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Conejo Valley real estate market jump-started by $8k credit plan By Stephanie Bertholdo
The deadline for first-time homebuyers to take advantage of an $8,000 tax credit is Nov. 30. The credit is offered through the American Recovery and Reinvestment Act of 2009.
The tax credit applies to first-time homebuyers. The credit of up to $8,000 is available to homebuyers who have never owned a home or have not owned one in the past three years. To qualify for the credit a home must have closed escrow between April 8, 2008, and Nov. 30, 2009.
The offering is part of President Obama’s economic stimulus package, signed in 2008 and expanded this year. Initially, new homebuyers received a $7,500 tax credit that had to be repaid over time, but provisions in the 2009 version stripped away the repayment requirement as long as the buyers used the new home as their primary residence for at least three years. The 2009 version also raised the credit to $8,000, according to the Internal Revenue Service website, www.irs.gov.
Keith Myers, president of RE/MAX Olsen Realtors in Westlake Village, Thousand Oaks, Simi Valley and the San Fernando Valley, said the credit is “better than a tax deduction.”
“It’s a pure write-off against taxes owed by the individual,” Myers said.
Some restrictions apply. The full credit is available for married couples filing a joint return whose modified adjusted gross income is $150,000 or less. The credit is incrementally phased out for married couples earning up to $170,000.
Single homebuyers’ modified adjusted gross incomes cannot be more than $75,000. The credit is eliminated after earnings surpass $95,000.
According to the IRS website, the credit reduces a taxpayer’s tax bill or increases a refund “dollar for dollar.” The credit “is fully refundable, meaning the credit will be paid out to eligible taxpayers, even if they owe no tax or the credit is more than the tax owed.”
Chuck Lech, branch manager of Dilbeck Realtors with offices in the Conejo Valley and Los Angeles, said the government plan has “absolutely” jump-started the sluggish real estate market.
“It was meant as an incentive and has worked,” he said, adding that low interest rates and the changes in Federal Housing Administration loans have also been a boon to real estate sales. Formerly, FHA loans were targeted to low-income families, but now the programs are intended for all first-time homebuyers.
Lech estimated that 40 percent of the sales in the Conejo Valley can be attributed to the stimulus plan, an estimate that is backed up by a survey published by the California Association of Realtors.
The association’s 2009 First-time Home Buyers Tax Credit Survey, released on Sept. 18, revealed that about 40 percent of first-time homebuyers reported that the federal tax credit played a critical role in their decision to purchase a home. The association surveyed 200 first-time homebuyers in California to determine the effectiveness of the government program.
“It is clear that the federal tax credit for first-time homebuyers is working, as evidenced by the spike in home sales in recent months,” said association president James Liptak. “This tax credit is arguably the most successful strategy employed by the government . . . to stimulate the housing market.”
The National Association of Realtors is lobbying the federal government to not only extend the program through 2010, but to allow buyers in all price ranges to take advantage of the credit, Myers said.
California home prices have declined 59 percent from the peak in 2005, according to data provided by the state association. Nationally, prices have declined by 28 percent.
“While affordability has improved in California over the past two years, it is still lower than affordability nationally,” Liptak said in a media statement. “As a result, the tax credit is an even bigger factor in California compared with elsewhere in the country. Going forward, the credit will be even more important to the housing recovery.”
Lech is happy with the efforts being made by the national association to extend the government program.
“The housing crisis is what got us into this recession. . . . It may be that (housing sales are) what get us out,” he said.
Lech said not many people or groups are complaining about the government subsidy.
“People are gratified that they have the ability to get into a home,” he said. “There have always been tax benefits in homeownership. The government gets a lot of it back.”
The tax credit applies to first-time homebuyers. The credit of up to $8,000 is available to homebuyers who have never owned a home or have not owned one in the past three years. To qualify for the credit a home must have closed escrow between April 8, 2008, and Nov. 30, 2009.
The offering is part of President Obama’s economic stimulus package, signed in 2008 and expanded this year. Initially, new homebuyers received a $7,500 tax credit that had to be repaid over time, but provisions in the 2009 version stripped away the repayment requirement as long as the buyers used the new home as their primary residence for at least three years. The 2009 version also raised the credit to $8,000, according to the Internal Revenue Service website, www.irs.gov.
Keith Myers, president of RE/MAX Olsen Realtors in Westlake Village, Thousand Oaks, Simi Valley and the San Fernando Valley, said the credit is “better than a tax deduction.”
“It’s a pure write-off against taxes owed by the individual,” Myers said.
Some restrictions apply. The full credit is available for married couples filing a joint return whose modified adjusted gross income is $150,000 or less. The credit is incrementally phased out for married couples earning up to $170,000.
Single homebuyers’ modified adjusted gross incomes cannot be more than $75,000. The credit is eliminated after earnings surpass $95,000.
According to the IRS website, the credit reduces a taxpayer’s tax bill or increases a refund “dollar for dollar.” The credit “is fully refundable, meaning the credit will be paid out to eligible taxpayers, even if they owe no tax or the credit is more than the tax owed.”
Chuck Lech, branch manager of Dilbeck Realtors with offices in the Conejo Valley and Los Angeles, said the government plan has “absolutely” jump-started the sluggish real estate market.
“It was meant as an incentive and has worked,” he said, adding that low interest rates and the changes in Federal Housing Administration loans have also been a boon to real estate sales. Formerly, FHA loans were targeted to low-income families, but now the programs are intended for all first-time homebuyers.
Lech estimated that 40 percent of the sales in the Conejo Valley can be attributed to the stimulus plan, an estimate that is backed up by a survey published by the California Association of Realtors.
The association’s 2009 First-time Home Buyers Tax Credit Survey, released on Sept. 18, revealed that about 40 percent of first-time homebuyers reported that the federal tax credit played a critical role in their decision to purchase a home. The association surveyed 200 first-time homebuyers in California to determine the effectiveness of the government program.
“It is clear that the federal tax credit for first-time homebuyers is working, as evidenced by the spike in home sales in recent months,” said association president James Liptak. “This tax credit is arguably the most successful strategy employed by the government . . . to stimulate the housing market.”
The National Association of Realtors is lobbying the federal government to not only extend the program through 2010, but to allow buyers in all price ranges to take advantage of the credit, Myers said.
California home prices have declined 59 percent from the peak in 2005, according to data provided by the state association. Nationally, prices have declined by 28 percent.
“While affordability has improved in California over the past two years, it is still lower than affordability nationally,” Liptak said in a media statement. “As a result, the tax credit is an even bigger factor in California compared with elsewhere in the country. Going forward, the credit will be even more important to the housing recovery.”
Lech is happy with the efforts being made by the national association to extend the government program.
“The housing crisis is what got us into this recession. . . . It may be that (housing sales are) what get us out,” he said.
Lech said not many people or groups are complaining about the government subsidy.
“People are gratified that they have the ability to get into a home,” he said. “There have always been tax benefits in homeownership. The government gets a lot of it back.”
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