Thursday, February 05, 2009

$15,000 Tax Credit for All Home Buyers?

Earlier today, a client of mine who happens to be a commercial real estate attorney, sent me this update. It's from a group called Fix Housing First

"Isakson Amendment Passed!!Thanks to all of you who weighed in, the Isakson amendment - which provides a tax credit of up to 15,000 to all home buyers - passed by voice vote in the Senate last night with bi-partisan support; it will now be part of the final Senate bill. Truly your voice made a difference.
This is an important victory but our work is not done. Other amendments are expected to be offered today which embody parts of the Fix Housing First plan and we need to support those as well. The plan is to have a bill on the President's desk by February 13, so our efforts this week will be concentrated on the Senate and next week on the conference committee process.

Today Senator Ensign (R-NV) will offer what he is calling the "Fix Housing First Act" (amendment #353) which is much broader than our agenda but does include a mortgage rate buy down program which could lower mortgage rates to as low as 4%. While the plan is not exactly what we have been advocating for, it is another step in the right direction. So please urge your Senators to support the amendment - particularly its rate buy down provisions."

This is a huge jump from the existing $7,500 tax "credit" that applied to first time buyers (and those who have not owned for the past three years). The credit was actually paid back in $500.00 increments each tax year.

Ask your Chicago Lender how this credit would help your ability to purchase a home.


Anonymous said...

long time reader, first time commenter.

So is this similar to the previous credit that acted as more of a 10 yr tax free loan, with some exceptions on repayment?

Also, is this official? ...or it will die if the economic stimulus dies as a whole?

Eric Rojas said...

Thanks for reading. I'm not sure yet if the $15,000 will be a true credit with no payback over time. What we do know, it's for all buyers. Here's a yahoo news story from today.

It is entirely possible the amendment can be changed or dropped... but I doubt it. There seems to be no opposition to this component.

At our annual forecast meeting, NAR Chief Economist Lawrence Yun stressed making the $7,500 permanent and for all buyers. $15,000 makes a huge difference for those folks needing to put money somewhere and would like a home anyway.

We'll see. I think promoting home buying for qualified buyers is always a good idea. It stabilizes neighborhoods with long term self-interested tax payers.

The whole issue of the crash was two fold: 1. Real estate speculators and 2., Lending to unqualified buyers. Buyer Incentives are good if the actual lending requirements are in line with well documented borrower behavior. This is true for cars, TVs and homes.

There will be a stimulus package passed and it will have TOO much spending. But whatever passes, housing will get more than their fair share in my opinion.

Unknown said...

Love the blog.

So if I bought in late November 2008, will I be eligible? I wouldn't think it would be retroactive, right? We were planning to take the $7,500 credit and put it into a CD.

This would only apply to every purchase made from enaction of the bill forward, right?

This should really help the market. Maybe we shoulda waited a couple of months. $15,000 credit with no payback sounds great to me!

xxx said...

The amendment states "single family"...
Any chance this would apply to an owner occupied 2-flat (zoned R2) with a renter in one unit ?

Eric Rojas said...

We now know the $15,000 credit will NOT be required to be paid back as long as the home will be a primary residence within two years of purchase.

Gene, I don't know if there will be a retro-active component. I doubt it.

Triple X, looks like all primary residences will apply. Don't know this for sure until we see the act.
I think it would be ridiculous to exclude owner operators of multi-units as two and three flats need buying up too.

BTW, I have a great two flat to sell you in Ravenswood Manor Albany/Park near the Francisco Brown Line! Off-market for now, but I can show it.

Eric Rojas said...

BTW, Just posted some facts on the $15,000 buyer's credit.

Anonymous said...

I am confused about the concept of tax credit. My daughter is a teacher and makes less than 50k a year and wants to buy her first place. Her tax bill is nowhere near 15k. In fact, I think she usually gets some money back.

With this 15K tax credit and assuming she doesn't owe any money, would she get a check from Uncle Same for 15K? If she doesn't, what benefit is this credit to people like her?