Did You Take Advantage of the Home Buyers Tax Credit?Many Austin homeowners did, and many may end up repaying tax credits on property purchases that didn't qualify. Others will have to fight the IRS to have their purchase records corrected in the IRS databases.
Three Instances of the Home Buyers Tax CreditIn 2008 and 2009, three acts of Congress defined three different strategies to stimulate the housing economy, each of which contained provisions referred to as the Home Buyer Tax Credit:
- The Housing and Economic Recovery Act in 2008
- The American Recovery and Reinvestment Act of 2009 - (Complete Text of the Enacted ARRA)
- Worker, Homeownership and Business Assistance Act of 2009
Quick Summaries of the Home Buyers Tax Credit ActsIn the beginning, the Tax Credit was actually an interest-free loan, instituted by the Housing and Economic Recovery Act (HERA) in 2008. First time home owners, defined to be those that had not owned a home in the previous three years, could qualify for a tax credit of up to $7500 if they purchased a home between April 8, 2008 and July 1, 2009. This loan, received in the form of a tax credit, would be paid back over 15 years by slightly increasing the taxpayer's taxes beginning in the second year after the home was purchased. When the original bill failed to provide sufficient boost to the housing recovery (yeah, which recovery was that?), Congress passed another bill, the American Recovery and Reinvestment Act (ARRA) of 2009. This new legislative action included another home buyer tax credit, although this time the tax credit was an actual cash rebate of ten percent of the purchase price, up to $8,000. The effective dates for purchases eligible under this act were set for January 1, 2009 through November 30, 2009. (If you're interested, you can track where the money for the ARRA has gone (and is going) on the Recovery.gov Track the Money website.) Note the 5 month overlap between the dates for the Housing and Economic Recovery Act (4/8/08 - 7/1/09) and the American Recovery and Reinvestment Act (1/1/09 - 11/30/09). Soon after, when the second bill had also failed to sufficiently stimulate an economic recovery, Congress passed a third bill, called the Worker, Homeownership and Business Assistance Act of 2009. This third attempt to address the myriad economic problems facing our country extended the dates of the $8,000 tax credit through 2010, applicable to homes under contract by the end of April of 2010, set to close by June 30th, 2010. This bill also added a smaller credit for repeat buyers which was worth up to $6500 and provided generous limits for income before the credit eligibility began to phase out. Do you have a headache yet? I know I do. When it became clear that hundreds of thousands of purchase transactions under contract by the April 30th deadline of the third bill weren't going to be able to close by the June 30th deadline, Congress extended the closing deadline to September 30th, 2010. All three of these bills contained nearly identical provisions for recapturing the credit (returning the money to the government) if the house was sold within three years of purchase and for waiving the recapture if the owner were to die or sell the home without a gain.
Tax Credit Repayment: Why Home Owners Might Have to Cough Up Some CashWhen taxpayers returns were filed for 2009, the IRS ran into trouble identifying and properly processing returns under the three different sets of rules established by the three stimulus acts. The IRS has incorrectly identified thousands of taxpayers as being required to repay the home buyer tax credit and others that filed for the credit but didn't qualify. In response, the Treasury Inspector General of Tax Administration (TIGTA) studied the problem and published a report. This report doesn't seem to have an actual name, so we will refer to it as the TIGTA Tax Credit Repayment Study. Quoting from the report about the Impact on Taxpayers:
Approximately 1.8 million taxpayers claimed a total of almost $12.5 billion in First-Time Homebuyer Credits in Calendar Year 2009. More than 950,000 taxpayers will be required to repay the Credits because their homes were purchased in 2008.In particular, this section jumped out from the TIGTA Tax Credit Repayment Study report:
However, our analysis identified an estimated 73,119 (4.1 percent) of the 1,774,718 individuals receiving the Credit had incorrect purchase dates recorded on the IRS’ system; 59,802 of these taxpayers purchased their homes in 2009, but the IRS incorrectly recorded the purchases as 2008 or the years were not recorded. These taxpayers could incorrectly receive notices requiring repayment.
Will First Time Home Buyers in Austin be caught in this mess?Some will and some won't. Hopefully those that might will seek the services of a good CPA to make sure their tax forms are in order for 2009 and 2010. If you are one of these home owners, dig out your purchase transaction records, or request copies from your Realtor. TIGTA's recommendations are summarized as follows:
TIGTA recommended that the Commissioner, Wage and Investment Division, 1) correct the purchase dates for the 68,924 accounts TIGTA identified as having incorrect purchase dates and 2) ensure the 798 individuals who TIGTA identified as being deceased prior to the purchase of the home are entitled to claim the Credit. In their response to the report, IRS officials agreed the claims for the Credit for the 68,924 accounts were processed early in the program and some purchase dates were incorrectly recorded in IRS systems. The IRS plans to use third-party property records to verify home purchase or disposition information and to refer discrepancies for appropriate resolution. In addition, it plans to audit the 798 accounts and recapture the claims paid out, if necessary.For reference, here is a chart, taken directly from the TIGTA study, that compares some terms of each act:
Steiner Ranch, Austin Real Estate ValuesA quick real estate market data update for the Steiner Ranch subdivision in Austin, Texas for the last 6 months:
- Between March 8th and September 8th, 2010, 179 homes have sold in Steiner Ranch.
- 125 homes are currently for sale and 34 are under contract.
- This gives an absorption rate of about 30 houses/month that sell.
- With 125 currently for sale, that gives just over 4 months of inventory of homes.
- The highest selling price was $2,583,900 for a 7748 square foot home on 3 1/2 acres on the waterfront. This home was on the market for 978 days!
- The lowest selling price was $147,695 for a 2322 square foot home built in 1988 which sold in 320 days.
- The median selling price (half sold above, half sold below) was $409,000 for a 3350 square foot house.
- The median days on the market was 47.
- The highest list price is $2,995,000 for a house with 5565 square feet that was built this year. This one has been on the market for 397 days.
- The lowest list price is $224,900 for a house that is 2135 square feet and was built in 1989. This one has been on the market for just 20 days.
Map of Steiner Ranch in Austin, TX
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Real Estate Update for Avery Ranch in Round Rock, TexasThe most recent market data for this subdivision can be found in Avery Ranch Real Estate Market Sales Data for 2009 and 2010 This video provides real estate sales data for the 12 month period ending September 14th, 2010.
12 Month Sales Data SnapshotFor another take on the sales data for this area, here are the number for the 6 month period ending September 8th, 2010. A quick real estate market data update for the Avery Ranch subdivision in Round Rock for the last 6 months:
- Between March 8th and September 8th, 2010, 107 homes have sold in Avery Ranch.
- 64 homes are currently for sale and 18 are under contract.
- This gives an absorption rate of about 18 houses/month that sell.
- With 64 currently for sale, that gives less than a 4 month inventory of homes.
- The highest selling price was $575,000 for a 4403 square foot home built in 2007 which sold in 227 days.
- The lowest selling price was $158,000 for a 2511 square foot home built in 2003 which sold in 110 days.
- The median selling price (half sold above, half sold below) was $240,000 for a 2344 square foot house.
- The average days on the market was 52, which is skewed to the higher end by one home that sat for 329 days before selling.
- The highest list price is $625,000 for a house with 4461 square feet that was built in 2005. This one has been on the market for 97 days.
- The lowest list price is $169,900 for a house that is 1518 square feet and was built in 2004. This one has been on the market for 169 days.
Historical Market Updates for Avery RanchFor additional real estate sales data for this Round Rock subdivision, please refer to our Avery Ranch Market Update for March 2010.
Map of Avery Ranch in Round Rock, TX
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Teravista, Round Rock Real Estate 78665A quick real estate market data update for the Teravista subdivision in Round Rock for the last 6 months:
- Between March 8th and September 8th, 2010, 72 homes have sold in Teravista.
- 63 homes are currently for sale and 12 are under contract.
- This gives an absorption rate of about 12 houses/month that sell.
- With 63 currently for sale, that gives about a 5 month inventory of homes.
- The highest selling price was $387,829 for a 4588 square foot home built in 2007 which sold in 24 days.
- The lowest selling price was $155,000 for a 1685 square foot home built in 2007 which sold in 13 days.
- The median selling price (half sold above, half sold below) was $207,750 for a 2663 square foot house.
- The average days on the market was 80, which is skewed to the higher end by one home that sat for 298 days before selling.
- The highest list price is $398,500 for a house with 4583 square feet that was built in 2007. This one has been on the market for 148 days.
- The lowest list price is $160,000 for a house that is 1848 square feet and was built in 2005. This one has been on the market for 5 days.
More Teravista Market DataAnother take on recent Market Activity for Teravista is summarized in this Austin Appraiser 60 Second Market Update: I've also seen a bunch of searches for "Terra Vista Round Rock", so if you've found this page and this isn't the area you're looking for, please send me a note and I can dig up some market information for you, too.
Photos of Teravista HomesWe like to take photos where ever we go, so here are a few of the homes in Teravista that caught our eye this fall. Note that these aren't for sale - they're just attractive homes in this area of Round Rock.
Map of Teravista in Round Rock, TX
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