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Act now or risk losing home tax credit

Contract must be signed by April 30

CINCINNATI - The final rush is on to beat an April 30 deadline for house hunters who want to take advantage of federal tax credits that could be worth up to $8,000 for first-time buyers and $6,500 for repeat buyers.

Area Realtors are making sure potential buyers have everything they need to close a deal. More than 2,500 houses will be open for a mega-tour in Southwest Ohio, Northern Kentucky and Southeast Indiana on March 20-21.

Free home buyer education seminars will be held starting Wednesdaythrough March 18 at several Greater Cincinnati locations.

"There are a lot of great opportunities out there, but buyers need to be serious by late March if they're planning to make a move," says Tim Mahoney, president of the Cincinnati Area Board of Realtors.

To qualify for the tax credits - which are part of the federal stimulus - eligible buyers must have a signed contract by April 30 and close on their purchase before July 1.

Mahoney said buyers rushing to meet the deadline should be aware of red flags that could slow negotiations for purchase agreements.

"Short sale properties would certainly be an issue," he said.

A short sale occurs when a lender agrees to accept less from a buyer than the seller owes on the property. The transactions can take months to negotiate and involve stacks of paperwork.

Serious shoppers also should get pre-approved prior to starting their search, Mahoney said.

Doing so will help keep shoppers in their realistic price range and better position them to make an offer when they find their dream home.

"This is probably the last opportunity for buyers to get in on the tax credits and take advantage of the low interest rates," Mahoney said. "The savings they'll see is amazing. It's doubtful that the credits will be extended, and we're all pretty sure that interest rates are going to go up this year."

This month, Lisa and Ron Miller closed on a four-bedroom home in O'Bryonville and are using their $6,500 tax credit to do upgrades.

"The tax credit really did give us the impetus to move and gave us a little cushion to have some contract work done that probably wouldn't have happened otherwise," said Lisa Miller. "From our perspective, it's a win-win. We found a house we love and were able to make some improvements."

Nationally, it's estimated that up to 30 percent of home sales have gone to first-time buyers seeking the tax credit, according to the National Association of Realtors.

Locally, building permits have been on the rise as some "builders went into production mode specifically for the entry level homes," said Brian Miller, executive vice president of the Northern Kentucky Home Builders Association. "There are definitely newly built homes out there that are still available."

Kentucky also offers a $5,000 non-refundable state tax credit for buyers of newly built homes. For now, the credit can't be combined with the federal credits, but builders have been lobbying legislators to change that rule.

A measure that would allow buyers to use both perks could land in the state Senate this week, Miller added.

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