Homebuyer tax credit gets extended life

With a Nov. 30 expiration looming, Congress recently extended and expanded a tax credit for first-time homebuyers that Realtors in Westchester said has had little direct impact on house sales in the county”™s high-priced market.

An added federal tax credit for established homeowners buying a new home that Congress also approved could give more of a boost to the housing market here, Realtors said.

The credits were inserted as amendments to an unemployment benefits extension bill that was quickly approved by both the Senate and House of Representatives. President Barack Obama”™s White House staff has indicated he will sign it into law.

Eligible first-time buyers will have until May 1, 2010 for purchases. Those with binding contracts in place by April 30 will have until July 1, 2010 to close on house sales. Couples buying their first home can claim a credit of $8,000 on their federal tax returns. Individuals can claim a $4,000 credit.

Congress also raised the income limit by $50,000 for eligible first-time buyers, to $125,000 for individuals and $225,000 for couples filing joint returns. Buyers whose income is no more than $20,000 over those limits will receive partial credits.

To further spur housing sales, the Senate added a tax credit for repeat buyers. Couples can claim a $6,500 credit and individual tax filers can claim $3,250 for home purchases between Dec. 1 this year and May 1, 2010. Eligible buyers must have lived in their homes consecutively for five of the previous eight years. The same income restrictions apply as for first-time buyers.

No credit can be claimed for house purchases over $800,000.

Economists at the National Association of Realtors estimated the current tax credit for first-time buyers has contributed approximately $22 billion to the general economy and approximately two million people will take advantage of the credit this year.

In the Westchester market, “I can”™t really point to anybody who bought a home because of it,” White Plains Realtor Henry W. Fries said of the credit included in the federal stimulus package this year. Rather, “It”™s the perception that somebody”™s doing something to help them get a house ”¦ It puts a different mood in the market.”

Fries said both homebuyer credits would have greater impact if they were federal payments that could be applied to down payments on house purchases. “People are having trouble with the down payment. This bill doesn”™t monetize it and get it up front as a down payment,” he said.

Fries, president-elect of the New York State Association of Realtors, said the homebuyer credit will have more of an impact in upstate markets such as Buffalo. In those markets, “It means an awful lot. We definitely want to have it extended.”

Perry Goldman, president of New Home Sales & Marketing Inc. and Westchester Condos & Coops in Croton-on-Hudson, said the first-time homebuyer”™s credit “is almost all gloss.” Though eligible buyers are in the market for condos and coops priced at $250,000 to $350,000, “It is inapplicable to the typical Westchester buyer with our median prices for single-family homes.”

That median price was $630,000 in the third quarter this year, down from $730,000 two years ago, according to the Westchester-Putnam Multiple Listing Service.

In the Hudson Valley, where Goldman has sold more than 300 subdivisions and currently is marketing The View at Pomona, an active-adult community, “I would say that at least a third of the sales recently are first-time homebuyers” using the federal credit “and another third are foreclosures and short sales. Only about a third of the market are your typical pre-recession buyers.”

Goldman said the $6,500 credit for move-up buyers “should have a very positive effect” for those who qualify. “If they can sell their house, they can now sell it for $6,500 less,” he said.

Gov. David A. Paterson this year announced a state Mortgage Credit Certificate program that allows first-time homebuyers to claim an additional federal tax credit amounting to 20 percent of their annual mortgage interest payments. That program last month was limited to homes bought in target areas around the state; in Westchester, those are limited to neighborhoods in Mount Vernon, New Rochelle and White Plains.

Fries said the governor”™s bill to extend the mortgage credit, which expires at the end of this year, seems to have little support in the State Legislature.