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Many of the ground rules of real estate are being rewritten after the economic meltdown of 2008 - which in large part was caused by what many now call a "real estate bubble" that valued homes unsustainably high and has led to a large number of foreclosures and a huge strain on the credit system.
Unfortunately for many retirees who wish to downsize and/or move to other areas, lower home values and longer sales times make it harder to realize a good profit on your existing home and pocket the difference when moving to a smaller, cheaper place. However you should be considering new factors as you plan your retirement. For example if you are considering retiring to a state or region in the USA such as Florida and California that have seen huge downturns in prices you may be able to buy more than you expected, especially if you are moving from areas that have not been hit as hard by the decline in real estate prices.
Although time may be running out, if you are planning a move you'll want to check into the new eligibility rules for an IRS Tax Credit of up to 8000 for existing and new home buyers who are purchasing homes before April of 2010: Homebuyer Credit Expanded and Extended The Worker, Homeownership and Business Assistance Act of 2009, signed into law on Nov. 6, 2009, extends and expands the first-time homebuyer credit allowed by previous Acts. Under the new law, an eligible taxpayer must buy, or enter into a binding contract to buy, a principal residence on or before April 30, 2010 and close on the home by June 30, 2010. For qualifying purchases in 2010, taxpayers have the option of claiming the credit on either their 2009 or 2010 return. The new law also: Authorizes the credit for long-time homeowners buying a new principal residence. Raises the income limitations for homeowners claiming the credit. Click here for the IRS Website to learn more