Tax credits move home buying season up

Normally, the busiest time of year for home sales begin in the spring. Since residents need to have a contract on a home by the end of April 2010 to qualify for the federal tax credits, that time frame has been significantly moved up, said Barb Chasteen, president of the Middletown Board of Realtors.

“Even with the snow, our last few open houses have been full. When we’ve been doing showings, one couple is coming out when the next one is coming in. It’s very busy,” she said.

On average, it takes 45-60 days to close on a house, “so residents should begin the search now,” said John Prazynski, president of the Hamilton-Fairfield-Oxford Board of Realtors.

Why Butler County is the place to buy

Greater Cincinnati has been identified by Forbes Magazine as one of the top 10 regions in the country where it makes more sense to buy rather than rent. With a median home price of $131,700 and the average rent pegged at $663, economically it is better to own, according to the report.

“Greater Cincinnati has long been known as a place to live where a great quality of life can be affordable,” said Dan Dressman, executive director of the Home Builders Association of Greater Cincinnati. “The federal tax credit available on purchases made by April 30 makes homeownership now even more attractive.”

Close to major highways and situated between Dayton and Cincinnati, the area is also the perfect halfway point for commuters, Chasteen said.

“This is especially the time to buy in Middletown because who knows where we are going to be soon,” she said. “I think five years from now we are going to be up. Maybe we are going to be the next West Chester.”

How tax credits work

There are two tax credits up for grabs: one for first-time buyers and one for existing homeowners. Both credits require buyers to have a contract placed on the home no later than April 30, 2010 with closing completed no later than June 30, 2010.

• First-time homebuyers: Residents purchasing their first home can claim 10 percent of the home’s sale price up to $8,000. This means homes with a purchase price of less than $80,000 would not receive the full credit.

According to the Internal Revenue Service, to qualify as a first-time homebuyer, you must not have owned a primary residence within the last three years.

To claim the credit on a 2009 tax return, buyers must now file a paper return. Attach form 5405 to the return and the settlement statement showing all parties’ names, signatures, purchase price and date of purchase. New home construction buyers must attach the certificate of occupancy, the IRS said.

• Existing home owners: Residents who have owned a home for at least five consecutive years in the last eight years and are buying a new home can qualify for a tax credit. The credit is equal to 10 percent of the home’s purchase price up to a maximum of $6,500. Purchases of homes priced above $800,000 are not eligible for the tax credit.

Because the credit was added at a later date, only home contacts that have closed between Nov. 6, 2009 and by April 30, 2010 will qualify, according to Eric Erickson, spokesman for the IRS.

Recent grads get more

In Ohio, recent college graduates can get even more money to buy a home on top of federal credits.

The Ohio Housing Finance Agency has launched the Grants for Grads program, which gives borrowers 2.5 percent of the home’s purchase price. To qualify, residents must have graduated from an Ohio high school and apply for the program within 18 months of earning an associate, bachelor’s, master’s, doctoral or other post-graduate degree.

The funds will be awarded as a second mortgage loan with a zero percent interest rate that is forgivable after five years. Grads can attend almost any school in the country to qualify, but the buyer’s mortgage must go through a program-affiliated lender, said Erin Biehl, OHFA spokeswoman.

Butler and Warren County residents must have an income of $83,040 or less for a household of up to two people, or $96,880 or less for three people or more to qualify. Also, the home’s purchase price cannot exceed $360,437.

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