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Confused about the Economic Stimulus Bill going through Congress

By Bob Mori

Real Estate Agent with RE/MAX Right Choice

February 10, 2009 01:38 PM

I am new to Active Rain, so if I am asking about something already discussed, I am sorry.

The Economic Stimulus Bill going through Congress contains, in the Senate version for now, a tax credit of 10%, up to $15,000, on the purchase price of a primary residence. This tax credit applies to all homebuyers, not just first time homebuyers.

My question. Does anyone know when this credit would take effect? It is for a term of one year, but will that year start retrocative back to 1/1/09, or does the one year start the date the President signs the Bill? I have seen both start dates in the press. Also if a person signs a contract for a home before the Bill goes into effect, but closes on the home after the Bill is in effect, does that person qualify for the credit?

I am being asked the above questions by potential buyers I am currently working with and I am not sure of the correct answers. Thanks for any light you can shed on this topic.

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David Timm

Coldwell Banker Residential Brokerage - Fort Collins, CO

CRS, EcoBroker, GRI, ABR

Until the bill is law one can only speculate. It would be hugh!! But it could vanish.

Feb 10, 2009 01:57 PM

Karen Monsour

Coldwell Banker Fort Lauderdale Beach - Fort Lauderdale, FL

REALTOR, SSRS - Sells FL Waterfront, Short Sale Expert!

Bob,

First of all, welcome to AR, you will learn so much from blogging and reading on here. This is a great community.

I do not think this law is applicable until it has been signed by the President. Whether or not it is retroactive is a good question.

Half the lawmakers that voted on this today weren't even sure what was contained in this stimulus package...after all it was 800 pages...

That is a great question that you posed and I hope someone else here can shed some light on this.

P.S. You might want to click on the link button and add a link to yourself so people can find you.

Feb 10, 2009 02:06 PM

Alan Brown

Coldwell Banker Realty - Davenport, FL

34 Years of Real Estate Experience .

I am not sure either.. I would imagine since it is a Tax credit, it will be for anyone closing on a principal residence any time during the calender year 2009 dating back to January 1st

Feb 10, 2009 02:26 PM

Bob Mori

RE/MAX Right Choice - Trumbull, CT

David:

I agree that we won't know the whole story until the President signs the bill. Matter of fact we won't know if the tax credit even makes it through to the President until we see what the joint House/Senate committee does on reconciling the differences in their respective versions of the bill. However, customers are asking me this stuff and I just wish I had something more definitive to tell them. What none of us need at this time is another excuse for potential buyers to remain on the sideline.

Feb 10, 2009 02:30 PM

Karen Monsour

Coldwell Banker Fort Lauderdale Beach - Fort Lauderdale, FL

REALTOR, SSRS - Sells FL Waterfront, Short Sale Expert!

Bob,

I am having some trouble tonight as well. Perhaps there are some bad storms or they are upgrading again.

If you have a website you can add it by clicking on the "link" button under your name. After you do this you will see a space where you can add your website or contact information.

You can look at mine if it would help.

You also might want to add some things like Shelton, CT real estate or the like.

Feb 10, 2009 02:37 PM

Bob Mori

RE/MAX Right Choice - Trumbull, CT

Thaniks Karen.

Feb 10, 2009 02:49 PM

Karen Monsour

Coldwell Banker Fort Lauderdale Beach - Fort Lauderdale, FL

REALTOR, SSRS - Sells FL Waterfront, Short Sale Expert!

Bob,

If you need more help you can email me at KarenLuvs2ListNSellRE@yahoo.com

I know it's a long one, just copy and paste it. I'll try to help you. If I cannot do it, I may know someone on here who can.

AND, you are very welcome.

Feb 10, 2009 02:59 PM

Bob Mori

RE/MAX Right Choice - Trumbull, CT

Was just sent the following table outlining the Home buyer Tax Credit amendment I asked about last night. Unfortunately it might all be for naught in that I saw a statement coming out of the joint House/Senate committee that is reconciling their separate Stimulus Bills in which a Senator said that he expected to see the $15,000 cut back to a lesser amount.

Once again the little guy takes it on the chin while the big banks walk away with money in hand. Guess their lobbying efforts provided more campaign dollars to the Congressman than the dollars that come from NAR.

Aren't the banks part of the root causes of our economic problem, yet they are being rewarded with more bailout money while Charlie homeowner loses his house? Something truly is wrong with this scenario.

HOMEBUYER TAX CREDIT FEATURE	CURRENT LAW	HOUSE VERSION H.R. 1	SENATE VERSION (Isakson-Lieberman Amendment)
Amount of Credit	Lesser of 10 percent of cost of home or $7500	Same as current law	Lesser of 10 percent of cost of home or $15,000, but only for purchases beginning the date the President signs bill.
Eligible Property	Any single family residence (including condos, co-ops, townhouses) that will be used as a principal residence	Same as current law	Same as current law
Refundable	Yes. Reduces (or can eliminate) income tax liability for the year of purchase. Any unused amount of tax credit refunded to purchaser.	Same as current law	No. The credit can reduce tax liability to zero, but if purchaser's tax liability is less than the amount of the credit, the unused portion is not refunded to purchaser.
Income Limit	Yes. Full amount of credit available for individuals with adjusted gross income of no more than $75,000 ($150,000 on a joint return). Phases out above those caps ($95,000 and $170,000, respectively).	Same as current law	None.
First-time Homebuyer Only	Yes. Purchaser (and purchaser's spouse) may not have owned a principal residence in 3 years previous to purchase	Same as current law	No . All purchasers, not just first-time homebuyers, are eligible for credit.
Recapture/Repayment	Yes. Portion (6.67% of credit) to be repaid each year for 15 years, starting with 2010 tax filing. If home sold before 15 years, then remainder of repayment amount recaptured on sale.	Yes and No. Repayment will apply to 2008 purchases. For 2009 purchases, the credit will not be repayable UNLESS the home is sold within three years of purchase.	Yes and No. For 2009 purchases, the credit will not be repayable UNLESS the home is sold within two years of purchase. Repayment will continue to apply to all 2008 purchases and 2009 purchases before date of enactment.

Effective Date	Purchases on or after April 9, 2008. Repayment to begin for 2010 tax year (return filed in 2011.)	Repayment elimination applies only to 2009 purchases	$15,000 amount and repayment feature effective as of date of enactment (date of President's signature).
Termination	July 1, 2009	July 1, 2009	September 1, 2009
Interaction with Alternative Minimum Tax (AMT)	Can be used against AMT, so credit will not throw individual into AMT.	Same as current law	Same as current law
Allocation Election (Utilizing the credit over 2 years rather than only in the year of purchase)	No provision	No provision	A purchaser can make an election to take the credit over 2 years. If the purchaser makes this election, the amount claimed must be the same in both years.