Is This a Good Time to Buy a House?

The Facts: My husband and I are thinking about buying our first house.

The Question: Is this a good time to buy?

The Answer: Absolutely! Inventory is high, interest rates are low and Congress has just extended the Homebuyers Tax Credit bill. Under the new bill, even people who are not first time buyers may be eligible for a significant tax credit. Here’s how it works.

The Homebuyers Tax Credit bill provides that first time home buyers and buyers who have not owned a home in the last 3 years may be eligible for a tax credit equal to 10% of the purchase price of the home, up to a maximum credit of $8,000. Both single taxpayers and married couples filing jointly may qualify for the full $8,000 credit, depending on the value of the home and their income. For example, a single first time buyer with an income of $125,000 or less who is purchasing a house priced at over $80,000 is eligible for the full credit. A single buyer earning between $125, 000 and $145, 000 is eligible for a partial credit. Individuals earning over $145,000 annually are not eligible for the credit. Although they are higher, income limits also exist for couples filing jointly.

Current homeowners may also benefit from a tax credit under the Homebuyers Tax Credit bill. Repeat buyers who have used the house they are selling as their primary residence consecutively for 5 of the last 8 years may be eligible for a credit up to $6,500 on their Federal tax return when they purchase a new home. Like the first time homebuyers, repeat buyers must meet income criteria to be eligible for the credit. In addition, all buyers must enter into a written contract of sale by April 30, 2010 and close on their purchase by June 30, 2010 to be eligible for a credit.

Considering the low prices, large inventory, low interest rates, and generous tax credit, it certainly is a very good time to buy a house.

This article first appeared in the November 19, 2009 issue of the Times Beacon Newspapers.

Linda M. Toga of The Law Offices of Linda M. Toga, P.C. is an East Setauket, New York attorney with a general law practice focusing on estate planning, real estate, marital planning, small business services and litigation.