Florida’s existing home, condo sales up in December 2009
ORLANDO, Fla. – Jan. 25, 2010 – Florida’s existing home sales rose in December, marking 16 months that sales activity has increased in the year-to-year comparison, according to the latest housing data released by Florida Realtors®.
Existing home sales rose 33 percent last month with a total of 14,630 homes sold statewide compared to 11,013 homes sold in December 2008, according to Florida Realtors. Statewide existing home sales last month increased 4.3 percent over statewide sales activity in November.
Florida Realtors also reported a 91 percent increase in statewide sales of existing condos in December compared to the previous year’s sales figure; statewide existing condo sales last month rose 22 percent over the total units sold in November.
Seventeen of Florida’s metropolitan statistical areas (MSAs) reported increased existing home sales and higher condo sales in December. A majority of the state’s MSAs have reported increased sales for 18 consecutive months.
Florida’s median sales price for existing homes last month was $140,400; a year ago, it was $155,300 for a 10 percent decrease. Housing industry analysts with the National Association of Realtors® (NAR) note that sales of foreclosures and other distressed properties continue to downwardly distort the median price because they generally sell at a discount relative to traditional homes. The median is the midpoint; half the homes sold for more, half for less.
The national median sales price for existing single-family homes in November 2009 was $171,900, down 4.4 percent from a year earlier, according to NAR. In California, the statewide median resales price was $304,520 in November; in Massachusetts, it was $285,000; in Maryland, it was $245,569; and in New York, it was $210,000.
According to NAR’s latest outlook, home sales are seeing a boost from the federal homebuyer tax credit. “There are many more potential buyers who can enter the market in the months ahead,” said NAR Chief Economist Lawrence Yun. “Activity should ramp up for another surge in the spring when buyers take advantage of the expanded tax credit, which hopefully will take us into a self-sustaining market in the second half of 2010. In all, 4.4 million households are expected to claim the tax credit before it expires, and balance should be restored to the housing sector with inventories continuing to decline.”
In Florida’s year-to-year comparison for condos, 5,968 units sold statewide last month compared to 3,132 units in December 2008 for an increase of 91 percent. The statewide existing condo median sales price last month was $107,000; in December 2008 it was $130,300 for an 18 percent decrease. The national median existing condo price was $178,000 in November 2009, according to NAR.
Interest rates for a 30-year fixed-rate mortgage averaged 4.93 percent last month, significantly lower than the average rate of 5.29 percent in December 2008, according to Freddie Mac. Florida Realtors’ sales figures reflect closings, which typically occur 30 to 90 days after sales contracts are written.
Among the state’s larger markets, the West Palm Beach-Boca Raton MSA reported a total of 849 homes sold in December compared to 638 homes a year earlier for a 33 percent increase. The market’s existing home median sales price last month was $247,900; a year ago it was $246,000 for an increase of 1 percent. A total of 763 condos sold in the MSA in December, up 45 percent over the 527 units sold in December 2008. The existing condo median price last month was $111,400; a year earlier, it was $112,900 for a decrease of 1 percent.
Related: Dec. existing-home sales down, prices rise; 2009 sales up, says NAR
© 2010 Florida Realtors®
HUD takes action to speed resale of foreclosed properties to new owners
WASHINGTON – Jan. 18, 2010 – In an effort to stabilize home values and improve conditions in communities where foreclosure activity is high, HUD Secretary Shaun Donovan announced a temporary policy that will expand access to FHA mortgage insurance to allow for a quicker resale of foreclosed properties. The policy change will permit buyers to use FHA-insured financing to purchase HUD-owned properties, bank-owned properties or properties resold through private sales.
“As a result of the tightened credit market, FHA-insured mortgage financing is often the only means of financing available to potential homebuyers,” says Donovan. “FHA has an unprecedented opportunity to fulfill its mission by helping many homebuyers find affordable housing while contributing to neighborhood stabilization.”
With certain exceptions, FHA currently prohibits insuring a mortgage on a home owned by the seller for less than 90 days. This temporary waiver will give FHA borrowers access to a broader array of recently foreclosed properties.
“This change in policy is temporary and will have very strict conditions and guidelines to assure that predatory practices are not allowed,” Donovan says.
Acquiring, rehabilitating and reselling foreclosed properties to prospective homeowners often takes less than 90 days in today’s market; and FHA’s 90-day rule can adversely impact buyers if a seller is unwilling to hold a property 90 days thanks to holding costs and the risk of vandalism.
“FHA borrowers, because of the restrictions we are now lifting, have often been shut out from buying affordable properties,” says FHA Commissioner David H. Stevens. “This action will enable our borrowers, especially first-time buyers, to take advantage of this opportunity.”
The waiver will take effect on Feb. 1, 2010, and be effective for one year, unless otherwise extended or withdrawn by the FHA Commissioner. To protect FHA borrowers against predatory practices of “flipping,” the waiver is limited to those sales meeting the following general conditions:
• All transactions must be arms-length, with no identity of interest between the buyer and seller or other parties participating in the sales transaction.
• In cases in which the sales price of the property is 20 percent or more above the seller’s acquisition cost, the waiver will only apply if the lender meets specific conditions.
• The waiver is limited to forward mortgages, and does not apply to the Home Equity Conversion Mortgage (HECM) for purchase program.
• Specific conditions and other details of this new temporary policy are in the text of the waiver, available on HUD’s website:
http://www.hud.gov/offices/hsg/sfh/waivpropflip2010.pdf
© 2010 Florida Realtors®
Real Estate Outlook: Housing Recovery
by Kenneth R. Harney
The real estate recovery continues to roll along with a big 7.4 percent jump in home resales last month, according to the National Association of Realtors.
The current sales pace is 44 percent higher than it was the year before, including detached single family homes, townhouses, condos and cooperatives.
Equally important: Sales are up in every region of the country. They rose by 6.6 percent last month in the Northeast, 8.4 percent in the Midwest, 5 percent in the South, and nearly 11 percent in the West.
And for the second month in a row, sales totals were higher in all price classes. For most of the year, by contrast, only lower and moderate priced houses saw sales gains, while higher cost properties languished on the market. Now they're moving too.
Unsold inventories of houses also are down this year -- 16 percent below where they were the year before.
Lawrence Yun, chief economist for the National Association of Realtors, said a last-minute rush by buyers hoping to close on properties before the scheduled November 30 deadline for the $8,000 first time buyer credit added a lot of sales to the impressive November total.
Congress extended the November 30th closing deadline for the first-time buyer credit until June 30th of next year -- and added a new $6,500 credit for repeat purchasers to the mix.
Vicki Cox Golder, president of the National Association of Realtors, said the current combination of low prices, low mortgage rates and the tax credits has created an exceptionally attractive environment for buyers around the country.
“It really doesn't get any better for buyers,” she said, provided of course that they have “secure jobs and long-term ownership plans.”
Meanwhile, Fannie Mae's year-end forecast for 2010 suggests that sales of existing homes next year should jump by another 10 percent over this year, and new home sales should be 26 percent higher.
Like other forecasters, Fannie Mae sees rising mortgage rates hovering on the horizon, but not so high that they will scare away serious purchasers.
The Mortgage Bankers Association expects 30-year fixed rates to exceed 5.2 percent in the months ahead, up from about 5 percent in the latest week.
Even Federal Reserve chairman Ben Bernanke apparently is banking on higher mortgage rates as the economy warms up next year. The Wall Street Journal reports that Bernanke has refinanced out of an adjustable-rate loan on his Washington D.C. home and into a more secure 30 year fixed rate around 5 percent.
Published: December 29, 2009
Home Building Begins Rebound
Home building rose 8.9 percent in November to an annualized rate of 574,000, the U.S. Commerce Department announced Wednesday.
The rate was still 12.4 percent below what it was in November 2008, but the increases were nationwide, with the Northeast leading the trend with housing starts rising 16.4 percent. Housing starts rose 12.3 percent in the South, 3 percent in the Midwest and 1.9 percent in the West.
Analysts attributed the increase to the extension and expansion of the home buyer’s tax credit. David Crowe, chief economist at the National Association of Home Builders, is cautiously optimistic. “The new credit will have an impact as we move into 2010 and consumers plan for that credit availability, and builders begin to answer expected demand in the spring," he says.
15-Year Loans Gain Fans
Home buyers and home owners who are refinancing are increasingly enthusiastic about 15-year, fixed-rate mortgages.
Originations of 15-year mortgages at Wells Fargo & Co. are up 55 percent through November compared to a year ago. At J.P. Morgan Chase & Co., 20 percent of refinances are 15-year loans, up 10 percent in 2008.
One reason is that rates on 15-year fixed-rate conforming mortgages averaged 4.46 percent in early December, according to HSH Associates in Pompton Plains, N.J.
Source: The Wall Street Journal, Ruth Simon (12/09/2009)
Florida’s climate is business-friendly, says FAR
ORLANDO, Fla. – July 2, 2009 – As the Sunshine State, Florida’s warm and sunny weather draws residents and visitors eager to experience all the state has to offer, including the many opportunities and strong support it provides for business and industry.
“Not only is Florida a great place to call home, it’s a great place to do business,” says Cynthia Shelton, 2009 president of the Florida Association of Realtors® (FAR). “Our state has made it a priority to not only encourage new businesses and industries to come to Florida, but to provide the kind of supportive climate that entrepreneurs and businesses need to succeed and prosper. Florida is the fourth most populous state in the U.S., with a large and diverse population fueling innovation in industry, and providing a creative and highly skilled workforce.”
A broker/salesperson with Colliers Arnold Associates Inc. in Orlando, Shelton has more than 30 years of experience in the real estate industry, including residential, ownership, management, development and commercial sectors. With her extensive business background, Shelton understands the state’s appeal to business owners and entrepreneurs. With no state income tax and a favorable tax environment for corporations, she points out that Florida is an attractive location for people who want to own their own business and raise their families in a desirable place close to their livelihood.
Enterprise Florida, a public-private partnership devoted to statewide economic development, notes Florida’s business strengths on its Web site (http://www.eflorida.com) along with a list of recent accolades the state has received.
For example, did you know:
• Florida continues to be one of the best states for business, ranking No. 1 in the nation for workforce; among the top 10 for technology, innovation and access to capital; and third overall in Chief Executive’s survey of the best places for jobs and business growth. (Chief Executive, March 2009)
• Four Florida metros, Orlando, Miami-Ft. Lauderdale, Cape Coral-Fort Myers and Jacksonville, are among the nation’s best places to start a small business. (Bizjournals, Feb 2009)
• Florida has the second highest number (tied with Washington) of leading metropolitan areas on the Milken Institute/Greenstreet Real Estate Partners Best Performing Cities 2008 - 2009 Largest Metros Index. Florida consistently ranks among the top states in this annual report, which measures economic growth, job creation and technology growth. (Milken Institute, September 2008)
• Florida continues to gain ground among the nation’s top states for entrepreneurship, moving up to rank fourth overall in the 2008 Small Business Survival Index. Florida’s low tax rates have helped improve its ranking from sixth in 2006 and fifth in 2007. (Small Business & Entrepreneurship Council, December 2008)
• Florida earned top spots on Site Selection’s 2008 Top State Business Climate rankings. The state’s business climate ranked fourth among executives and sixth overall. (Site Selection, November 2008)
• Florida continues to rank among the top five states for best tax climates for business, according to a Tax Foundation survey. With no state income tax, low corporate taxes, a low unemployment insurance tax rate and sales tax exemptions for certain business transactions, Florida has remained among the top five U.S. states since the survey’s inception. (The Tax Foundation, October 2008)
• Florida’s economic climate ranks No. 1 in the U.S., according to Forbes’ Best States for Business. Ranking eighth overall, Florida also scored among the top five in the Labor and Growth Prospects categories. (Forbes, August 2008)
© 2009 FLORIDA ASSOCIATION OF REALTORS
Florida’s $8K program effective today but not available yet
TALLAHASSEE, Fla. – July 1, 2009 – Florida created a program to help first-time homebuyers get their federal tax credit early, allowing them to use up to $8,000 toward a downpayment. The effective date for the program is July 1; however, it will probably be another few weeks before the funds are available. As a result, some Realtors struggling to help homebuyers find the system confusing.
While most first-time homebuyers qualify for the tax credit (given by the government as an income tax rebate regardless of tax owed), they once had to buy a home first, submit the info to the IRS through their tax return, and wait for the $8,000 rebate. To help these buyers get the money early enough to use it as a downpayment, the State of Florida created a program of bridge loans, the Florida Homebuyer Opportunity Program (FLHOP), where money can be borrowed from the state and then paid back after the new homeowner receives his tax credit.
Under a different federal program, the Federal Housing Administration (FHA) has done something similar, yet with a significant difference: The federal program applies to FHA loans only, and buyers must still come up with a minimum downpayment of 3.5 percent.
“FAR’s Office of Public Policy has been getting a lot of questions from across the state regarding downpayment assistance for those who qualify for the federal first-time homebuyer tax credit,” says Florida Association of Realtors (FAR) Vice President of Public Policy John Sebree. “Given that there is a state downpayment plan and a federal downpayment plan (and at least one special exemption), it definitely gets confusing, and details have been slow to emerge. Many Florida Realtors say local housing authorities don’t have all the information they need to move forward with the state program, and some Realtors report that bankers are steering clear of the downpayment assistance programs altogether.”
Florida Homebuyer Opportunity Program (FLHOP)
The Florida Legislature created the state program during the recent legislative session, and it’s part of the 2010 budget effective July 1, 2009. Many details remain sketchy, but Sebree reports the following:
• Money for homebuyers may not be available until the first week of August. Lawmakers funded the program through doc stamp taxes applicable in the new fiscal year rather than through a lump sum commitment; and since today is the start of the new fiscal year, the program won’t be fully funded until the state collects new doc stamp taxes.
• Florida’s downpayment loan program can work with FHA loans. Florida Housing Finance Corporation (FHFC) – the state agency that funnels housing money to local housing agencies – received confirmation from FHA that borrowers who access the $8,000 tax credit through a state or local government program may use it to make up the required 3.5 percent downpayment, unlike the FHA downpayment loan program through private lenders.
• Florida’s local housing administrators will oversee the downpayment funds at the local level. (To find the administrator in your area, go to: http://apps.floridahousing.org/StandAlone/FHFC_ECM/AppPage_SHIPLGContacts.aspx). For local housing authorities, the program is similar to the SHIP program (State Housing Initiatives Partnership) with one major difference – the income limits. Currently, SHIP uses Area Median Income (AMI) and those are typically lower, and calculated differently, than the federal tax credit limit of $75,000. The $75,000 for a single income tax filer ($150,000 for joint filers) will be used for FLHOP.
• Realtors can start to promote the program to potential homebuyers. It takes time to close on a home, and local housing authorities should be taking applications now.
• FHFC says they’ve trained local administrators on procedures for the Florida downpayment program. Local housing authorities will have flexibility over the $8,000 loan, be able to include penalties, and create a structure dictating how the new homebuyer will pay back the money.
“It’s important to note that this money is a bridge loan to buyers; but once it’s repaid, local governments and housing authorities can keep the money and use it locally for affordable housing projects,” Sebree says. “This is a win/win for them. If the offices seem unwilling to work with Realtors, they probably don’t understand the program themselves yet.”
For specific questions about the $8,000 tax credit, homebuyers should consult a tax professional.
Resources for understanding the tax credit and bridge loans
FAR’s Homebuyer Center: http://www.floridarealtors.org/AboutFar/homebuyercenter/index.cfm
NAR’s The Basics: 2009 First-Time Home Buyer Tax Credit: http://www.realtor.org/home_buyers_and_sellers/2009_first_time_home_buyer_tax_credit?lid=ronav0019.
© 2009 FLORIDA ASSOCIATION OF REALTORS®
Florida’s quality of life means ‘home sweet home,’ says FAR
ORLANDO, Fla., July 1, 2009 – What does Florida have to offer? Pick up a travel brochure and some benefits are clear: Beautiful beaches. Miles of scenic parks and nature preserves. Oceans, rivers and lakes offering boating, fishing, swimming and other water recreation. A rich and varied history, which includes the city of St. Augustine, the oldest permanent European settlement in the mainland United States. Unique entertainment parks and other family-friendly attractions. Cultural activities that offer residents and visitors fine theater, music, dance and arts events. Then there is Florida’s climate featuring an average annual high of 81 degrees Fahrenheit and an average annual low of 60 degrees, giving the Sunshine State its well-known nickname and reputation.
“Florida is a great place to live and I feel privileged to call it home,” said 2009 Florida Association of Realtors® (FAR) President Cynthia Shelton. “There is so much to see, to experience and to enjoy in Florida, from the distinctive white sugar sand beaches of Destin in the north, to the family fun offered by Orlando’s theme parks and attractions, to the leisurely, laid-back lifestyle in the Keys. Whatever you like to do, you’ll find it here in Florida. We have visitors coming here from around the world to vacation in Florida. But they only get to sample what Florida offers for a brief time; when you’re lucky enough to be a Florida homeowner, there’s no end to the possibilities!”
State officials, Florida Realtors® and business recruiters agree: Florida’s unique quality of life is one of the state’s best assets. Enterprise Florida, a public-private partnership devoted to statewide economic development, notes on its Web site (http://www.eflorida.com) many of the amenities found in the Sunshine State.
• Florida beaches were awarded more top 10 spots than any other state, including the No. 1 beach in the U.S., Caladesi Island State Park, on America’s Best Beaches list for 2008. This internationally recognized ranking by Dr. Stephen P. Leatherman (aka Dr. Beach) is based on 50 criteria including number of sunny days, sand softness, algae and pollution content, safety record, and more. Leatherman is a Ph.D. coastal scientist, professor of environmental studies and director of the Laboratory for Coastal Research at Florida International University in Miami.
• The state’s park system, one of the largest in the U.S., has 160 parks covering more than 700,000 acres and 100 miles of Florida’s beaches.
• Seven of Relocate-America’s Top 100 Places to Live in 2008 were Florida cities, including one, Flagler Beach, which was named to the Top 10. These rankings attest to Florida’s high quality of life, and are based on a combination of economic data and feedback from people who live in each area.
• In many ways, Florida’s cost of living is below that of other states with similar economic growth and in-migration rates. For example, the state’s homeownership rate currently stands at about 70 percent, well above the national average. And, with data from the Florida Association of Realtors showing that $187,800 was the statewide median price for an existing home at year-end 2008, housing prices compare well to other similar states.
• Noted for its outstanding statewide system of trails, Florida was named the Best Trails State in America, winning the biennial National Trails Award in this past November from the national nonprofit organization American Trails.
• Five Florida universities were named to the Best Values in Public Colleges list for 2009 by Kiplinger’s Personal Finance. The schools are University of Florida, ranking No. 2 in the nation; New College of Florida, No. 8; Florida State University, No. 17; University of Central Florida, No. 42; and the University of South Florida, No. 75. Among other criteria, these rankings recognize schools with top academics and affordable costs.
© 2009 FLORIDA ASSOCIATION OF REALTORS
Florida’s Existing Home, Condo Sales Rise in April 2009
ORLANDO, Fla., May 27, 2009 – Florida’s existing home sales rose in April – the eighth consecutive month that sales activity increased in the year-to-year comparison, according to the latest housing data released by the Florida Association of Realtors® (FAR). April’s statewide sales showed gains over the previous month’s sales level in both the existing home and existing condominium markets.
Existing home sales rose 18 percent last month with a total of 13,111 homes sold statewide compared to 11,133 homes sold in April 2008, according to FAR. April’s statewide existing home sales were slightly higher than statewide activity in March.
Florida Realtors also reported a 21 percent rise in statewide sales of existing condos in April; existing condo sales last month increased 6.2 percent over the total units sold in March.
Fourteen of Florida’s metropolitan statistical areas (MSAs) reported increased existing-home sales in March and 11 MSAs also showed gains in condo sales. A majority of the state’s MSAs have reported increased sales for 10 consecutive months.
Florida’s median sales price for existing homes last month was $138,500; a year ago, it was $199,500 for a 31 percent decrease. Housing industry analysts with the National Association of Realtors® (NAR) note, however, a significant downward distortion in the current median price due to many discounted sales, including a large number of foreclosures. The median is the midpoint; half the homes sold for more, half for less.
The national median sales price for existing single-family homes in March 2009 was $174,900, down 11.5 percent from a year earlier, according to NAR. In California, the statewide median resales price was $253,040 in March; in Massachusetts, it was $255,000; in Maryland, it was $264,302; and in New York, it was $222,500.
According to NAR’s latest housing industry outlook, it could take a few months for the housing market to gain momentum, though there are signs of stabilization. “The share of lower priced home sales has trended up, indicating a return of many first-time buyers,” said NAR Chief Economist Lawrence Yun. “Buyer traffic has been rising, and real estate offices are getting phone inquires about the tax credit. By early summer we should be seeing a positive impact on home sales from record-low mortgage interest rates in addition to the stimulus provisions.”
In Florida’s year-to-year comparison for condos, 4,660 units sold statewide compared to 3,862 units in April 2008 for a 21 percent increase. The statewide existing condo median sales price last month was $106,600; in April 2008 it was $178,900 for a 40 percent decrease. In the latest data available at press time, NAR reported the national median existing condo price was $177,600 in March 2009.
Interest rates for a 30-year fixed-rate mortgage averaged 4.81 percent last month, down significantly from the average rate of 5.92 percent in April 2008, according to Freddie Mac. FAR’s sales figures reflect closings, which typically occur 30 to 90 days after sales contracts are written.
Among the state’s smaller markets, the Pensacola MSA reported a total of 316 homes sold in April compared to 272 homes a year ago for a 16 percent increase. The existing home median sales price was $143,300; a year ago, it was $157,400 for a 9 percent decrease. In the year-to-year comparison for the existing condo market, 48 units sold in the MSA last month, up 9 percent compared to 44 condos sold the previous April. The market’s existing condo median price remained level at $250,000.
Two charts showing statistics for Florida and the state’s MSAs are attached. One chart compares the volume of existing, single-family home sales and median sales prices in April 2009 to April 2008 based on Realtor transactions; the other compares the volume of existing, condominium sales and median sales prices April 2009 to April 2008 based on Realtor transactions.
FAR study looks at Florida’s present and futureTALLAHASSEE, Fla. – June 3, 2009 – Migration – the movement of people into and out of a geographic area – impacts a state’s economy and real estate market. Because birth and death rates are usually low and stable, migration often accounts for the largest changes in population growth, decline and redistribution.
Migration patterns have a big impact on real estate professionals, and Florida has one of the greatest levels of domestic migration. Florida’s total population was 18.3 million in 2008, and, according to the Census Bureau estimates, will reach 19.3 million by July 2010, and approximately 23.4 million by 2020. The Census Bureau estimates a 79 percent increase in total population between 2000 and 2030, ranking Florida third highest in projected population growth.
Twenty-two percent of the state’s population in 2007 was under 18 years old, and 17 percent was 65 years and older. By 2015, 21 percent of the state’s population is projected to be under 18 years of age, and 19.5 percent will be 65 years and older. Furthermore, Florida is a favorite state for many second home buyers, both from other areas in the U.S. as well as from abroad. While the state still attracts retirees, it also appeals to many young college graduates.
A Florida Association of Realtors®’ study conducted by the National Association of Realtors® analyzes mobility and migration trends for Florida, and includes information on recent second home purchase activity. It includes projections for future migration patterns, including expected housing demand by different demographic segments, states with high volumes of in-migration to Florida, and expected changes in the existing home sales.
The report also compares Florida second home purchases to other states; mortgage data on second home purchases compared with primary residences; and recent changes in purchases by income and race.
The complete study is available on floridarealtors.org at:
http://www.floridarealtors.org/LegislativeCenter/Research/index.cfm© 2009 FLORIDA ASSOCIATION OF REALTORS®
First-time homebuyers: How to get the $8,000 tax credit Tax Credit details
Every homebuyer has unique circumstances and specific questions. The National Association of Home Builders (NAHB) has launched a consumer Web site with detailed information and an extensive list of frequently-asked questions. To find out more about the $8,000 tax credit, go here.
WASHINGTON – Feb. 17, 2009 – How does a first-time homebuyer take advantage of the $8,000 tax credit that President Obama is expected to sign into law tomorrow? It comes with a few rules. According to the most recent analysis, the following rules will apply – though things could change as tax professionals weigh the details:
• The deduction is worth 10 percent of a home’s value up to $8,000, which means all homes worth more than $80,000 could qualify for the maximum amount.
• There is an income limit to qualify. A married couples’ modified adjusted gross income (MAGI) should be under $150,000 and single filers’ MAGI should be less than $75,000.
• Partial tax credits may be available for married couples with MAGI incomes over $150,000 but under $170,000, and single filers with incomes over $75,000 but under $95,000.
• If married couples file separately, they can both claim 5 percent of the home purchase ($4,000 each for a home over $80,000) on their tax returns.
• It’s a tax credit, not a deduction. That means the entire amount goes back to the first-time homebuyer unlike deductions, such as mortgage interest, that are subtracted from gross income before tax is calculated. If qualified for $8,000, the buyer gets $8,000, even if they would not owe that much in taxes otherwise.
• The tax credit applies to homes purchased from Jan. 1, 2009, through Nov. 30, 2009.
• The tax credit
does not have to be paid back, providing the homebuyer keeps the property for at least 36 months and resides in the home.
• To qualify as a first-time homebuyer, the purchaser cannot have owned a home within the previous three-year period. However, ownership of a vacation home or rental home does not disqualify the buyer.
• If purchasing a new home, the effective date to receive the credit is the first day the homeowner actually lives in the house. If construction began in 2008, that buyer could still qualify. And if construction begins in 2009 but the owner does not take possession until 2010, the buyer would not qualify.
• The tax credit can be claimed on 2008 income tax forms even though the purchase took place in 2009. A buyer could close on a home the same day that President Obama signs it into law, fill out their income tax forms the next day, and receive the tax credit fairly quickly.
The tax credit is not a downpayment, but it could be used toward a downpayment if first-time homebuyers plan ahead. U.S. taxpayers have money withheld from every paycheck for income taxes. If they owe more tax than the amount deducted, they pay the IRS; if they owe less, they get a tax refund.
By anticipating at least an $8,000 refund in early 2010 when they file 2009 taxes, these buyers could cut down on their tax withholding this year and save the money toward a downpayment. There is one caveat, however: Should they not buy a home in the qualifying period, they would still owe the IRS the money, and reducing their withholding amount could result in a high bill at tax time.
Questions? Call FAR’s Legal Hotline at 407-438-1409. It’s a free call for members except for long distance phone charges, if any.
© 2009 FLORIDA ASSOCIATION OF REALTORS®