$7,500 Tax Credit Repayment Likely to be Eliminated

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Real Estate Agent with America's 1st Choice RH Realty Co., Inc.

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An earlier post I made (When is a "tax credit" not a tax credit?) addressed the $7,500 tax credit and how the repayment clause makes it a "no interest" loan rather than a tax credit.  I also mentioned that the NAR was lobbying to have the "repayment" requirement eliminated.  While reading my daily NAR news, I found the article listed below:

As reported by the National Association of Realtors®:

"Ways and Means Chairman Charlie Rangel has released an outline of a $275 Billion tax package to be included in the Obama economic stimulus bill. Among its many provisions is one that would eliminate the repayment feature of the $7500 first-time homebuyer tax credit. An outline of the Senate Finance Committee package is expected shortly, as well, and is likely to also include the provision to eliminate the tax credit feature. Ways and Means markup on the bill is tentatively scheduled for January 22, 2009. The Finance Committee's deliberations will be roughly concurrent with Ways and Means.

The June 30, 2009 expiration for the credit remains intact in the Ways and Means package. NAR is working to have the effective date extended through the end of the year so that the more robust credit can have an impact. Congressman John Lewis (D-GA), a senior member of the Ways and Means Committee, has introduced H.R. 525, a bill that would extend the tax credit through December 31, 2009. NAR has sent the attached letter to every member of the Ways and Means Committee urging members to support Mr. Lewis's effort to move the effective date."

Read NAR's Letter to the House Ways and Means Committee

There is no doubt that the elimination of the repayment requirement on this tax credit would truly make it a "tax credit" and be another "perk" for first-time home buyers along with low interest rates and high inventories.

http://www/JonWHome.com

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Rainmaker
3,985,581
William Feela
WHISPERING PINES REALTY - North Branch, MN
Realtor, Whispering Pines Realty 651-674-5999 No.

Thias could make all the difference for some first time buyers!

Jan 24, 2009 01:08 AM #1
Rainer
132,369
Jon Wnoroski
America's 1st Choice RH Realty Co., Inc. - Green, OH
Summit County Realtor

Hi William - Yes, it certainly will make a difference and a positive one at that.  However, I won't count my chickens before they hatch.  I want to see the final order that will make this a reality.

Jan 24, 2009 01:25 AM #2
Ambassador
750,410
Jeff Belonger
Social Media - Infinity Home Mortgage Company, Inc - Cherry Hill, NJ
The FHA Expert - FHA Loans - FHA mortgages - USDA loans - VA Loans

Jon... your title confused, because there is already a deadline on the so-called tax credit. But you are talking about trying to extend it, which I think would be a great thing for real estate.  I have read some comments by realtors that actually disliked this credit, and gave very poor reasons. I guess they just didn't understand this program. I urge all first time homebuyers buying before July 1st, to utilize this. I even wrote on how you could use this prior to your actual purchase. The first time homebuyers credit - how to use it before you buy a home .

jeff belonger

Jan 25, 2009 08:44 AM #3
Rainer
132,369
Jon Wnoroski
America's 1st Choice RH Realty Co., Inc. - Green, OH
Summit County Realtor

Hi Jeff - Thanks for your comment.  The article points to the elimination of the "repayment" requirement which is a component I feel necessary to truly make this a "credit" on your taxes.  By removing the repayment component to this tax credit, in my view, will become a greater benefit to first-time home buyers.

Jan 25, 2009 09:15 AM #4
Ambassador
750,410
Jeff Belonger
Social Media - Infinity Home Mortgage Company, Inc - Cherry Hill, NJ
The FHA Expert - FHA Loans - FHA mortgages - USDA loans - VA Loans

Jon... sorry, I slightly misunderstood the post then... I am semi tired and worn out.  So, in regards to having the repayment part eliminated, I don't agree with it. Isn't it a fact that it's an interest free loan to begin with. Now we want people to not pay on it at all?  What about those that bought before the deadline?  What about those that rent?  It's just like someone that owns a home, but never had kids, so they never used the school system. But they still have to pay the same taxes as the next person. Or what about the person that sends their kids to a private school, not public...  why should they pay the same property taxes?  Just food for thought.  Haven't we given out enough money as it is?  I don't think asking someone to pay back $500 a year is such a big deal, when they were handed up to $7,500. thanks

jeff belonger

Jan 25, 2009 09:23 AM #5
Rainer
132,369
Jon Wnoroski
America's 1st Choice RH Realty Co., Inc. - Green, OH
Summit County Realtor

Hi Jeff - Thanks for your comments.  You certainly do present much to think about and make great points.  Reflecting back to the first home I purchased, Gerald Ford enacted a provision that gave first-time home buyers a tax break if they purchased a home within a specific time period.  I was able to take advantage of that credit and it came at a time when I needed it most.  That was in the mid 70s and intended to give the market a bit of a "kick."  I'm not sure if it did or not; I wasn't paying much attention to real estate back then. 

Thanks again comment; I certainly do appreciate your remarks.

Jan 25, 2009 09:32 AM #6
Rainmaker
540,760
Tom Burris
NMLS# 335055 - Baton Rouge, LA
Texas/Louisiana Mortgage Pro - 13 YRS Experience

I do not agree with inducing people to buy. Many will do so, and be in foreclosure before long.

 

 

Jan 25, 2009 09:47 AM #7
Rainer
132,369
Jon Wnoroski
America's 1st Choice RH Realty Co., Inc. - Green, OH
Summit County Realtor

Hi Tom - Thank you for your comment.  I do agree with you.  Inducing people to buy when they're not financially able to is not a good idea.  After all, didn't we just go through a lot of that with zero down programs and such?  However, I do like the idea of stimulating home sales for those who have the resources to purchase a home. 

We may have different views on the tax credit but that's a good thing.  I love hearing different views among those who have a stake in our industry.

Jan 25, 2009 10:29 AM #8
Rainmaker
275,682
Ken Cook
Content, coding, marketing, host. - Marietta, GA
Content Marketer/Creator

Eliminating the repayment would make it another welfare handout which is a form of wealth redistribution (socialism). A zero percent 15 year loan is impossible to beat and is plenty enough. I agree with extending the period until we are "out of the woods" but eliminating the repayment? I am definitely not in support of that with the information I have available to me at this time.

Jan 25, 2009 12:34 PM #9
Rainmaker
101,227
Robert D. Ashby
Visual Approach Aerial Photography (Visual Approach Photography) - Plantation, FL
Turning Visions into Photographs (and Videos)

Interesting commentary on the subject of the $7,500 handout.  OK, yes, right now it has to be paid back at a rate of $500 per year.  If one invests the money properly, they can make back a hell of a lot more than the $7,500 they got, so it is a hand out.  They should have to repay it back, period.

As for stimulating the housing market, the Fed has been buying up mortgage backed securities to artificially bring mortgage rates down this low, creating yet another bubble from their actions.  Tax incentive programs, if not required to at least be repaid over time, are another absurd way of stimulating the housing market, especially since it may very well invoke the same problems we currently are having.  There are already signs of stabilization in the markets and the government needs to stop screwing things up further, or merely prolonging the recovery, which is what history proves their actions do.

Jan 26, 2009 02:32 AM #10
Rainer
321,367
Russel Ray, San Diego Business & Marketing Consultant & Photographer
Russel Ray - San Diego State University, CA

I think that would be great if they actually turned it into a credit instead of a no-interest loan.

Jan 27, 2009 03:24 AM #11
Rainmaker
184,865
Christina Cavins
Irongate Inc. REALTORS - Centerville, OH
www.BuySellOH.com Search Ohio Homes For Sale

There is a chance that those taking advantage of the tax credit will not have to pay it back. I am worried that giving away free money will only put our country in further debt. The real reason that buying is down is the incredibly strict lender requirements, money for improvements is not an incentive to buy as far as I've seen.

Jan 29, 2009 03:57 PM #12
Rainmaker
722,654
Chuck Willman UtahHomes.me
Utah Homes - Alpine, UT
Utah Homes

I would be quite happy to see this happen... also, I wouldn't mind the 3.5% downpayment requirement go down to 3%.

Feb 02, 2009 01:15 AM #13
Rainmaker
373,340
Judy Jennings
Top Agent Plus - Middleboro, MA
Tap into Judy's real estate expertise & resources.

Jon,

Great post. It stimulated a great conversation about the tax credit, not so much for the housing market. I think it should be paid back. 

Judy

Feb 11, 2009 11:04 PM #14
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Rainer
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Jon Wnoroski

Summit County Realtor
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