A recent Coldwell Banker survey of 1,000 homeowners across the nation shows that savvy consumers are cashing in on the new and improved homebuyer tax credit and helping fuel the economic recovery.  Colorado homeowners and homebuyers are part of this smart group, and, as a result, we will surely see a boost to our local Denver area real estate market!

Among those surveyed, 83% said if they purchased a home and qualified for the tax credit they would engage in "smart spending," and only 6% said they would use the money for luxury items such as a vacation or shopping. 

The survey found that most consumers would spend their tax credit to:

• Pay off debts(34%).
• Make home improvements and potentially increase the value of their home and home equity (29%). 
• Put into savings and investments (28%).

When consumers pay off debt, they afford themselves more spending power.  Investing in home improvements also create more equity in their homes, increasing their ability to spend.  Further, when consumers increase their savings and investments, that generated income brings increased confidence. 

The survey also found that, after learning about the tax credit expansion, 20% of those surveyed said they were more likely to consider purchasing a home than they were six months ago.  Much consumer spending is fueled by the housing market -- provided the housing market is energized, and that was precisely the idea behind the homebuyer tax credit and its recent extension and expansion to include repeat buyers (instead of only first-time buyers). 

In October 2009, before President Obama signed the latest extension and expansion, more than 1.2 million tax returns had claimed about $8.5 billion in the refundable tax credit, for both new and resale homes - according to the Treasury Inspector General for Tax Administration (TIGTA).

The new law extends the $8000 tax credit for first-time homebuyers, as well as creating a $6500 tax credit for existing homeowners who buy a new primary residence through April 30, 2010.  The new rule also raises the qualifying income limits to $125,000 for single taxpayers and $225,000 for joint taxpayers, from the current $75,000 and $150,000.  The maximum allowed home purchase price is $800,000.

For more information, visit the Internal Revenue Service (IRS) website, as well as its question and answer page.

Whether you’re thinking of buying or selling a home in the Denver metro area, contact the Bandy Team for all of your real estate needs.  We are your local Denver real estate experts, and we will guide you every step of the way!

Marianne Bandy
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