The first-time homebuyer credit extension is one of the many temporary tax breaks Congress created to stimulate the economy. Local communities like New York Mills and Perham, with their city-owned developments, look to the incentives to fill available lots.
New York Mills would like some of these first-time homebuyers to take advantage of the tax break to build in the city-owned Country View Estates.
The development starts on the northeast side of the Carlund Commercial Park and runs north to Otter Tail County Highway 56.
The NYM Economic Development Authority, along with Centennial Realty, approached the development in two phases with a total of 36 lots available for purchase. The first phase, which includes 18 lots, has six lots remaining. Twelve have been sold in Phase I, one of which is the multi-family lot where Country View Townhomes was constructed.
With roads in place, the plan is to continue with development to the east.
With bond payments continuing, the city needs to get lots sold and homes built. It becomes a financial issue that is getting larger with each year as the bond payments continue to be due. The EDA adjusted the lot pricing about one year ago, and the lot prices are staying flat. Originally, lot prices were automatically increased each year by 3 percent to keep up with the carrying costs of the debt.
The city uses the funds from lot sales, assessments, and TIF revenues to make bond payments. Currently, TIF revenues are running about $14,000 per year. The way to increase revenues is to sell lots and get homes built. The lot sale proceeds, any resulting assessments, and TIF revenues will be ongoing sources of increased revenues in Country View.
The city hopes the federal homebuyer credit, as well as local incentives, will spur more development this coming building season.
The lowest price lot in Country View can be purchased for as little as $2,900 cash up front, with an additional amount of assessments certified to the tax rolls, if the buyer qualifies for tax increment financing (TIF).
The TIF eligibility is based on income. Basically, a family of 1 or 2 people can qualify if their income is no more than $72,900 annually, or a family of three or more can qualify with an income up to $83,835. The TIF discount is $7,500 off the lot price. The city is allowing up to one half of the lot price to be certified to the tax rolls for a portion of the assessments.
Any assessments certified would be payable over 10 years at a 5 percent interest rate. This is how the up-front cash price for the lots is so low-ranging from $2,900 to $8,750 for the single family lots.
The $8,000 first-time homebuyer credit recently was extended and expanded so more people will be eligible.
Now, even if you're not buying your first house, you might qualify for a credit worth as much as $6,500 if you're buying a principal residence after Nov. 6. To qualify, you must have owned a house for five consecutive years during the eight years before buying the new one.
Income limits to qualify for the credit have been raised, but again for purchases made after Nov. 6. The full credit is available if modified adjusted gross income is up to $125,000 for singles and $225,000 for married joint filers. It then starts phasing out. The house must be under contract by April 30, and the deal must close by the end of June.
The federal tax credits were extended in November through mid-2010 as a way to give the economy a needed boost. To get the money, homebuyers have to amend their 2008 tax returns or wait to claim the credit on their 2009 taxes.
First-time homebuyers, including buyers who have not owned a primary residence in the past three years, can receive a credit of 10 percent of the purchase price of a home, up to $8,000. Current homeowners who have lived at least five consecutive years out of the past eight in their primary residence can receive up to $6,500 for buying a new home.
Local incentives in Country View include a package of items from local businesses. For example, the city of New York Mills offers a $500 credit towards natural gas bills. Farmers & Merchants State Bank offers $500 off the origination fee on a construction loan. All of the incentives total over $3,700 and include various discounts from the local business community.