ERIN EDGEMON, Business Editor
Posted: Sunday, March 1, 2009 6:28 am

Scarlett Lanning started looking to buy her first home at the beginning of 2009 to take advantage of low interest rates and low home prices.

“According to everyone I have talked to it is a buyers’ market,” she said. “I don’t want to miss that opportunity.”

But, the recently announced $8,000 tax credit for first-time homebuyers as a part of President Obama’s American Recovery and Reinvestment Act of 2009 has motivated her even further to make the purchase of her first home.

The legislation authorizes a tax credit of up to $8,000 for qualified first-time homebuyers purchasing a principal residence on or after Jan. 1, 2009 and before Dec. 1, 2009.

“Adding the $8,000 tax credit to dropping home prices and interest rates hovering at some of the lowest levels we have seen in decades makes it a great time to start looking to buy that first house,” said Debra Beagle, a real estate agent with Coldwell Banker Snow & Wall.

Area real estate agents said the tax credit could even cause the real estate market to pick up in 2009.

“In my real estate career, I have not seen a better buying opportunity than right now,” said Joe Hafner, managing broker of John Jones Real Estate.

Interest rates are hovering around 5 percent and on average home prices have dropped between 5 to 7 percent since mid-2007.

“It is probably not going to get any better than this,” said Bud George, vice president of professional development for Bob Parks Realty, of buying conditions.

First-time homebuyers have the option of claiming the tax credit on their 2008 tax returns due April 15 or on their 2009 tax returns next year, according to the Internal Revenue Service. The credit doesn’t have to be repaid as long as the home remains the buyer’s main home for 36 months after the purchase date.

The revised version of Form 5405, First-Time Homebuyer Credit is available on IRS.gov. Last year, first-time homebuyers could receive a tax credit but it had to be repaid.

First-time homebuyers can claim 10 percent of the purchase price of their home up to $8,000, or $4,000 for married individuals filing separately, according to the IRS.
The amount of the credit begins to phase out for taxpayers whose adjusted gross income is more than $75,000, $150,000 for joint filers.

Beagle said first-time homebuyers should still approach buying their first home with a realistic point of view. Getting pre-approved for a home loan before beginning the search will make the process easier.

Lanning, who works as an industrial engineer in Shelbyville, said the extra money from the tax credit will come in handy as her new home will likely need some repairs or paint.

Erin Edgemon can be reached at 869-0812 and at eedgemon@murfreeesboropost.com.

For more information, visit irs.gov.