Downsizing Buyers Are Eligible for a Tax Credit, Too!

It’s hard to believe but there are many people that still do not know about the changes in the first-time homebuyer tax credit! The biggest change is that now the tax credit applies not only to first time home buyers (and those who have not owned in 3-plus years) but to anyone that purchases a home within the new guidelines. (The credit for first- time buyers remains at up to $8,000 based on the home price as well as their income.)

Vicki Aubry, Realtor, ABR Mobile: 508-868-3625 Voicemail Pager: 508-365-4060 Email: Vicki.Aubry@NEMoves.com Website: www.VickiAubry.com Therefore, two large groups that were not included in the first tax credit that expired Nov. 30, 2009, can now take advantage of this new Home Buyer Tax Credit! They can be eligible to receive up to $6,500.

The first group of potential buyers is the “move up” buyer, someone that has outgrown their current home or needs more space for any reason or perhaps would like to move due to new geographic requirements – a job change or family needs, for example.

The second group of potential buyers is the “downsizing” buyer.

Some years ago when the market was hot and prices were escalating, the downsizing buyer was in the driver’s seat. They had healthy proceeds from their homes and were able to not only purchase a more suitable home or condominium, but they also were able, in many cases, to take a good chunk of those proceeds to invest or put cash in the bank. As the market changed, this became harder and harder to do for this group as often times their house was their only large asset and as prices went down, so too did the ability to be able to sell with the idea of putting away some cash and also buy a new more suitable home.

Finally, prices have stabilized so this potential buyer is able to put their current home on the market without the fear of freefalling prices and move forward to purchase a more suitable property. Unlike the move-up buyer, health concerns, proximity to extended family, and the toll it takes physically just to move are all issues that cannot be put on hold for too long with a downsizing buyer. However, for those that still have good equity in their current property this new tax credit does not have the requirement that the current home must be sold by a certain date, therefore this buyer can close on a new home using some equity from the old home or with a mortgage and continue to own that first home to use as an investment or to hold onto until as some point in the future the market improves.

This buyer is eligible for the $6,500 credit, assuming they fit the income guidelines of $125,000 for a single or $225,000 for a married couple. Also, the home they purchase cannot be over $800,000. Further, they must have lived in the home they came from consecutively for five of the previous eight years and the new home must become their principal residence, not a vacation home or investment home.

For this group, who had a lot of equity in their homes that has been depleted a fair amount due to the change in the market over the past few years, a tax credit of $6,500 could mean the difference in making the move or not! The time will run out quickly as you will need to be under agreement by April 30 2010, and close by June 30, 2010.

So, give me a call so we can get started!