Sales of existing homes climbed by 9.4% in September, representing the strongest monthly increase in more than two years, according to the National Association of Realtors (NAR). With an $8000 federal tax credit set to expire on November 30th, buyers took advantage of low prices and huge inventories of available homes to snap up bargains.
The news was better than expected but not too surprising given that home prices in most markets are much lower than they were from a year ago. Include the federal tax credit for first time home buyers in the mix and the response reflects consumers shopping for values.
Though Congress is talking about extending or expanding the $8000 tax credit, legislation has yet to be introduced to bring that about. Thus, buyers are jumping in now just in case a “last call” is being made.
How do you know if you qualify for the tax credit? Well, restrictions do apply but you may be able to get a credit if the following apply to you:
- You plan on buying a home prior to December 1, 2009. This means that your closing cannot be after November 30, 2009 in order to qualify.
- You are a first time home buyer or you haven’t owned a home in the past three years that was considered to be your primary residence. If you own a cottage in the mountains, then you may qualify as long as that home isn’t your primary residence.
- The home you are buying must be your primary residence. Rental property and vacation homes do not qualify.
- You may not buy your home from a close relative. This means that you cannot buy your home from your spouse, parent, grandparent, child or grandchildren.
- Finally, if you’re single then you cannot make more than $75,000 annually to qualify for the tax credit while couples filing jointly cannot make more than $150,000. These are adjusted gross income amounts, therefore if your salary is higher you may still qualify for the credit once tax adjustments have been made.
Remember, if you want to take advantage of the tax credit, you’ll have to close on your home no later than November 30th. This means you have your work cut out for you and the seller must agree to a quick closing date – a tall order, but one that can be reached if all parties cooperate to make it happen.
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