Colli Real Estate

What Happens When The First Time Homebuyer Tax Credit Expires?

The stimulus bill was packed full of government programs designed to get the economy moving again. Some were popular. Some were not. Some were successful. Some were not. The first time homebuyer tax credit has turned out to be highly popular and a boon for the real estate industry. Still, what happens when it expires?

The first time homebuyer tax credit is designed to help the lowest rung of the home buying market get moving. It does this by giving first time homebuyers a tax credit up to 6.2 percent of their income. The 6.2 figure is actually a bit of a red herring as the credit is capped at $8,000. Still, it is a health contribution to the down payment on a home for someone making the plunge the first time. The program is also government friendly as the tax credit has to be repaid in 15 annual payments starting in 2010.

I don’t have to tell you the real estate market has been morbid since 2007. Foreclosures. Bankruptcies. Bank failures. The Great Recession. It has been a scary time and remains so. Still, the real estate market has seen some positive improvement as people have taken advantage of the government program. There is one date though that makes many in the business very nervous – November 30, 2009.  This is the date the credit expires.

The big question in the real estate market is what happens when the calendar turns to December 1, 2009. The demand for housing is going to fall again as most people interested in buying are doing so before the deadline. December is not exactly a hot month in real estate during the best of times, but what about 2010. Will the tax credit give the market a bump that builds momentum or just a one time bump that really solves nothing?

If I could read the future…I’d be floating around on my yacht and not typing this. That being said, the housing market appears to be in for another tough period in late 2009 and into early 2010. The help given to first time buyers is a good thing, but growth is going to be stagnant as long as unemployment is in the 9 to 10 percent range. There simply is no way to avoid that fact.

About the Author

Thomas Ajava is with CPATaxAttorneyMariettaGeorgia.com where you can locate a CPA – tax attorney in Marietta, Georgia.

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