The $6500 and $8000 Tax Credits Are Great but Will They Solve the Underlying Problem?
The $6,500 tax credit is hot. The $6,500 tax credit and $8,000 tax credit are tax credits that help many homebuyers. The $6,500 tax credit will help homebuyers that have owned a home previously, provided that they have been in their prior home for at least 5 years.The $8,000 tax credit is currently only for taxpayers that make less than $75,000 annually and that have not owned a home in the past 3 years. The $6,500 tax credit extends to individuals that earn up to $125,000 and have been in their current home for at least 5 years.
The $8,000 tax credit has been under a lot of scrutiny, as the IRS indicated recently that people as young as four have claimed the credit on their tax return. Furthermore, the system is rife with fraud, as millions of taxpayer dollars were sent out for tax credits on homes that were never even purchased.
The $6,500 tax credit is for homes that are purchased between April 30, 2010 and July 1, 2010. The $8,000 tax credit was set to expire, but an extension has been granted to April 30, 2010.
The $8,000 tax credit has been hailed by many, including realtors glad to see traffic back in an all but stalled market. The $8,000 tax credit is part of Obama's stimulus plan that is created to help get the economy moving again.
What will happen when the $6,500 tax credit expires? Will the economy be healed enough by then to allow people to purchase homes without the tax credit? Unfortunately, if "cash for clunkers" is any indication of how the first time homebuyer's tax credit will work - we aren't in for a fix for our problems.
In fact, the $6,500 and $8,000 tax credit can actually make things worse. People will be rushing to purchase homes by the July 1, 2010 deadline in order to take advantage of the tax credit. After then, there is no incentive to buy and people are likely to sit back and wait for housing prices to fall again.
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