With Congress reaching agreement on a $789 billion stimulus package for Americans and the President expected to sign it into law, don’t expect it to help boost the Big Bear real estate market.
The package contains two benefits related to the overall housing market.
The first provision is fairly well-known. It gives first-time home buyers an $8,000 tax credit provided they purchase a home between January 1, 2009 and August 31, 2009.
This is a true tax credit.
To reduce misuse and abuse, however, the $8,000 credit is contingent on home buyers holding property for at least 3 years. If the home is sold in fewer than 3 years, the tax credit must be repaid to the government. It’s also worth noting that the date range applies closings and not sales agreements.
Closings must occur within these 8 months to be eligible.
A second noteworthy feature in the package is that the stimulus package gives existing homeowners incentive to “green” their homes. With available tax credits for energy-efficient windows and doors, furnaces and insulation, homeowners can claim larger tax deductions based on home improvement, up to $1,500.
But, just because the government provides housing-related tax benefits doesn’t mean you should just act on them blindly. Tax liability is a highly individual item and you may be ineligible for any number of reasons. Be sure to discuss your plans with a qualified accountant before committing to a plan.
From a real estate standpoint, the Stimulus Package will have very little impact on home sales in Big Bear. It is well known that most (over 70%) of the homes purchased in Big Bear are second homes or investment properties, so the $8,000 credit would not apply.
There are going to be a few exceptions to this, but it would have been a lot nicer if the $8,000 credit applied to all purchases! Wishful thinking, I know.
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