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San Fernando
Thursday, Mar 28, 2024

Take It From Experience, Homebuyer Tax Credit Works

A couple months ago, I decided to sell my house in Albuquerque, N.M. So I traveled to the Duke City, did some upgrades and maintenance, and worked with a Realtor to get it on the market in the last week of September. The 1,300 square foot home, which I purchased in 2004, has three bedrooms, two baths and a large landscaped backyard. It’s located in a nice part of town, the Northeast Heights, but not too nice. Asking price: $190,000. The last time I tried to sell was exactly a year ago, right as the economy was tanking. I put my For Sale sign up and within a week 20 other people in the immediate vicinity did the same thing. Home values had also plummeted. Fear was in the air. Last year I showed the house twice over a two month period. And 90 percent of the telephone inquiries I got were from people asking if I could carry the note –indicative of the tight credit markets. So I chose to rent it out instead. My hopes were not high this time around. But being an out-of –state landlord is also not my cup of tea. In the first two days on the market, my Realtor showed it five or more times to quality prospective home buyers. An offer was on the table by day three. If all goes as planned we’ll close on the sale by the end of the month. Sales price: $185,000. My Realtor no doubt helped it sell quickly. But my hunch is another factor weighed into the process: The house was priced in the “starter home” category at a time when many buyers are taking advantage of the federal government’s 2009 First-time Home Buyer Tax Credit. I didn’t grill prospective buyers, but my guess is the economy showing signs of recovery plus the $8,000 tax credit increased the activity in my neighborhood. Maybe a coincidence, but I noticed in September that there were a lot less homes on the market in my neighborhood. The tax credit is set to expire on Dec. 1, and there’s a lot of talk about whether it should be extended and possibly expanded. My answer is unequivocally, “Yes!” and not just because it may have helped sell my home. The National Association of Realtors projects that by the end of the year the program, in addition to high affordability, will have brought two million new buyers into the market. About 350,000 of those people would not have bought without access to the tax credit. Home sales nationwide would have declined six percent for the year without the program. Instead, sales are projected to be up about 1.5 percent for the year, according to a spokesperson for the association. The credit applies to first-time home buyers who purchase homes between January 1, 2009 and December 1, 2009. To qualify the purchaser or his/her spouse may not have owned a residence during the three years prior to the purchase. The credit may be applied to primary residences, including single-family homes, condos, townhomes, and co-ops. Each home buyer’s tax credit is determined by the price of the home -the credit is equal to 10 percent of the purchase price of the home, up to $8,000; and the buyer’s income -single buyers with incomes up to $75,000 and married couples with incomes up to $150,000 may receive the maximum tax credit. The credit decreases for buyers who earn more. The San Fernando Valley’s real estate market is a lot worse off than Albuquerque, which makes this credit even more important locally. There’s still a glut of homes on the market and honest people out there who could benefit from selling their homes, even at a loss, and getting on with their lives. Selling my home in Albuquerque is beneficial for the buyer, Realtor, me, and even California. The buyer gets a great home in a great neighborhood at a price that’s a lot less than it would have been a couple years ago. As the market recovers, the home is in a prime location to steadily increase in value and boost the buyer’s equity and wealth. My Realtor is a good friend who has had to hussle to make ends meet lately. So I can honestly say I’m glad to pay her a commission on the sale. She earned it 100 percent. I didn’t make a ton of money, but I also didn’t take a loss. For me, the benefit is that I’m no longer financially tied to New Mexico and the stress of managing a rental property from out-of-state. Since moving to California last March, I’ve also been living in an apartment that’s “cozy” to say the least. Proceeds from the sale will immediately go towards securing a larger abode. Then I will start looking for opportunities to invest, and maybe even by a home, right here in California. Staff Reporter Eric Billingsley can be reached at (818) 316-3124 or at [email protected].

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