Is President Barack Obama's stimulus plan already working? Maybe. In Colorado Springs real estate agents say business has picked up over the last two weeks since President Obama signed his plan into law. Under President Obama's plan, qualifying first-time home buyers get $8,000 on their tax return next year.
So far, the incentive seems to be helping the housing market, but there's still a lot of confusion about what that tax credit actually means. That could be in part because it may sound too good to be true, but it's true and there are rules.
"Business is absolutely picking up because of the $8,000," said Jennifer Lohrig who is a Broker with Walston Group Real Estate in Colorado Springs.
But what is that $8,000 tax credit? Lohrig says people are always asking her. "Is it a tax credit? Is it just a deduction?" said Lohrig. Lohrig says most people are either confused or in the dark all together. "People aren't aware of it," said Lohrig.
Here's how it works. You must file for your 2009 income tax return first. Once you've done that, say, you're set to get back $2,000, then, "You would actually get a $10,000 check back," said Lohrig. That's right, $8,000 cold hard cash for you to spend on whatever you want.
Here are the rules. If you've never bought a house before you have until November 30th 2009 to buy your first home. Or, if it's been more than three years since you've owned a home then you're viewed as a first-time home buyer.
You also can't make more than $75,000 a year if you're single and $150,000 if you're married.
Lastly, you have to live in the house for at least three years otherwise you have to pay the entire $8,000 back.
Andy Flansburg and Britt Cefalu are engaged to be married. They're house hunting, but had no clue about the tax credit. "I was pretty excited. Jennifer Lohrig told us and I was like, 'really?,'" said Cefalu.
Now Andy Flansburg and Britt Cefalu say they have the confidence they need to move forward in purchasing their first home. "Right now we're renting and happy where we are, but since there is that credit we feel like we should buy now while that's available," said Flansburg.
You can do whatever you want with your $8,000. "Go on a vacation, buy appliances or add another bedroom to the house," said Cefalu.
The cherry on the cake is that the $8,000 is tax free.
Last year the government offered a $7,500 tax credit to home buyers through The Economic Recovery Act. The difference is, those home buyers have to pay back the $7,500 over 15-years interest free, and this time you don't.