Real Estate: Who will Get the proposed $15,000 Tax Credit for Buying a New Home? Sellers, of Course!

Posted By Cliff Tuttle | February 14, 2009

Posted by Cliff Tuttle

Over 35 years of handling real estate transactions, both as a lawyer and (years ago) a real estate broker, I have had the opportunity to observe the interaction between the price of real estate and other financial factors. In the days when a sales transaction did not immediately affect the assessment of a property, a low tax assessment was a selling point and increased the selling price. Similarly, when home loan interest rates go up, sales prices go down. When interest rates go down, that’s right.

The proposed $15,000 tax credit for home purchases, embedded in the stimulus legislation before Congress, may very well serve to stimulate the home sales market. But don’t think that the tax credit, if adopted, will mean a $15,000 bonus for buyers. History says that sales prices will rise to give most, perhaps all, of the $15,000 to the seller.

If a buyer could have purchased a house for $100,000 before the tax credit but doesn’t and later pays $115,000 after the tax credit is enacted, who gets the $15,000?

Another observation from experience: markets anticipate the future. It may already be too late to purchase the house for $100,000. Sellers are watching to see whether the tax credit is adopted and postponing making reductions in their asking price.

CLT

Welcome

CLIFF TUTTLE has been a Pennsylvania lawyer for over 45 years and (inter alia) is a real estate litigator and legal writer. The posts in this blog are intended to provide general information about legal topics of interest to lawyers and consumers with a Pittsburgh and Western Pennsylvania focus. However, this information does not constitute legal advice and there is no lawyer-client relationship created when you read this blog. You are encouraged to leave comments but be aware that posted comments can be read by others. If you wish to contact me in privacy, please use the Contact Form located immediately below this message. I will reply promptly and in strict confidence.

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