With the holidays upon us, hopefully you are experiencing the festive spirit of the season, a time of the year when we are—or at least intend to be—a bit nicer and extend ourselves to help others.
Now I don’t know if anyone has ever experienced this on Long Island, at least the Long Island that I know. If anything, people get surlier as they prepare to fight for that elusive parking space at the mall or battle check-out lines that rival a run on a help wanted sign during the Depression. And given the year we’ve had, you can bet this one will probably be a little bit rougher with nerves worn thin simply by the act of giving.
For many, surviving has taken the place of splurging. It’s been a mean economic year resulting in the loss of homes to foreclosure, leaving many homeless during this holiday season. In fact, the Nassau and Suffolk region was among the state leaders in regard to the number of foreclosures in 2009.
But not all news related to the housing market is of the bad variety. In an action that could be interpreted as a sign of the season, Congress passed, and President Obama signed, an extension of the Homebuyer Tax Credit that was scheduled to expire at the end of last month.
For many, surviving has taken the place of splurging.
What does this mean for those in the market to buy a home on Long Island? Up to an $8,000 tax credit for those who qualify for the program, which has been extended through April 30, 2010 with the potential for an additional 60-day extension for those who have entered in contract to buy a home by April 30 (provided the closing take place by June 30, 2010). There are catches to the program, but their impacts are minimal. For example, the home being bought must be the principal residence of the applicant. A positive of its latest incarnation, there is no requirement that the credit be paid back—as was the case with the Housing and Economic Recovery Act of 2008—so long as the home being acquired remains the principal residence of the applicant for at least three years. Hell, it will take you that long just to pick out a paint scheme for the new place.
The initial phase of the highly successful program—the National Association of Realtors credits the program with the sale of more than 400,000 homes since its inception—targeted first time homebuyers, which by definition of the IRS are taxpayers who have not owned another principal residence at any time over the three years prior to the date of purchase. The second phase of the program targets this same demographic and those who are not first time home buyers, who can receive a tax credit of up to $6,500 provided these buyers have owned and occupied a principal residence for five of the last eight years.
The income levels for those who buy a home after November 6, 2009 has been raised to $125,000 for a single person from $75,000 and $225,000 for a couple, up from the previous limit of $150,000. Above those numbers, a phase out of the tax credit is incorporated. The maximum home price that will still qualify for the credit is $800,000, but it is obvious the program is intended for home buyers looking for homes more moderately priced.