By Mary Shanklin
RISMEDIA, July 2, 2009-(MCT)-Starting Wednesday, Florida hopes to stoke its real estate market by becoming one of the few states to offer $8,000 in down-payment assistance to qualified home buyers so they can benefit upfront from a new federal tax credit.
The state Legislature set aside $30 million to create the Florida Home buyer Opportunity Program, aimed at first-time buyers and others who have not owned a home for at least the past three years. To qualify, an individual cannot earn more than $75,000 a year, while couples can’t earn more than $150,000.
“Here in Florida, rather than qualified buyers waiting to get the tax credit on the tail end of the process, in the form of a credit after they have filed the tax returns, it will allow them to get it upfront and let them use it for down-payment assistance and fees,” said David Hart, vice president of legislative and government affairs for the Florida Home Builders Association. He estimated that about five states are taking a similar approach.
The state’s program takes effect Wednesday, though the money isn’t expected to be available until later in July or August. The funds are being distributed through local government and nonprofit agencies that already provide down-payment help through the State Housing Initiatives Partnership, known as SHIP. Qualified home buyers are entitled to $8,000 or 10% of the property’s purchase price, whichever is less.
18 months to repay
Buyers who receive a down payment must file for the tax credit on their federal tax return next year and then repay the agency that lent them the assistance, according to the program, which was proposed by state Sen. Mike Fasano, R-New Port Richey. The program gives buyers who qualify and get funds 18 months in which to repay the state, which allows them plenty of time to realize the benefits of the tax credit, part of the federal government’s massive stimulus package, the American Recovery and Reinvestment Act of 2009.
The state program is intended to boost Florida’s slumping housing market. While the number of existing-home sales locally and statewide have been up for months now compared with a year ago, prices continue to be down 30% or more year-over-year depending on the market, according to the Florida Association of Realtors.
To receive the state’s down-payment assistance, the buyer must close on a property by the end of November. Housing agencies are still working out the details of how to distribute the funds, and state officials caution that four or five months is a relatively short time in which to qualify, find a home, obtain a mortgage, close on the property — and use the money. Qualified buyers who do not take advantage of the state program may still take the federal tax credit, which is currently set to expire in December.
Some local homebuilders are hopeful the state’s decision to convert the tax credit into upfront money will help spur the slumping market. George Glance, who oversees operations for KB Home in Central Florida, said that, while historically low interest rates and falling home prices are enticing many first-time buyers into the market, many of them struggle to come up with a down payment.
“Allowing the federal tax credit to be used toward a down payment would be a great advantage to a first-time home buyer trying to obtain the dream of homeownership,” Glance said.
One consumer advocate considers the state program flawed, however, because of the way the state is distributing the money. Walter Dartland, director of the Consumer Federation of the Southeast, said he fears some Florida cities and counties will run out of cash before the end of November, even as others wind up with excess funds that won’t get used.
Will it be used?
“Each county or municipality gets a share of the money. In smaller counties, no one is going to buy any houses-there’re so many for sale,” Dartland said. “The concern I have is that it won’t be used. If there’s any money left on deck, it won’t stimulate anything.”
He proposed that the money all come from a single, statewide pot. But state officials said they must abide by rules set by the Legislature, which call for the funds to be distributed through local housing agencies.
Mary Shanklin can be reached at email@example.com or 407-420-5538.
Copyright ©2009, The Orlando Sentinel, Fla.
Distributed by McClatchy-Tribune Information Services.
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