New tax credit handy for new home buyers – Desoto Times Tribune, Hernando, MS

By ROBERT LEE LONG – Community Editor

rlong@desototimestribune.com

 

Published: Monday, April 20, 2009 7:55 PM CDT

 

DESOTO COUNTY ?  While new home sales and building permits have taken a dive due to the ailing national economy, local real estate experts say new tax incentives could help boost the industry.

 

That is, if new home buyers are aware of the incentives and take advantage of them.

 

On Feb. 17, President Obama signed into law the American Recovery and Reinvestment Act of 2009, which includes tax credits and incentives for new home buyers. As part of $787 billion in economic stimulus measures, the legislation created a home buyer tax credit that is larger than the previous credit implemented in July 2008.

 

Among other things, the tax credit provides $8,000 toward the purchase of a home. The incentive applies to first-time home buyers only. In order to qualify, individuals must not have owned a principal residence in the last three years. The $8,000 is a grant not a loan and, unlike the tax credit enacted in 2008, does not need to be repaid unless the owner sells the home within three years of purchase. The credit applies to homes purchased and closed between Jan. 1 and Nov. 30, 2009.

 

The tax credit applies toward the purchase of a principal residence only. Investment and vacation homes do not qualify.

 

Leigh Anne Boyd with Crye-Leike in Olive Branch said only about half of the home buyers she works with were aware of the tax credit.

 

“If they haven’t heard of it, they hear it from me or from the loan officer,” she said. “But only about 50 percent come in knowing about it.”

 

Boyd said the tax credit has helped the local real estate market, but just how much is hard to say.

 

“It has factored into our upswing,” Boyd said. “But it’s more of an after-the-fact benefit.”

 

Boyd said she hasn’t seen home buyers flocking to the market because of the incentives.

 

” Most are looking forward to it to reimburse savings or for future furnishings or upgrades to the home.”

 

Donnie Chambliss III, president of the Home Builders Association of North Mississippi, said prospective new home buyers need to act quickly to take advantage of the tax credit.

 

“This new tax credit provides an unprecedented opportunity for people looking to buy their first home,” Chambliss said of the legislation.  “In addition to record-low interest rates and competitive prices first-time home buyers will receive $8,000 from the IRS. With electronic filing, some home buyers have already received their credit drafted directly into their checking account.”

 

“This opportunity won’t be around forever,” Chambliss said.” Keep in mind that you have to purchase your home and close before Nov. 30.”

 

There are income limits for claiming the tax credit. The income limit for single taxpayers is $75,000; the limit is $150,000 for married taxpayers filing a joint return. The tax credit amount is reduced for buyers with a modified adjusted gross income (MAGI) of more than $75,000 for single taxpayers and $150,000 for married taxpayers filing a joint return.

 

Robert Lee Long: rlong@desototimestribune.com or at 662-429-6397, Ext. 252