Earlier this week the Senate approved their version of the stimulus bill, including a $15,000 tax credit for all home buyers. Following negotiations between House and Senate members combining their bills into one piece of legislation for President Obama to sign, that tax credit has now been reduced to $8,000, according to the LA Times blog.
The newly proposed home buyer tax credit is only $500 more than the credit in last summer’s Housing and Economic Recovery Act. In addition to the reduction, new restrictions from the Senate bill have been put into place. Only first time buyers will qualify, and the transaction must close by August 31, 2009. No official word on other limitations.
What does this mean for home buyers? As Jon Lansner points out on his OC Register real estate blog, it depends on where you live. For those of us in California, it equals 1.3% of the $633,581 state average listing price. Check out his analysis of how the $8000 credit will impact buyers by state.
He’s charted each state (plus Washington DC) by the change in housing prices over the past year and has placed them into three categories: sickets, middle, and healthiest. See how much the tax credit will count toward purchases real estate’s sickest state (CA) versus the healthiest (WV).
For more updates about the stimulus, keep an eye on the Politics & Real Estate blog on Trulia Voices blogs.
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February 13th, 2009 at 11:16 am
Katie
I am still trying to find out if there are income limits like the current $7,500 tax credit has - $95K for individuals and $150K for couples. As you noted in your post, the impact of the $8,000 tax credit is a function of the cost of housing in each market area. The income limit currently existing has the same impact. The $8,000 credit will hepp the RE Market but it certainly is not the total solution to market weakness.
February 13th, 2009 at 8:03 pm
Hey Arn -
Just read the text of the House bill that passed, and it looks like the income limits still apply. However, the credit no longer has to be paid back over 15 years, so at least we get that…
February 13th, 2009 at 9:46 pm
Katie
thanks for reading thru all 1100 pages !
thanks for the update.
income limits limit effectivensss of credit in SF Peninsula except for first-time buyers in lower priced areas - but any little bit will help.
i have buyers closing Feb 24 with FHA financing - $10,000 cash in - hooray they will get almost of all that back next year - they are very HAPPY - unexpected bonus.
we will delay close a few days if bill has not yet become law.
i think the credit is just another reason first-time buyers should really consider getting into this market.
prices may decline a little but i think we may be approaching a bottom in the next 12 months.
REOs are selling like hot cakes!
Arn
February 16th, 2009 at 1:26 pm
Hey Arn -
Ha! It’s unlikely that even Congressional members read all 1100 pages…gotta love the command-F “find” function to find just the housing info
Sound like it’s good news for at least a few first-time buyers. We’ll see what impact it has long-term…
February 16th, 2009 at 7:16 pm
I purchased a home in November of 2008. I am still eligible for the 7,500 tax credit under it’s guidelines despite the new tax credit that is to be implements? The new tax credit will not wipe out my opportunity to claim the 7500 when I get my taxes filed in a week?
February 16th, 2009 at 7:24 pm
Hi Melissa
) - consult your tax advisor for details. bottom line tyhe benefits on the older version are minimal in my opinion.
you are in the same boat as my girlfriend who bought in September 08.
subject to income limits $85K single $170K joint, you can claim the $7,500 credit. just be aware it is not a TRUE CREDIT, it is a no interest loan - you will need to pay credit back over 15 years with no interest (kind of like buying a mattress
Arn
February 18th, 2009 at 4:21 pm
This article has some useful tax info related to the home buyer credit : http://www.savingtoinvest.com/2009/02/15000-first-home-buyer-tax-credit-in.html
I just hope the government makes last year’s credit exempy from repayment.
February 20th, 2009 at 2:58 pm
I bought my house on April 4 2008 just 5 days before the cut off of April 9th for the $7500 tax credit deadline. Is there anyway that I will be eligible for either of these?? I wanted to know if anyone knew why the date of the 9th was picked instead of April 1st.
February 21st, 2009 at 1:06 pm
I purchased a home on Jan 31, 2008. Am I eligible for the stimulus package? I was told by someone the house had to be bought after April 2008. Is that correct? Thank you…
February 23rd, 2009 at 4:52 pm
I purchased a home on November 26, 2008 and I have already received the $7500 tax credit but I was wondering if I qualify for the new law $8000 without having to pay back since it is only 35 days before the new law was effective. I don’t believe this new law is fair for all the new homeowners like me that qualified for the previous tax credit but still have to pay back. It should have been revised starting from the original tax credit April 9th 2008 to XXXX. Please let me know if there is anything I can do to qualify for it.
March 5th, 2009 at 1:09 am
Lee
unfortunately the answer is NO.
and i believe you only missed it by a few days.
the new no pay back credit is effective as as 12-1-08.
my girlfriend closed on 9-8-08 and she too missed the no payback credit.
i know it is a bummer.
Arn
April 14th, 2009 at 12:26 pm
Hi there,
I’m doing a bit of research on the former $7500 tax credit. I bought a new home which closed on DECEMBER 30, 2008. I am not a first time home buyer (2nd time). Can anyone tell me if a) I will still receive the $7500 tax credit, and b) if it will need to be paid back over the coming years or if I am now eligible under the “no pay back” package?
I see above you said “the new no pay back credit is effective as as 12-1-08.” and for some reason I thought it was January. Any advice would be fantastic!! Thank you.
April 14th, 2009 at 7:42 pm
Ashley
if you are not a first time buyer then you do not qualify for any of the credits - end of story. but please note i believe they US gov defines first time buyer as someone who has not owned in 3 years.
please go to my blog and click on pending legislation to pull up detail info on dates. i do not have time to check myself right now. but again if you have owned within 3 years, it is all a moot point anyway.
Arn
June 29th, 2009 at 3:00 pm
The government is offering first time home buyers an $8,000 tax credit in an effort to stimulate the ailing real estate market.
Sellers can attract buyers by highlighting the refund in their ads, especially when used in conjunction with owner financing.
This appealing tax credit is part of the Recovery Act that was expanded for 2009 home purchases. Here are 10 things you must know to make the most out of this program. Check out http://noteinvestor.com/?p=655 for more info!
January 28th, 2010 at 10:10 am
In my opinion the tax credit should not only of been decreased from $15000 it should of been abolished completely. Giving $8000 tofirst time buyers is 90% of the time just going to benefit those who were thinking of buying an house anyway. I mean $8000 is nice but a mortgage is a huge commitment and considering the economic climate not many people are willing to commit or have the funds for it.