If builders want to get the most sales they possibly can from the recently passed federal housing tax credit, they need to get to work, according to speakers on a Tuesday NAHB teleconference.
“We are not doing what we should to promote this tax credit,” asserted Dan Levitan of marketing firm Levitan and Associates in Fort Lauderdale, Fla., who referred to a recent news item calling the $8,000 credit for first-time home buyers “the best-kept secret in America.”
That could be an expensive secret for builders to keep; the $8,000 credit is only available for homes closed on or after Jan. 1 and before Dec. 1 of this year, giving builders just 11 months (or fewer, given that Congress approved the credit Feb. 17) to market the advantage.
“We can use it as a tool to stay in contact with our prospects,” Levitan said. Builders could call would-be buyers to let them know about the tax credit, email or send them informational materials, hang banners (“Ask me about the tax credit”) in the sales office, or organize home-buying seminars that explain to interested customers how the credit works.
Many big builders have already jumped on the issue, highlighting the credit on their Web sites. But others have been slow to gear up to sell the tax credit to prospective buyers, perhaps because they are still keeping their fingers crossed for a bigger and better credit. “I think we all had hoped for more, and when we got $8,000, we didn’t know what to do with it,” said Gayle Orr of Coldwell Banker Advantage New Homes in Raleigh, N.C., who also spoke during the teleconference.
Other in home building may still be trying to figure out the details, judging by the volume of questions from builders and other listeners during the call, many of whom were seeking answers to specific buyer situations.
According to Rob Deitz, director of tax issues for the NAHB, here are the important facts about the 2009 credits:
Only first-time home buyers purchasing a primary residence are eligible. The definition of first-time home buyer for this credit is someone who has not purchased a primary residence within the past three years.
The home must be purchased, and the title transferred, on or after Jan. 1 and before Dec. 1 of this year. A signed sales contract does not qualify a buyer for the credit.
The credit is for 10% of the purchase price, up to $8,000.
As long as buyers remain in the home for at least three years, the tax credit cannot be recaptured by the government.
The full credit is only available to single buyers with incomes of no more than $75,000 and married buyers with incomes of no more than $150,000. (A partial credit is available to singles who make no more than $95,000 and couples who make no more than $170,000.)
In the case of married buyers, both of them must qualify as first-time home buyers under the definition (i.e., neither has purchased a primary residence within the previous three years).
The 2009 credits are different from the housing tax credits of 2008, which only went up to $7,500 and were not true “credits” but were actually long-term loans from the government that would be paid back over 15 years.
The credit may actually be claimed on the 2008 or 2009 return. If a buyer has already filed their 2008 taxes, they can submit an amended return after they close on the home to get the credit faster.
Builders who target first-time buyers must know these details if they want to capture tax-credit sales, but they aren’t the only ones, according to Orr. She urged move-up builders to familiarize themselves with the credit and its advantages. “We need to be as well-versed in those situations as we are with first-time buyers,” she said. Move-up buyers typically have a home to unload, so Orr suggested creating a flyer for such buyers with basic information on how the tax credit may help them sell their “departure residence.” Alison Rice is senior editor, online, at BUILDER magazine.
Want to know more? Rob Dietz, director of tax issues for the NAHB, discusses the 2009 housing tax credit in the video below from the NAHB.