Buyers & Sellers, Buying & Selling, Contributor Article

Picking holes in $6,500 tax credit

Some doubt incentive is enough to motivate homeowners

When President Obama signed into law the Worker, Homeownership and Business Assistance Act of 2009, it extended the $8,000 first-time homebuyer tax credit as well as offering a new tax credit up to $6,500 for current homeowners who buy a new primary residence.

The law also extended the strongest driving force in housing today. How big of a force is it? According to the Internal Revenue Service, more than 1.5 million claims were processed from individuals and families who have purchased a home between January and September 2009, and the National Association of Realtors estimates that some 350,000 of these buyers would not have purchased the home without the tax credit.

In addition, analysts say that more than two-thirds of all current homeowners and nearly all first-time buyers will be eligible for the credit extension.

While there’s no doubt that the first-time component will continue to be popular, how many existing homeowners who qualify for the new $6,500 credit will actually use it?

Before we present some basic projections from a professional survey, let’s consider some realistic domestic timeframes. Here are the important dates to remember:

Nov. 7, 2009: For current homeowners, the home must be purchased on or after Nov. 7, 2009, to qualify for the credit.

April 30, 2010: Purchase and sales agreements must be dated by all parties with a date on or before Friday, April 30.

June 30, 2010: Purchases must close on or before Wednesday, June 30.

The big question for current homeowners is if the window is wide enough to even consider the incentive. Would you, especially if you had not considered selling your home, now uproot your family for $6,500? Would you even consider the anxiety of marketing your home during the holidays or gambling that an acceptable offer would be signed all around by April 30? …CONTINUED