Sometimes, it pays to read more than just the headline in the newspaper.
The biggest real estate headline last week announced the extension of the $8000 first time home buyer tax credit through April 30, 2010.
But if you stopped reading there, you probably don’t know there’s more to the story.
Now there’s a tax credit for existing homeowners too.
If you’ve owned a home or owner occupied a duplex for the last five years, you are now eligible to earn up to a $6500 tax credit if you sign a purchase agreement before April 30.
The credit may be applied for purchases of up to $800,000 for single family homes.
While I have not seen a cap on the purchase price of a duplex, only the portion of the property you intend to owner occupy is eligible to earn either tax credit anyway. For example, if you purchased a duplex for $200,000, you would count the value of your half, or $100,000, toward qualifying for the credit.
As always, any type of property you use as your principal residence may qualify for the credit. Vacation homes, however, do not count.
There is some debate among those who have the time to argue such issues as to whether or not the tax credit for existing property owners will help stimulate sales. The naysayers argue as these people have property to sell before they can buy, more inventory will hit the market, therefore further supressing prices.
In my opinion, if those people have duplexes or single family homes appropriate for first time home buyers, the additional inventory would be welcome. There just aren’t that many good lower end properties out there to choose from.
According to the Wall Street Journal, Mark Zandi, the chief economist at Moody’s Economy.com, agrees with me. He thinks the expansion of the credit will result in 500,000 more home sales by the end of April.