Builders Believe Tax Credit will Boost Sales
September 20, 2008
The Housing and Economic Recovery Act includes a temporary $7500 tax credit that many Tulsa home builders are hoping will put a bit more motivation back into the housing market, which will aid in cutting the excess inventory and stop the down slide of new home prices.
National Association of Home Builders are not only in high hopes of the tax credit but actually bet this will help the slow economy. Of course, what this bill will actually do on the housing market is still up in the air, however, Tim Eller the CEO of Centex Homes was already discussing the possibilities at a conference explaining that builders must find ways to take advantage of this incentive. Pulte Homes announced they would match the tax credit until September 15, before Centex Homes came up with such incentive programs.
The good news is that the $7500 tax credit does not imply the home purchased must be a new construction, thus real estate agents need to find ways to use incentives as well as home sellers. The tax credit is for any home including condos as long as it is the main residence and the sale was closed after April 9, 2088 and before June 30, 2009. With this good news, agents need to be using this information to help their clients find their dream homes.
For Tulsa home buyers you cannot wait until the last minute to find a home as the cutoff date of June 30 states that you have to close the deal before this date, signing a contract is not enough.
To look a bit closer at the bill, the credit is really 10% of the purchase price or $7500 which ever is the lesser, for married taxpayers that file jointly. For singles or married filing separately, the maximum tax credit is $3500. For unmarried couples purchasing a home together, the tax credit can be divided equally.
Remember, this is tax credit, meaning it has to be repaid. The repayment will be at the rate of $500 each year for 15 years. The repayment will begin two years after you claim the credit such as if you plan to claim the credit in 2009, you will begin to repay in 2011.
This may or may not sound too good for most home buyer, however, if you have an interest free loan from Uncle Sam you will be able to save quite a bit over the next 15 years.
An example posted by the National Association of Home Builders explains:
“Assuming an interest rate of 7 percent and a maximum credit, you will save $4,200 in interest payments over the full payback period. Compared to financing $7,500 as part of a 30-year, 7 percent mortgage, and the credit is worth more than $8,100 in interest payments.”
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