New Home Buyer Tax Credit - Impact on Current Home Owners and Members of the Military
Although there was a plethora of speculation regarding the Tax Credit extension most everyone was simply waiting for the timing of the announcement ! Hard to argue with the impact of the Tax Credit ( at least on the surface) and for the local perspective lets take a look at the numbers for the Charleston SC area.
Charleston SC & AREA * Solds - % Change 2008 vs 2009 |
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Unit Volume |
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Aug. |
Sept. |
Oct. |
Nov. |
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-8.18 |
+3.4 |
+22.46 |
+57.59 |
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Dollar Volume |
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Aug. |
Sept. |
Oct. |
Nov. |
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-19.8 |
-6.98 |
+9.35 |
+37.33 |
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* All figures extracted from Charleston Trident Association of Realtors MLS data . |
Moving forward opinions remain mixed on whether the Oct/Nov sales uptick will continue at the same momentum. Rock bottom interest rates continue for home mortgages with the 30 year fixed averaging 4.81 at the time of this blog. Certainly with the expansion of the tax credit to current homeowners there is reason to be optimistic.
So, for most of us the tax credit extension was "In the Bag" so to speak however the expansion of terms was not as certain - at least from this Realtor's perspective. So what do these expanded terms mean and who will benefit? Let's take a look ...
Qualified Repeat Home Buyers
New !! Current home owners who buy a replacement principal residence may also claim a credit of up to $6,500 ( up to $3,250 for a married individual filing separately). Repeat home buyers do not have to purchase a home that is more expensive than their previous home to qualify for the tax credit.
Restrictions:
Military, Intelligence and Foreign Service Members
New !! The revised program also recognizes the home ownership challenges faced by the men and women who serve our country outside of the USA; they now have an additional year to buy a principal residence in the US and qualify for the credit.
New!! Members of the Military, Intelligence and Foreign Service do not have to repay the credit if they have to sell their home after fewer than 3 years occupancy due to official business.
Restrictions:
Claiming the Credit
You claim the tax credit on your Federal Income Tax Form. Home Buyers should complete *Form 5405 and then claim this amount on their 1040 Income Tax Form.
Note: You cannot claim the credit on Form 5405 for an intended purchase for some future date: it must be a completed purchase.
* A new form 5405 is being developed by the IRS and anyone purchasing a home after November 6, 2009 must use this new form. This also applies to tax payers who are claiming the credit on their 2009 Tax Return.