Will the $ 8000 tax credit be renewed?
That is the question that many people ask themselves these days. The $ 8,000 tax credit incentive approved last February is well above its predecessor of $ 7,500 last year, which was actually just an interest loan that had to be repaid. This new tax credit is FREE MONEY; You keep it as long as you qualify and live on the property. This great incentive combined with historically low prices has changed our local real estate market! Our prices finally stopped falling and sales increased. It has made such a big difference that many people have become increasingly concerned that once November 30 expires (just 5 weeks away), we will face a slowdown in sales.
To avoid this, many have been petitioning the government to extend the tax credit. One thing to consider with the initial applications was that having a deadline gave people urgency and that urgency has led to more sales and a stop to the price drop. Many of us expected credit to roll over upon maturity. There has been much speculation about fostering that sense of urgency by waiting until the last minute to extend credit. Unfortunately, it has gotten more complicated than that.
The main concern at the moment appears to be the government’s challenge of estimating how much this will cost. Since most of these credits won’t be claimed until tax time next year, it will be difficult to determine exactly how many people will apply. HUD Secretary Donovan cautions that a decision should not be made without a careful examination of the cost. This is understandable and can lead to the decision being postponed for a time.
The other big concern is fraud. There have been 167 confirmed cases of criminal fraud so far and the IRS has begun examining more than 107,000 cases that they consider questionable. If they decide to extend credit, they will have to decide how best to organize the process to avoid fraudulent activity.
So, for now, the answer is a big fat man … “we’ll see …”