$15,000 homebuyer credit cut in compromise, Stimulus package may restore higher loan limits

Mike and others, The comprimise document states the following:

Refundable First-time Home Buyer Credit. Last year, Congress provided taxpayers with a refundable tax credit that was equivalent to an interest-free loan equal to 10 percent of the purchase of a home (up to $7,500) by first-time home buyers. The provision applies to homes purchased on or after April 9, 2008 and before July 1, 2009. Taxpayers receiving this tax credit are currently required to repay any amount received under this provision back to the government over 15 years in equal installments, or, if earlier, when the home is sold. The credit phases out for taxpayers with adjusted gross income in excess of $75,000 ($150,000 in the case of a joint return). The bill eliminates the repayment obligation for taxpayers that purchase homes after January 1, 2009, increases the maximum value of the credit to $8,000, and removes the prohibition on financing by mortgage revenue bonds, and extends the availability of the credit for homes purchased before December 1, 2009. The provision would retain the credit recapture if the house is sold within three years of purchase. This proposal is estimated to cost $6.638 billion over 10 years

I hope this helps and remember I am an old Realtor:  I work when Realtors work; nights and weekends!

You can always call on me for anything,

John Tuggle

Comprimise explanation from Congresional Summary

Refundable First-time Home Buyer Credit. Last year, Congress provided taxpayers with a refundable tax credit that was equivalent to an interest-free loan equal to 10 percent of the purchase of a home (up to $7,500) by first-time home buyers. The provision applies to homes purchased on or after April 9, 2008 and before July 1, 2009. Taxpayers receiving this tax credit are currently required to repay any amount received under this provision back to the government over 15 years in equal installments, or, if earlier, when the home is sold. The credit phases out for taxpayers with adjusted gross income in excess of $75,000 ($150,000 in the case of a joint return). The bill eliminates the repayment obligation for taxpayers that purchase homes after January 1, 2009, increases the maximum value of the credit to $8,000, and removes the prohibition on financing by mortgage revenue bonds, and extends the availability of the credit for homes purchased before December 1, 2009. The provision would retain the credit recapture if the house is sold within three years of purchase. This proposal is estimated to cost $6.638 billion over 10 years

Thanks for reading my stuff and please feel free to call on me anytime.  I was a Realtor before I was a Lender.

John Tuggle

Mike,

That is how I see it, however, I am not a tax advisor.  I always advise my clients to seek competant tax and legal advice.

Thanks and keep up the Real Estate Recovery Work!

John Tuggle

Mike,

Your son is doing the right thing.  I will say if your son purchased in 2008 he appears to be subject to the current $7,500 tax credit and it's rules.  If he is planning on purchasing anytime between January 1, 2009 and December 1, 209 he will be subject to these new rules.  It is very important to note that your son's tax advisor nor the IRS ahve the actual written rules included in the code yet.  It could take several weeks for all that to be revised.  If he can hold off to file he should until it is al settled.  Also, remember, Congress still has to pass this and the President still has to sign it.  If all goes smooth then it should be done by early next week and all codes updated within a month of that.

All of this is my best estimate.  Thanks,

John Tuggle