Fire sale on condos, tax credits for first-time homebuyers

By Michael Stoler | February 17, 2009 11:48AM


In a similar manner to local department and discount stores trying to move unsold inventory, Toll Brothers recently reduced prices by as much as 25 percent on its condominium units at Northside Piers, a luxury waterfront project in the Williamsburg section of Brooklyn.

A number of other condominium developments are holding back from publicly announcing that they are offering discounts for new units. According to real estate sources, if a buyer really wants to make a deal, he can negotiate price reductions for as much as 20 percent off the purchase price for condo units in some neighborhoods in Brooklyn. In Manhattan, the bidding and asking prices for sincere purchasers can range from 7 to 15 percent.

One thing is certain, local developers had hoped the stimulus proposal compromise between the House of Representatives and the Senate reached last Wednesday for a $15,000 tax credit for first-time homeowners would aid in the sale of condo units. On Thursday, the credit was scaled back to a more modest $8,000 — or 10 percent of the purchase price, whichever is less.

Under the stimulus package expected to be signed into law, first-time home buyers would receive an $8,000 tax credit if they purchase a home this year before November 30. This would be an actual tax credit and receipt of it is contingent upon the home buyer owning the property for at least three years. If the home is sold in less than three years, the tax credit must be repaid to the government.

There is an income cap for recipients of the full tax credit — under $75,000 income for individuals and less than $150,000 for couples who file their taxes jointly.

Unfortunately, the bonus won’t apply to many first-time homebuyers in Manhattan and trendy sections of Brooklyn and Queens because their incomes exceed the qualification level, and yet their incomes are not great enough to enable them to qualify for a mortgage.

Michael Stoler is a columnist for The Real Deal and host of real estate programs “The Stoler Report” and “Building New York” on CUNY TV and on WEGTV in East Hampton. His radio show, “The Michael Stoler Real Estate Report,” airs on 1010 WINS on Saturdays and Sundays. Stoler is a director at Madison Realty Capital as well as an adjunct professor at NYU Real Estate Institute, and a former contributing editor and columnist for the New York Sun.