Tax Credit Helping Thousands of Buyers

Early results show that the first-time homebuyer tax credit is helping hundreds of thousands of homebuyers. The following report from Real Trends demonstrates this fact.

According to very preliminary figures from the IRS, some 567,685 taxpayers claimed more than $3.9 billion worth of first-time homebuyer credits on their 2008 tax returns, according to Steve Cook of realestateeconomywatch.com. Even though 38,158 may be disqualified because the IRS has found they had ownership in a personal residence within the past three years, the total will certainly exceed the $4.6 billion estimated by Congress last year. The preliminary figures were from returns received by March 6-five weeks before 2008 returns were due. These preliminary returns means the credit helped to make possible at least ten percent of the roughly 5 million new and existing home sales last year. No doubt it was a deal maker in many of those transactions. Source: Steve Cook, Real Estate Economy Watch

Locally, we are also seeing buyers take advantage of the credit. And this year Congress expanded the credit to $8,000 and eliminated the pay-back requirement. This means that even more people will take advantage of the program in 2009.

Remember that the credit exists only on purchases through November 30, 2009. Considering that it is likely that more money will be spent than Congress allocated, it is not a guarantee that the program will be extended. It is, however, having a positive influence on entry-level price segments, which is where every housing recovery begins. If the current housing trends continue, the tax credit will turn out to be money well spent.