It's official! President Obama today signed legislation H.R. 3548, which includes a provision to extend and expand the $8,000 first-time home buyer tax credit, with a new $6500 Credit for current homeowners wishing to move up. The New Jersey Association of REALTORS® (NJAR®) anticipates that the newly signed legislation will help maintain the recent momentum seen in the New Jersey real estate market and spur the state's economy as a whole.
"It's a brand new day for those first-time home buyers who were rushing through their transaction in anticipation of the original November 30th deadline because they now have more time to complete the process," said NJAR® Executive Vice President Jarrod C. Grasso, RCE. "The extension to April 30th of next year is key because these new buyers now have the opportunity to analyze every aspect of their purchase carefully and still close in time to obtain the $8,000 credit."
The legislation will extend the $8,000 first-time home buyer tax credit past its original November 30 deadline, and it will now be available through April 30, 2010. Additionally, existing homeowners who have lived in their homes for at least five consecutive years out of the last eight will be eligible for a credit that can total $6,500. In both cases, a written, binding contract to purchase must be in effect by April 30, 2010, and the purchaser needs to close by July 1, 2010.
On the "trading up" side, Goldman Sachs estimates as many as 70 percent of owners will be eligible.
"The credit has been shown to be a powerful incentive that significantly spurred the real estate market here in New Jersey," said Diane Dilzell, president of NJAR®. "Expansion of the tax credit to current homeowners is bound to aid in continuing to elevate the housing market and the economy further as it offers a bonus to those buyers. In addition to experiencing low prices and low interest rates, current homeowners are now faced with a prime opportunity to trade up to the home of their dreams."
The new law raises the limits for first-time buyers. The new limits for obtaining the full credit are $125,000 for a single person and $225,000 for a married couple. Individuals earning up to $145,000 and married couples earning up to $245,000 are eligible for partial credit.
According to data from the NATIONAL ASSOCIATION OF REALTORS® (NAR), in New Jersey, the home buyer tax credit has brought in an additional 6,500 buyers into the market in 2009 compared to 2008. NJAR® is hopeful that the credit extension and expansion can lead to continued growth in 2010.
More than 1.4 million people nationally have claimed the original tax credit, based on figures provided by the Internal Revenue Service (IRS). About 350,000 of those would not have made their purchase without the tax credit, according to estimates from NAR.
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