Homebuyers get a bonus in the stimulus bill

By
Real Estate Agent with 1st. Choice GMAC

First time buyers could receive a $7,500 tax credit if they purchase soon.

NEW YORK (CNNMoney.com) -- If you're thinking of buying a home, there could be a big bonus for you in the economic stimulus bill that's now before Congress.

Among its many provisions is a $7,500 tax credit for first time home buyers. The House passed the $819 billion stimulus plan, including this tax credit, in a vote late Wednesday. The Senate may vote on its version of the bill some time next week.

Technically, the stimulus bill is actually changing the terms of the $7,500 tax credit that was issued as a part of the Housing Recovery Act, which Congress passed last summer. That legislation required that the tax credit be repaid over 15 years, making it more of a no-interest loan. The stimulus bill now under consideration would make that tax credit a true credit that doesn't need to be repaid.

Many in the housing industry believe this credit could do a lot to jump start the moribund housing market.
"Our economists have studied the effect [of the credit] and they say there could be a 10% increase in home sales if it's implemented," said Mary Trupo, a spokeswoman for the National Association of Realtors. "It gives people who are sitting on the fence or who have inadequate funds for closing costs an incentive to act now."

A 10% increase would yield an extra half million sales this year.
Who qualifies
To be eligible, buyers cannot have owned a home for the past three years, and the new home has to be used as a primary residence. The credit phases out as income rises above $75,000 for singles and $150,000 for couples, and disappears entirely at $95,000 and $170,000, respectively.

Applying for it is easy, or at least as easy as doing your income taxes. Just claim it on your return. That's it. No other forms or papers have to be filed.

Both the Senate and the House versions of the new act remove the requirement that buyers repay the credit. The Senate bill applies retroactively to any purchase completed between January 1, 2009 and the end of August. The House version is also retroactive to the start of the year, and expires at the end of June. As long as buyers don't sell for at least 36 months, they keep the money.

And the credit is refundable, meaning that it can be claimed even if the amount of the credit earned exceeds the buyer's tax liability. So even if your total tax bill comes to just $5,000, you can still qualify for a full $7,500 refund.

The housing industry has been pushing this idea for many months, arguing that first-time homebuyers are the key to boosting home sales. First time buyers who purchase from existing homeowners free those sellers to trade up to bigger, better houses.

Comments (4)

Anthony Stokes-Pereira
Better Homes and Gardens Rand Realty - Nanuet, NY
Realtor

Hi Silvia;

Great post! Super news for first time home buyers. Thank you for sharing.

Jan 30, 2009 06:43 AM
Mary Ann Mazza-Peeler
Joyner Fine Properties, Inc. - Richmond, VA

Silvia:

Isn't there also a provision in this bill to make this tax credit permanent or at least extend it?  Also, I heard that it could be passed on to all home buyers.  Have you heard that?

Feb 03, 2009 03:36 AM
Anonymous
Anonymous

Anthony, thanks for your comment.

Mary Ann, yes I heard about that but as of today we don't have any good news yet.

Feb 03, 2009 04:47 AM
#3
Silvia Ruch
1st. Choice GMAC - Parkland, FL

Mary Ann,

Check this :http://www.realtor.org/wps/wcm/connect/b95f6b004ce7024095c69763cd08651d/Microsoft+Word+-+CM_Podcast+Script_020309+v4.pdf?MOD=AJPERES&CACHEID=b95f6b004ce7024095c69763cd08651d

Copy and paste in your browser.

 

Feb 03, 2009 10:31 AM