$1,800 Tax Credit for Georgia Home Buyers

$1,800 Tax Credit for Georgia Home Buyers

On May 11^th, Governor Sonny Perdue of Georgia signed a bill that gave its residents a tax credit up to $1,800 for new home buyers.  This is on top of the $8,000 tax credit the federal government had already decided to give the same buyers.  By up to $1,800, the legislation actually calls for either that figure or 1.2% of the purchase price, which ever is the lower figure.  The original proposal had called for $3,600, but it was decided that figure was too high.

Realtors across the state gave praise to this bill, which is only good for home purchases between June and November 30^th.  The idea behind the bill is to stimulate the housing market, which had suffered from drastic declines based on the financial problems Georgia has been having.  But this isn’t the only reason the legislation has become important.

The first problem Georgia has had is that it’s had the most bank closures in 2009 through March with four.

The second is the number of foreclosures, which lead to some of those bank closures.  Georgia was 8^th in the nation in foreclosures in February of this year, 8^th in April, and 5^th overall for the first quarter of 2009.  There were over 10,000 foreclosures listed in the Atlanta area alone as of February, and Atlanta at that time was considered the 3^rd emptiest metropolitan area in the nation at that time, as ranked by Forbes.

The legislation applies to new and previously occupied homes as well as residences that have been foreclosed.  The credit can be used either for houses and condominiums and either on primary or second residences.  And, unlike the federal bill, there are no income caps.  Of course, there are some other rules that apply:

• the bill only applies to single-family homes and condos if they are your primary residence
• the property must have been for sale prior to May 11, 2009 and must still be for sale
• The property must be in default on or before March 1, 2009
• The property has to already have been foreclosed on and is held by the bank or mortgage company

There are already indications that even before the Governor signed this legislation into place that the housing market might be ready to turn around.  Housing starts were up 6.7% from the previous month, though still lower than last year at the same time.  And there was also more movement in April towards purchasing foreclosed homes in April, with buyers waiting to hear if this legislation, which was originally introduced in February, would pass.

How successful the program will eventually be still depends on the buyers being able to pass the newly rigorous standards many banks and lenders have implemented since the housing crisis began.  But for those that do qualify, this is definitely a blessing in disguise.

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