Michael and Dianne Page took more than two years to look for a home before finally closing on a 3,000-square-foot ranch in East Lyme last month.
During their long search, the Pages and their two young children stayed with Dianne's parents in Windham, saving up money and watching real estate prices and interest rates nosedive. Finally, just as they narrowed their search for a home - and as the seller accepted an offer for $200,000 less than a previous asking price - Congress passed a housing-stimulus bill that offered first-time home buyers like themselves up to $8,000 in tax credits.
| FIRST-TIME HOMEBUYER CREDITS
The tax credit is equal to 10 percent of the home's purchase price up to a maximum of $8,000. Any home above $80,000 would be eligible for the full credit.
The tax credit is for first-time home buyers only, which is defined as anyone who hasn't owned a home in the past three years. Spouses of homeowners are ineligible, but their children or parents may be eligible.
The tax credit is not a loan and never has to be repaid, unless a house is sold within three years. If the home is sold in the first three years after it was purchased, the owner will owe the government the full tax credit they receive.
The credit will be given to first-time buyers of homes in which closings are conducted on or after Jan. 1 and before Dec. 1.
Unmarried people with incomes $75,000 or less and married couples with incomes up to $150,000 will get the full tax credit. People with higher salaries will get progressively smaller credits as their income goes up.
Only single-family residences are eligible, including condos, co-ops and townhouses, if they are used as a principal residence.
SOURCE: EASTERN CONNECTICUT ASSOCIATION OF REALTORS WEB SITE
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And there was one added bonus: the stimulus bill allowed the Pages to amend their 2008 tax returns and get an $8,000 bonus from the government this year. While other people who close on homes later this year will have to wait until next year for their government payments, the Pages expect a check sometime in the next few weeks.
”It was great,” Michael, 33, a United Parcel Service employee, said of the tax credit. “It made a lot of things possible.”
For one, the money will ease concerns about a 10 percent down payment on the house depleting their financial cushion. The extra money also may come in handy if the Pages decide to make some needed cosmetic changes.
Real estate agents say the $8,000 tax credit is helping to drive new interest in home buying as the busy spring selling season gears up. It doesn't hurt that interest rates are hovering around historic lows, prices are down to 2004 levels and the number of homes on the market offers buyers many choices.
”This is like a perfect storm to buy a house,” said Neal Kachinsky of Weichert Realtors in Mystic. “People buying now will, in a few years, be rewarded. You need to buy things when nobody wants them.”
Kachinsky and other agents said the new tax credit, which replaces a $7,500 tax deferment offered last year that amounted to an interest-free loan, is bringing out new buyers who have been sitting on the sidelines during a lull in the real estate market.
It's also bringing out singles like 23-year-old Zachary Withrow, who said he never really thought of buying a house until the tax credit came to light. He figures to take the $8,000 credit and use it for some kind of investment, whether it be a long-term Individual Retirement Account or a bet on the stock market.
”It was actually a suggestion from my parents that got me thinking about it,” Withrow said. “They said the government probably would never give you money again like this.”
