NEW YORK —President Barack Obama announced an $8,000 tax credit for first-time homeowners as part of his economic stimulus package, but many Americans are not impressed, and many more don’t even know about it. That’s according to a new survey by Move, Inc., a web-based real estate listing company.
The survey says that while 18.1 percent of homebuyers plan to take advantage of the $8,000 tax credit this year, nearly half said they didn’t know about the credit. Another 29.3 percent said the credit wasn’t large enough to inspire them to buy.
Potential homebuyers with higher incomes are more interested in the tax credit than those in lower income brackets, as 43.4 percent of first-time buyers earning $50,000 or more say they plan to use the tax credit.
The credit is applicable to individuals earning an adjusted gross income of less than $95,000 and married couples filing jointly who earn less than $170,000. Only purchases made between Jan. 1 and Nov. 30 qualify. A first-time homebuyer is defined one who has not owned a primary residence in three years. The amount the credit reduces the taxed owed is 10 percent of the home’s purchase price up to $8,000.
Those who have already filed their taxes but are planning to buy a home in the next few months can redeem the credit by amending their 2008 return or claim the credit in the 2009 return instead, according to the IRA website. To apply for the credit, file Form 5405 with your 1040. The form is available on the IRA website.
Buyers Warming Up, Though Slowly
A combination of low home prices, favorable mortgage rates, and tax incentives are encouraging more people to make the leap to home ownership. According to the Mortgage Bankers’ Association’s March 13 Weekly Mortgage Applications Survey, the number of home loan applications rose 21.2 percent that week compared to the week prior. Of that, most are applications for loan refinancing, but a slight increase in purchases is paired with the surge.
The average mortgage lending rate for a 30-year fixed rate dropped from an already-low 5.14 percent on Feb. 27 to 4.96 percent on March 6.
The interest to buy is there. 23 percent of adults surveyed by Move, Inc. plan to purchase a home in the next five years, and more than half of them (53.5 percent) are first time homebuyers.
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