Coach Patti's Blog

Someone will spread the word – shouldn't it be you? I'm talking about the new economic stimulus tax credit that is waiting like a plum ready to pick beginning March 26, 2009. It's ripe and ready to be enjoyed by first time homebuyers, but this plum is also good news for just about everyone in real estateFirst, what are the essentials of the stimulus package's credit? Here are the basics I've gathered from various news sources:

• Up to $8,000 refundable tax credit if you buy (settle on) a home between March 26 and December 31, 2009.
• You must be a first time homebuyer, BUT if you have not owned a home in the past three years, you qualify as that first time homebuyer.
• You have to use the home you buy as your principal residence, not a second home or investment property.

Now for a few explanations:

• "Refundable" means that the credit is deducted from whatever you owe on your Federal tax return for 2009 (the one you file in April, 2010.) If you owe less than $8,000, the difference is refunded. For example, if you owe Uncle Sam $6,200 before the credit, IRS will send you a refund check of $1,800 after applying that credit.
• You don't have to file any special forms or papers now to get the credit – you'll do that when you file your tax return next year.
• There is a limit on the amount of the credit if your Modified Adjusted Gross Income is more than $75,000 for single taxpayers or $150,000 for married couples. Above those limits there are some partial credits available. The tax forms for 2009 will probably explain what to do about the limits, but you should consider consulting a tax professional like a CPA or Enrolled Agent.
• You do not have to repay the credit in the future unless you sell that house before you live in it for three years. In that case the full credit will be taken back at settlement.

The big question is, what does this mean for your business in real estate, and why should you be excited about it?

Suppose you know a young person or couple who want to buy a house but have been holding back. They are thinking, "We can't buy a home now, we'll have to wait." You can now say, "Maybe you can. Let's take a look at it now with an extra $8,000!"
 
I can tell you for sure that this makes a difference right in my own family. Three years ago my son sold his home and has been renting since. He thought he would just wait a few years before buying again, but this new tax credit has changed his perspective. With $8,000 credit, he's gone from thinking, "I can't," to "I can!"
 
Here's a great opportunity for you as the professional to remind people that all the elements are in place for them to take advantage of this credit. There is plenty of inventory, as we know. Mortgage money is cheap. And now the government will help you buy. Maybe the person you are talking with doesn't plan to buy a house, but what if they have a child or sibling in the market?
 
Whether you think the stimulus plan is good for the economy or not, it is here. Why not take full advantage of what it offers so that you can help your clients and your business? Talk it up. Get people thinking positively about possibilities. The only way you're going to change your economy is find the opportunities today and take then to the people who can use them.
 
Ready to ride? Go spread the word!
 

Patti Kouri, Accelerated Performance Coaching
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