Home Buyer Tax CreditA Tax Credit is an amount by which tax owed is reduced directly. In other words, a dollar-for-dollar amount is subtracted directly from the taxes you owe. 2010
Miss it? It May Not Matter
If you missed the home buyer tax credit 2010 deadlines, don’t fret. In the long run, it may not matter. Financially speaking, you could be better off.
With a crush of home buyers looking to capitalize on the $8,000 first-time home buyer tax credit and $6,500 long-term homeowner tax credit, home prices in April, 2010, actually rose a bit more than 3 percent.
But since the April 30 deadline to complete a valid contract has passed, home buyer interestInterest is money charged for the use of borrowed funds. Usually expressed as an interest rate, it is the percentage of the total loan charged annually for the use of the funds. has plummeted by as much as 50 percent, according to the MortgageA Mortgage is a document granting a lien on a home in exchange for financing granted by a lender. The mortgage is the means by which the lender secures the loan and has the ability to foreclose on the home. Bankers Association and the National Association of Realtors.
How bad is it? Sellers, states, and even real estateReal Estate is land and anything permanently attached to it, such as buildings and improvements. companies are offering cash incentives to buyers in order to generate new interest.
- Coldwell Banker has been running television ads offering $8,000 to home buyers who missed the home buyer tax credit deadlines. The “Coldwell Banker Buyer Bonus” is available nationwide. Participating sellers will offer buyers a 3 percent credit on the sales price of up to $8,000 ($10,000 for homes in California). There are no income or property eligibility requirements. The credit is applied at the closing. The Coldwell Banker Buyer Bonus exhorts sellers to “Do your part to keep the momentum of the home buyer tax credits going,” although the program is scheduled to end July 31, 2010.
- In March, California Governor Arnold Schwarzenegger signed AB183 that will provide a state tax credit of up to $10,000 to first-time home buyers and those who purchase a new home. The legislation authorized up to $100 million in tax credits for first-time home buyers and up to $100 million in tax credits for new home buyers. This legislation extends a similar $10,000 home buyer tax credit that permitted first-time home buyers to qualify for up to a total of $18,000 in tax credits if they were also able to qualify for the federal first-time home buyer tax credit.
- Builders are advertising buyer incentives worth thousands of dollars on Craig’s List. In Jonesboro, Ga., a builder is offering a $5,000 incentive if you purchase a new house. Other builders are offering $5,000 cash bonuses for the buyer and will pay mortgage, taxes and insurance costs for the first six months the buyer lives in the property.
- In different parts of the country, desperate sellers are offering everything from flat-screen televisions (which are at times difficult to remove anyway), furniture and cars. According to Tara Nelson, consumer educator and PR manager for Trulia, Atlanta Falcons tight end Tony Gonzalez has listed his home for sale on Trulia and is offering to throw in his Porsche 911.
- The biggest bonus for home buyers who missed the home buyer tax credits is that home prices are expected to begin falling again in the second half of 2010, as more foreclosures are listed for sale, and sellers decide to try their luck.
Although home prices rose slightly in April, most industry observers feel that the rise in prices is due solely to the end of the home buyer tax credits. Now that the deadline to have a valid contract in place has passed, demand for housing has dropped dramatically.
(As this column went to press, it looked as though home buyer would have until September 30, 2010 to close on their property and still collect a home buyer tax credit, provided they met other requirements.)
And, as demand drops, so will the price. Economists say homeowners in some foreclosureForeclosure is the legal action taken to extinguish a home owner's right and interest in a property, so that the property can be sold in a foreclosure sale to satisfy a debt.-heavy states could see another 10 to 15 percent drop in home prices. With jobs scarce and a record number of Americans looking for work, this latest drop in home prices could mean another round of strategic defaults and an increased number of foreclosures.
But for buyers who missed the home buyer tax credits, the silver lining is lower home prices – and that means big savings.