UPDATE: February 12, 2009.
A $15,000 tax credit for anybody buying a home was dropped from the stimulus plan yesterday during negotiations between Senators and House Representatives trying to reconcile the two existing legislative plans. Instead, in a compromise, first-time homebuyers can claim an $8,000 credit for homes bought by the end of August. This is only a $500 increase from the existing $7,500 first time home buyer tax credit.
The Senate had previously approved a $15,000 tax credit for home buyers. The Senate proposal would have made the following changes to the existing $7500 first time home buyer tax credit: (1) tax credit increased to 10% of home value, up to a limit of $15,000; and (2) tax credit applied to all home buyers instead of just first time home buyers.
However, the Senate proposal did not survive the reconciliation of the Senate stimulus plan with the House of Representatives.
Mitch McConnell: GOP Reformer of Stimulus Plan
The New York Times reported last week that GOP Senators supported a proposal that would allow a tax credit of 10% of the value of a home purchased by any home buyer, up to a $15,000 limit. That would have doubled the current first time home buyer tax credit, which is $7,500. Furthermore, the tax credit would have applied to all home buyers, instead of just first time home buyers, as under the old law.
This proposal did not survive the reconciliation of the Senate Bill with the House of Representatives bill.
The tax credit, if passed into law, might have helped potential home buyers who are on the fence about buying property in this economic environment. While home prices are low and declining, mortgages are hard to come by in the tightening credit market, making purchasing property difficult for many. Potential buyers may find an additional $7,500 in tax credit just what they need to decide to buy a new home. Any buyers will help get the U.S. real estate market moving once again. An additional $500 for first time home buyers (as currently proposed in the updated bill) will likely have no impact on the economy.
Unfortunately, a serious attempt at tax relief has been shot down by Democrats. See video regarding the Republican response to the stimulus plan. Tax Relief is what we need!:
February 5th, 2009 at 1:02 am
What exactly is a “tax credit?” Is it like an earned income credit where they actually give you the money. I also read that you have to pay this back at a rate of $500 a year. Do you know anything about that?
February 5th, 2009 at 1:05 am
Push for the already failed policy; ’spend baby spend’ by means of tax deduction looks like a Mugabe style, I’d say. If the deficit matters, then those with the concern will be advised to count the costs of imported oil and reduce war expenses, I think.
The U.S. need to take an extraordinary measure toward job creation right away. If it fails, the U.S. is sure to fall into decay from trend., I think.
February 5th, 2009 at 6:37 am
We need to fire all of Congress and start over. They need to stop spending money we don’t have and messing with the economy. It is not part of their job description. Let the market correct itself.
We would be better off if congress only met 1 every 4 years and then only for a few months. I think we should make all of congress a part time job with part time pay.
We now have Republicans acting like Democrats and giving away money.
February 5th, 2009 at 7:29 am
I already filed my taxes (my refund is being processed now). I took the $7500 credit. Will i be able to re-file and get the rest of the credit if this passes?
February 5th, 2009 at 7:51 am
George, I think its been totalled up before and what you come up with is that congress only works abot 3 months out the year as it is.
Didnt they just give themselves a raise last year while b*tching about corporate execs pay ?
February 5th, 2009 at 8:34 am
Yes Micky they did. That is different because they are in PUBLIC SERVICE. They are not making the big money like CEO’s because they are working hard for us.
WE NEED TERM LIMITS. WE NEED THEM NOW.
I would love to vote myself a raise but my boss won’t go along with that. I am hoping and praying that this backfires on the Dem and even the Repucrats in the worst way and America get mad and cleans house. I know. It is just a pipe dream. But Barry has inspired me to hope for change.
February 5th, 2009 at 8:44 am
Does anyone know if this is a refundable tax credit? I heard the $7,500 was.
February 5th, 2009 at 8:45 am
Thoun: I would think you would be able to ammend your return. We’ll see.
February 5th, 2009 at 8:53 am
First, this law isn’t enacted yet so, to date, the already-existing $7,500 repayable credit is the only game available today.
If enacted, however, it will be for ALL homebuyers, not just first-timers, for a year following enactment. It will NOT be recoverable (no need to repay it — unlike the current $7,500 credit) unless the home, which must be a primary residence, is resold within two years.
Upon enactment, the current credit will be “sunsetted”.
February 5th, 2009 at 8:54 am
Justin -
The tax credit is currently $7,500 and is a refundable credit. And yes, you have to repay it.
Per the IRS website “You must begin repaying the loan the second year after claiming the credit. For example, if you properly claim the maximum available credit of $7,500 on your 2008 federal tax return, you must begin repaying the credit by including one-fifteenth of this amount, or $500, as an additional tax on your 2010 federal tax return. Normally, $500 will be due each year from 2010 to 2024.”
February 5th, 2009 at 8:55 am
The new proposed credit, if it becomes law, IS refundable, and is NOT retroactive to prior sales, though it can be claimed on the 2008 return.
February 5th, 2009 at 9:43 am
Wait. This whole economic crash stemmed from the collapse of the housing bubble. The housing bubble was largely a result of government policies encouraging people to buy a home whether or not they could afford them.
Is encouraging poor people to buy houses really again really a good thing?
February 5th, 2009 at 10:05 am
LeftRight
I would hope that if thats the case then the qualifications would have to come up a little.
Getting your foot in the door and actually following thru can be two different things.
I doubt the same caliber applicants that got us into this will be let thru again.
Then again…
Viable home owners are one of the best things that could happen to our economy.
First I would think that there needs to be employment available so mortgages can be met.
These projects that are going to take 4 to 5 years to get up and rolling such as highways and bridges will do nothing but delay and stagnate the process.
Corporate and small business incentives are the way to go.
Not all these projects we see on the bill that do nothing but drop money into things that are meant to do nothing other than pay off campaign debts and build political capital.
February 5th, 2009 at 10:41 am
Tim, I don’t know where you are getting that it is applicable to all home buyers. New York Times reported that it was only to first timers. Do you have a different source?
February 5th, 2009 at 10:51 am
Tim is right. My apologies. When this post was made last night, news media reports indicated that it was for first time home buyers, as per the old law. Now, it appears to be expanded to ALL HOME BUYERS. Article has been amended to reflect that. Thanks, Tim!
February 5th, 2009 at 12:16 pm
Is the tax credit only for people who bought a house in 2008? I am a first time home buyer and I bought my home in November of 2007
February 5th, 2009 at 1:59 pm
Can we claim $15000 tax credit in our 2008 return, if we buy home before 1st April 2009?
Any one please.
Thanks
February 5th, 2009 at 2:46 pm
For those with tax questions, you are best off asking your tax professional (H&R Block is highly recommended). However, I will add that the credit does not look like it will not apply to 2007. It may apply to 2008, but I suggest you talk to an accountant.
February 5th, 2009 at 3:02 pm
Here is a link for some info on the “new” revised 15,000 credit (not sure if true or not)
http://www.associatedcontent.com/article/1449166/15000_tax_credit_as_part_of_senate.html?cat=3
It would seem the credit would only apply to homes purchased this year 2009 and not be retro active in any way shape or form.
But whose to say it will remain in its current form by the time its approved-
February 5th, 2009 at 3:05 pm
What if you bought a house in 1999 and refinanced in 2004 and would just like to have $15,000 from the government?
Who do I have to sue to make that happen?
February 5th, 2009 at 3:12 pm
Nah, just claim a disability or minority status.
Tell em your a gay black depressed transgender amputee and they probably sell you the white house
February 5th, 2009 at 3:12 pm
As it stands with the $7,500 First Time Home Buyer Credit, it only applies to purchases made between April 8, 2008 and July 1, 2009 and it is to be repaid over 15 years. People who qualify can claim the credit on their 2008 tax returns even if the house is purchased in 2009. Once the new credit is enacted, it will “sunset” the original credit, offering the credit to all home buyers and increasing the credit to 10% of the purchase price, up to $15,000. This credit will not have to be repaid. Since the stimulus package has not been finalized, it is unknown yet if the required purchase dates will change, the proposal just says the time frame will be 1 year from enactment. As far as amending returns, I’m sure this will continue to be allowed since the purpose of this credit is to stimulate the economy ASAP. Again, we do not know if a person who already claimed the $7500 credit will be able to get additional funds, tax professionals have the same information available as everyone else. I get updates daily from the IRS and will repost when I get more information and when the proposal passes.
Mortgage lenders have also made it harder to get approved for loans and are changing limits almost daily. Although home prices have dropped drastically, it’s harder than ever to get loans because of all the bad loans in the past. Too many people bought houses that they could not afford because lenders told them they could afford a mortgage way beyond their means and they padded their information so it would fly. Not the case anymore.
February 5th, 2009 at 3:14 pm
You know what ?
I actually bought my house in 99 and did refinance it around 2005.
I’d actually like to know the answer to that.
February 5th, 2009 at 3:18 pm
TaxLDY was on it while I was typing.
Thanks.
You also confirmed my point above that we wont be seeing the same kind of applicants anymore that contributed to this mess.
February 5th, 2009 at 3:24 pm
Associated Press is now saying that the credit will be applied to purchases made between 1/1/09 and 12/31/09 and will be credited on next years taxes. I don’t know if this is correct since I’m not seeing it anywhere else, besides the way everything changes while being debated, who knows what the credit will end up actually being.