Most have heard Congress recently passed legislation allowing qualified first time home buyers to receive a tax rebate of up to $8000. Google it and research the benefits if you haven't done so. Unlike the 2008 version, this rebate doesn't have to be repaid! It is an excellent attempt to propel the real estate business, and I believe it will have a great impact if the lenders will use their bail out money to join in the common cause. Even though the tax rebate only applies to first time buyers, sellers of all types of properties should see benefits as a result of the property ladder . . .
What I've been terming "The Property Ladder" works like this:
- Once a first time home buyer is preapproved for a loan, they choose a Realtor and buy a starter home listed for sale - the first wrung of the ladder.
- The seller of the starter home is then able to buy a bigger house perfect for their growing family - the next wrung up the ladder.
- This allows the Seller of the bigger house to finally move to the house of their long-term dreams - the next wrung up the ladder.
- The seller of the dream house is now a happy retiree able to buy a condo in Florida, a lake home in Hartwell, and a couple of rental investment homes in Athens, because the rental income pays their annual tax bills on all of the properties.
When the banks began pulling back on funding and tightening regulations, more first time home buyer candidates had to remain renters. Thus all of the houses on the market took longer to sale: from starter homes to family homes to dream homes, and so on, and so on.
Obviously, moving the starter homes is an opportunity for everyone hoping to sell; Family homes, Florida vacation homes, Hartwell Lake homes, townhomes, mansions, and even double wides.
Because qualified applicants can file for the rebate with their 2008 tax return, or lower their withholding over the course of 2009 by the amount of their rebate, the tax rebate should help first time home buyers with the expenses of first time home ownership. I should also add that most foreclosures can be purchased at large bargains, but often need work. This requires cash many starter home purchasers don't have after going through the process of putting a downpayment on a house. This rebate allows them a means to pay for those repairs and begin filling some of the empty shells left after foreclosures.
Oh - and parents of college students - I think this is a great opportunity to experience the benefits of the rebate while helping your college student grow their credit: Gift them the funds and assist them with Buying the house they currently rent (I even know of a lender who can offer 100% financing!). Have their roommates continue to pay rent, and your college student will have an income stream while also receiving a tax rebate that will assist in their education expenses for the year - and gain equity throughout their college career. BTW: A good property management company (All Hart Realty, for instance!), can manage it for him or her, collect rents from their roommates, pay the mortgage, make repairs, and simply cut a check to your son or daughter every month for you.
Encourage everyone you know who can benefit from the tax rebate to buy! Contact me anytime, and I'll work with you to help determine your elligibility.
