When Is A Credit Not A Credit

By
Real Estate Agent with Bob Leigh & Assoc., LLC

Question:  When is a credit not really a credit?
Answer:  When the government gets involved.

I was not going to write on The Housing and Recovery Act of 2008 because so much has been written here at AR about it, especially about the elimination of the Down Payment Assistance and the increase in the FHA buyer contribution.  But, here I am writing about it.

The regular press and tv news all seem to regurgitate the same talking points without any depth.  For instance, this 'tax credit' for first-time homebuyers keeps being touted as a wonderful way to help struggling buyers in their first year of ownership.  BUT - IT IS NOT A TRUE 'CREDIT'.  It is a loan.  Granted it is interst-free, but it is still a loan.  It must be paid back over a 15-year period.  It is my understanding that if it is not paid back, there will be interest and penalties attached just like if you did not pay your income taxes.

 I'm a little tired of getting letters and emails from my Congressmen, patting themselves on the back for passing such wonderful legislation.  The correspondance I get from them are equally as shallow as the news articles.  And don't get me started on our trade association - NAR.  You know, the orginization who is supposed to be looking out for our interests.  I really feel like they pulled the wool over my eyes on this.  I blindly followed their recommendation to support this legislation.  "Fool me once, shame on you.  Fool me twice, shame on me."  Woe to the unlucky person who calls me next year asking for my PAC contribution.

Enough of my rant...I feel better.  Now, where did I put those rose colored glasses?

 

 

Posted by

            

Bookmark and Share

close

This entry hasn't been re-blogged:

Re-Blogged By Re-Blogged At
Groups:
1st Time Buyers
The FHA Mortgage Group
Mississippi Real Estate Professionals

Spam prevention
Show All Comments
Rainer
129,065
Justin Ukaoma
Vizion KC - Kansas City, MO
Kansas City Real Estate Investments

Very clever and well written.  Glad to see people getting the facts out about this so called tax credit.

Aug 08, 2008 07:42 AM #1
Rainmaker
238,460
Angelia Garcia
Pure Realtors - Dallas, TX

Thanks for the rant. It takes laymen terms to understand and really catch on to what is being said. Hope you find those glasses soon.

Aug 08, 2008 07:44 AM #2
Rainer
19,710
Billie Chubb
Chubb Realty Group - Wilmington, DE

Not a credit, but an interest free loan. That is basically the only thing in that bill that results in us responsible tax payers not "Bailing Out" irresponsible people who bought more house then they could afford or who speculated...

Aug 08, 2008 07:44 AM #3
Ambassador
585,555
C Tann-Starr
Tann Starr & Associates, Inc. - Palm Bay, FL

Don't forget the 6 2/3% tax on the $7,500 that is written into the bill. Who needs "an interest free loan" that has a legislated tax specifically designed for it? Imagine paying 6 2/3% on $7,500 for 15 years... OMG, lets do some math. I'll be nice and round it down to an even 6%. :-)

6% of $7,500 is a $450. Hmm... Theoretically, my credit could actually cost me a few thousand dollars on top of the original credit I have to pay back if I actually stick to the 15 year plan... Did someone just bite me? I don't know. I'll have to ask my CPA when I buy a home. You guys should ask your tax advisers to explain that Bill paragraph by paragraph before you make a decision to do anything. The idea that I could possibly lay out maybe $4000 in taxes over ten years for a $7,500 credit is just not fun for me...

Pam, I have been carrying on about how this thing whomps for a while now... Please excuse my mini-rant. Enjoyed your post. Regards, C.

Aug 08, 2008 07:52 AM #4
Rainmaker
658,768
Kathy Toth
Ann Arbor Market Center Keller Williams - Ann Arbor, MI
Ann Arbor Real Estate Experts - Kathy Toth Team

Bravo!  I am learning more about this legislation and look forward to the governmnet interpreting the law.....more to come. right?

Aug 08, 2008 07:54 AM #5
Rainmaker
116,152
Pam Simpson
Bob Leigh & Assoc., LLC - Senatobia, MS
GRI, Broker-Assoc.

Justin- Thanks.  The sad part is that if you just get your news from the 'traditional' sources, you will never know the strings attached to most of the items in this Act.

Angelia - Well, it did make me feel better.  Thank goodness for AR and places like this or I may have never heard about the specifics of this Act.

Billie - Yes, I agree.  I started to write about how this Act would probably do more harm in the way of taxpayer burden than good in the form of 'housing recovery', but I figured I would leave that to someone else.

Aug 08, 2008 01:07 PM #6
Rainmaker
116,152
Pam Simpson
Bob Leigh & Assoc., LLC - Senatobia, MS
GRI, Broker-Assoc.

C - Thanks for the math!  I have this image in my mind of first-time homebuyers taking this 'credit' with no real grasp of the future implications.  The last straw for me is when I received a letter from my US Representative letting me know how he helped to pass this legislation and how it was going to save our housing market.

Kathy - Yes.  I spoke with one of my lenders while this bill was in the Senate and he said he anticipated future legislation to try and fix what this bill is going to screw up.

Aug 08, 2008 01:14 PM #7
Ambassador
585,555
C Tann-Starr
Tann Starr & Associates, Inc. - Palm Bay, FL

Congress is very good at passing a few laws with "unintended consequences." (LOL)

Aug 08, 2008 01:44 PM #8
Rainmaker
208,829
M. Suzi Woods (Gravenstuk)
NOW Sharing the life and spice of the GC one day at a time - Grand Canyon, AZ
Suzi Woods, Prior Independent REBroker in MS

Pam and commenters: Ditto! (Darn, no points for this comment;-)

Jan 01, 2009 11:47 PM #9
Show All Comments

What's the reason you're reporting this blog entry?

Are you sure you want to report this blog entry as spam?

Rainmaker
116,152

Pam Simpson

GRI, Broker-Assoc.
Ask me a question
*
*
*
*
Spam prevention

Additional Information