This is the Last Month to Act on the Tax Credits

It is the last month for the home buyer tax credits. Millions of buyers around the country have taken advantage of them. How many more lock in before the credits expire on April 30, 2010 remains to be seen.

Most of our clients who have benefitted from the credit were not motivated primarily by the credit. Instead, they wanted to move for the same reasons nearly all buyers act – to meet the changing needs of their lives. Whether it is a bigger or smaller home, one closer to schools or work, or a home better suited for hobbies, these buyers found a home better suited to their current needs.

To the extent buyers are jumping based on financial incentives, it may be more about price and affordability than the credit. With average prices down about 12% since the peak, buyers are finding that prices of many homes are at levels of affordability not seen in years. The price reductions are far more substantial than the amount of the tax credits.

The lower home prices combined with great mortgage rates have been the bigger financial drivers of the decision – not the tax credit. Still, for people who are inclined to venture into the housing market, the credits are certainly an added bonus.

There are two credits available. One is for first-time buyers (which includes someone who has not owned for the past three years). That credit is $8,000 (or 10% of the purchase price, whichever is less).

Repeat buyers, who have owned a home for five consecutive years out of the past eight, will receive a $6,500 credit (or 10% of the purchase price, whichever is less).

For more on the tax credits, visit www.irs.gov