At a glance
The Homeowner Affordability and Stability Plan extends the existing tax credit of as much as $8,000 for first-time homebuyers to the middle of next year and establishes a new credit of as much as $6,500 for current homeowners who plan to buy. It requires that a contract be signed by the end of April. Buyers also need to have lived in their current home for five of the past eight years.
Homeowners may retain their existing home and rent it, or use it as a vacation home.
Other provisions include:
■ The $6,500 credit is available for homebuyers who sign a contract on an existing home by April 30, 2010, and close by July 1.
■ The cost of the new home may be as much as $800,000.
■ Buyers will not have to repay the $6,500 as long as they occupy the new home for at least three years.
■ The credits do not apply to previous sales — the purchase must have happened after Nov. 6.
■ The home purchased must be the primary residence of the buyers.
■ It is allowable to trade down to a less expensive home.
■ Income limits for existing homeowners are $125,000 for a single person and $225,000 for a married couple.
Steamboat Springs Steamboat Realtors are optimistic that the combined effect of twin federal tax credits for homebuyers could unstick a portion of the local real estate market.
President Barack Obama on Nov. 6 signed legislation extending the $8,000 tax credit for first-time homebuyers that was scheduled to expire Nov. 30 and at the same time approved a new tax credit of as much as $6,500 for current homeowners interested in buying a new home.
Some Steamboat Realtors say some owners of modest townhomes, for example, would like to buy their first single-family home, but they can’t pull the trigger until they capture equity from the sale of their existing home. They say the twofold tax credits could generate multiple related sales.
“This will trickle down to Steamboat. It will stimulate our housing market,” said Michelle Diehl, of Prudential Steamboat Realty.
Diehl observed that the original tax credit for first-time homebuyers is thought to have stimulated 400,000 home sales nationwide. Some forecasts say the extension of that tax credit combined with the new one could stimulate an additional 450,000 sales, she added.
“I was working with several first-time buyers who couldn’t get their financing together before the Nov. 30 deadline,” Diehl said. “They’re going to be thrilled with this extension.”
Theoretically, buyers who wouldn’t have found a way to purchase their first home in Steamboat without the help of the tax credit also could help other property owners move up in the market, said Coleman Cook, of Colorado Group Realty.
“This extension is a key ingredient in providing the opportunity for this potential chain of events to occur,” Cook said. “It’s a win-win-win scenario that could potentially help as many as three separate families or individuals buy and sell real estate here in Steamboat.”
The need for the tax credits to stimulate home sales is more acute here, Cook said, because the pool of first-time buyers has shrunk because of the loss of construction jobs and the increasingly stringent terms for loan qualification.
“I have many clients who are trying to take advantage of current prices and buy up to a single-family residence; however, they are having a difficult time selling their existing townhome or condo to make that possible,” Cook said.