessarily true.  First of all, there is great deal of activity in the marketplace today. Yes, I just mentioned that prices are down from their record highs of the last few years. That said, everyone that is selling a primary residence must be moving somewhere.  For most, that means buying another home.  So the real question comes down to where and what you are buying.  If you are buying in the same general market and buying more home, you stand to do quite well in the “net” of the two transactions.  This will be the topic of my next article.

It is a temporary first-time homebuyer tax credit, which functions like an interest-free loan. A tax credit is a dollar-for-dollar reduction in what the taxpayer owes in income taxes. To qualify for the tax credit, a home purchase must occur on or after April 9, 2008 and before July 1, 2009 and the taxpayer must meet the annual income requirements. For the purposes of tax credit, the purchase date is the date when closing occurs.

How much is the new homebuyer tax credit?

The tax credit is equal to 10% of the qualified home purchase price, but the credit amount is capped or limited at $7,500. For many first-time homebuyers, this means the credit will equal $7,500.

Who is eligible for the tax credit?

A “first-time homebuyer” is defined as a buyer who has not owned a principal residence during the three-year period prior to the purchase. First-time homebuyers purchasing any kind of home—new or resale—may be eligible for the tax credit.

For more information on the details of the bill visit:
http://www.federalhousingtaxcredit.com.

Does the tax credit need to be repaid?
Yes, homebuyers will be required to repay the credit to the government, without interest, over 15 years or when they sell the house, if there is sufficient capital gain from the sale. For example, a homebuyer claiming a $7,500 credit would repay the credit at $500 per year. The home owner does not have to begin making repayments on the credit until two years after the credit is claimed. If the home was sold, the remaining credit amount would be due from the profit on the home sale. If there was insufficient profit, then the remaining credit payback would be forgiven.