15K primary residence tax credit in stimulus bill

30ashopper · 02-05-2009, 11:59 AM

Hopefully Kurt won't get too mad that I've cross posted on this in politics, but after reading the amendment, I thought this might be an interesting real-estate discussion.

This tax credit actually looks pretty neat for anyone thinking of buying a home. The purchase has to be a principal residence you move in to within two years of the purchase. The deduction is equal to a maximum of 15,000.00 or 10% of the value, whichever is larger, and can be applied over two years after the purchase. You also have to buy the home within one year after the 2009 stimulus bill passes, so it's very temporary.

I can see a few loop holes in this. You could use this to buy a second home as long as you were willing to live there for a period of time that fell within the definition of a principal residence. I'm not too sure how long that is, maybe it's the two years out of five the IRS currently uses. The amazing thing about it seems to be that it's a deduction of your federal tax, so I guess if you bought a house for 150K, and had 15K in taxes, your net tax bill for the year would be zero.

I'm guessing there are going to be some people taking advantage of this. 15K is a lot of money.

Here's the amendment that was passed -

http://graphics8.nytimes.com/images/...-amendment.pdf

passin' thru · 02-05-2009, 12:03 PM

Quote:

Originally Posted by 30ashopper

... a maximum of 15,000.00 or 10% of the value, whichever is larger ....

Whichever is smaller, right? $15K max, period.

TooFarTampa · 02-05-2009, 12:27 PM

Honestly this seems to be stimulus spending in its purest, most targeted form. It's the kind of money that should make many people sitting on the sidelines who can afford it and can get credit to dive in. And it could provide a cushion in case of further declines. What is not to like? If the government is going to be spending more money it doesn't have, this actually seems like a useful way to do it.

scooterbug44 · 02-05-2009, 01:27 PM

If it has to be your primary home, why do they give you 2 YEARS to move into it?

Sure some of the RE bat turds will take advantage of that one!

Also thought you had to start repaying it over a 15 year period so it's more like an interest free loan.

SWGB · 02-05-2009, 01:58 PM

Quote:

Originally Posted by scooterbug44

If it has to be your primary home, why do they give you 2 YEARS to move into it?

Sure some of the RE bat turds will take advantage of that one!

Also thought you had to start repaying it over a 15 year period so it's more like an interest free loan.

I believe you have to LIVE in the home for years of the 5 you own it to qualify as a primary residence.

30ashopper · 02-05-2009, 02:21 PM

Quote:

Originally Posted by scooterbug44

If it has to be your primary home, why do they give you 2 YEARS to move into it?

Sure some of the RE bat turds will take advantage of that one!

Also thought you had to start repaying it over a 15 year period so it's more like an interest free loan.

That was the old one they passed last year, this replaces it. This time around, it's real tax credit and there aren't any income restrictions.

info on the old one -
Federal Housing Tax Credit for First-Time Home Buyers: Tax Credit at a Glance

blurb on the new one (same site)-
Federal Housing Tax Credit for First-Time Home Buyers: Home

30ashopper · 02-05-2009, 02:26 PM

Quote:

Originally Posted by TooFarTampa

Honestly this seems to be stimulus spending in its purest, most targeted form. It's the kind of money that should make many people sitting on the sidelines who can afford it and can get credit to dive in. And it could provide a cushion in case of further declines. What is not to like? If the government is going to be spending more money it doesn't have, this actually seems like a useful way to do it.

Maybe. The way it plays out should be interesting. Initially sellers will probably feel they have buyers over a barrel, so I bet prices decline more slowly. But as the deadline approaches, we might expect to see a flurry of negotiations as both parties get nervous about missing out on an opportunity.

The thing I'd worry about as a buyer would be, after the deadline is past, do prices resume thier rapid decline? In which case that 15K you thought you saved ends up getting eaten up by a loss in value on your new home.

destinsm · 02-05-2009, 03:28 PM

Quote:

Originally Posted by 30ashopper

Maybe. The way it plays out should be interesting. Initially sellers will probably feel they have buyers over a barrel, so I bet prices decline more slowly. But as the deadline approaches, we might expect to see a flurry of negotiations as both parties get nervous about missing out on an opportunity.

The thing I'd worry about as a buyer would be, after the deadline is past, do prices resume thier rapid decline? In which case that 15K you thought you saved ends up getting eaten up by a loss in value on your new home.

ding, ding, ding, ding... we have a winner!!!!

This is just kickin' the can down the road...

When median home values are 3x median income all will be good. Anything else is burdening our future to try to maintain a life we can't afford today!!!

SHELLY · 02-06-2009, 12:15 AM

Quote:

Originally Posted by destinsm

ding, ding, ding, ding... we have a winner!!!!

This is just kickin' the can down the road...

When median home values are 3x median income all will be good. Anything else is burdening our future to try to maintain a life we can't afford today!!!

...ah oh--apparently there's a fatal flaw in their plan. The government and industry didn't count on the fact that there just might be folks out there smart enough to connect the dots.

.

SWGB · 02-06-2009, 03:23 AM

Quote:

Originally Posted by SHELLY

...ah oh--apparently there's a fatal flaw in their plan. The government and industry didn't count on the fact that there just might be folks out there smart enough to connect the dots.

.

Isn't that the US way? Pass the buck, let the next generation deal with it, do it tomorrow or, of course my favorite, never do today what you can load on the backs of your grandchildren.

CADreaming · 02-06-2009, 10:36 PM

Does anyone know if the credit applies to building a home on an existing lot? I know, I should read the bill!

SHELLY · 02-06-2009, 10:43 PM

Quote:

Originally Posted by sowalgayboi

Isn't that the US way? Pass the buck, let the next generation deal with it, do it tomorrow or, of course my favorite, never do today what you can load on the backs of your grandchildren.

You think we can work those words into lyrics for a 3rd verse to the National Anthem?

.

Beach Runner · 02-06-2009, 10:47 PM

Wait a minute. How many $150K houses have a tax bill as high as $15K? I guess it's just Friday, and I'm tired and dense after a long week at work.

30ashopper · 02-08-2009, 06:51 PM

Quote:

Originally Posted by Beach Runner

Wait a minute. How many $150K houses have a tax bill as high as $15K? I guess it's just Friday, and I'm tired and dense after a long week at work.

It's applied to your income tax, not property taxes.

30ashopper · 02-08-2009, 06:53 PM

Quote:

Originally Posted by CADreaming

Does anyone know if the credit applies to building a home on an existing lot? I know, I should read the bill!

Doesn't look like it, it's aimed at clearing out inventory. Unfortunately it has a fatal flaw, it includes existing home sales.

SWGB · 02-09-2009, 03:15 PM

Quote:

Originally Posted by SHELLY

You think we can work those words into lyrics for a 3rd verse to the National Anthem?

.

I'm not much of a lyricist, but maybe we could get a haiku out of it.

BeachSiO2 · 02-09-2009, 06:06 PM

Quote:

Originally Posted by sowalgayboi

Isn't that the US way? Pass the buck, let the next generation deal with it, do it tomorrow or, of course my favorite, never do today what you can load on the backs of your grandchildren.

Quote:

Originally Posted by SHELLY

You think we can work those words into lyrics for a 3rd verse to the National Anthem?

.

Quote:

Originally Posted by sowalgayboi

I'm not much of a lyricist, but maybe we could get a haiku out of it.

hmmm, did someone say haiku...

Onward grand kiddies
Leaving empty piggy banks
Full of IOUs

SWGB · 02-09-2009, 08:32 PM

Wow, it's like Bloody Mary. You just say haiku 3 times in the message board and BS2 shows up and writes one.

SHELLY · 02-09-2009, 11:29 PM

Quote:

Originally Posted by sowalgayboi

I'm not much of a lyricist, but maybe we could get a haiku out of it.

Liar loans for all
Stainless Steel, Granite, Ramen
Everyone approved

Fun flipping condoz
It was a great time to buy
Grandkids owe our debt

gardening1970 · 02-10-2009, 12:09 PM

Quote:

Originally Posted by SHELLY

Liar loans for all
Stainless Steel, Granite, Ramen
Everyone approved

Fun flipping condoz
It was a great time to buy
Grandkids owe our debt

Bonus points for use of buzz words!

30ashopper · 02-12-2009, 01:06 PM

This has been completely reworked. The tax break was cut in half, there are now income limits, and the break only applies to new homes.

ClintClint · 02-12-2009, 01:39 PM

I believe that's " first time homebuyers" not "new homes"

traderx · 02-12-2009, 02:20 PM

Quote:

Originally Posted by ClintClint

I believe that's " first time homebuyers" not "new homes"

I believe you are correct. It has been cut to $8k but no longer has to be paid back.

30ashopper · 02-12-2009, 03:37 PM

Quote:

Originally Posted by traderx

I believe you are correct. It has been cut to $8k but no longer has to be paid back.

Yep you guys are right. The old program gets converted over, so people don't have to repay, and it's specifically for first time buyers. The income limits remain in place as well apparently.

traderx · 02-12-2009, 07:08 PM

Quote:

Originally Posted by 30ashopper

Yep you guys are right. The old program gets converted over, so people don't have to repay, and it's specifically for first time buyers. The income limits remain in place as well apparently.

Yes, income limits are the machine guns and hand grenades of class warfare.

SHELLY · 02-12-2009, 09:47 PM

Quote:

Originally Posted by traderx

I believe you are correct. It has been cut to $8k but no longer has to be paid back.

As it reads at time of posting:

FIRST-TIME HOME BUYER CREDIT First-time home buyers are eligible for a refundable tax credit equal to 10 percent of the purchase price of their home, up to $8,000, if they made the purchase after Jan. 1, 2009, but before Dec. 1, 2009.

Unlike a similar credit that Congress provided last year, you don’t have to pay this one back over 15 years. The new credit, however, does phase out for individuals with incomes over $75,000 or married couples with incomes over $150,000 who file their taxes jointly. Also, you forfeit the credit if you sell the house within three years.

Bob · 02-13-2009, 09:07 AM

cue the crickets, very underwhelming