What's all this talk about the $7,500 and $15,000 Tax Credit?
Â by Josh M. Boggs
Â Â Â Â What a crazy past couple of weeks we all have been living through.Â I don't know about you, but my head is still spinning over all this talk over the HUGE and Historical Economic Stimulus Package that President Obama and the government are proposing to enact.Â Little alone the fact that we keep hearing that our beloved banks and other large corporations whom have been blessed with our hard earned tax dollars are still not taking things so seriously and are out lavishly pampering their corporate employees with expensive junkets
.Â What's really going on here?
Â Â The biggest concern for myself personally is what will happen and be in store for the Real Estate market, not only because it's my profession and career; but because history has proven to us that Real Estate is a vital backbone to the stability of our U.S. economy.Â So that in turn leads to my initial question about these well sought after tax credits for new home buyers?Â I have fielded about 20 of the same questions about this topic and so I thought I'd try to dig deep into the research and post the results here in my attempts to learn a bit more myself and help to clarify the news around the water cooler.
Â Â The current available $7,500 tax credit
which was part of the 2008 American Housing Rescue and Foreclosure Act
is still active and in place for those whom have not owned a residence for at minimum for the last 3 years or not at all until June, 2009.Â However, this is not free money and has to be repaid within 15 years, but is INTEREST FREE!
Â There are many advantages with this credit and it was a great spark that helped fuel many buyer's interest in the last year.Â However, we are now hearing about this "new kid on the block"; the $15,000 tax credit
which is part of the new proposed Economic Stimulus Package that is awaiting a final vote
.Â And better yet, we are hearing news that it WILL NOT have to be paid back baring a few stipulations.Â Here's an excerpt from Georgia Senator Johnny Isakson's (R) website
whom himself is the prime sponsor for this bill.Â Senator Isakson is also a former Real Estate Broker.
Â Â Â
Specifically, Isaksonâ€™s amendment to the pending
economic stimulus bill would provide a direct tax credit to any
homebuyer who purchases any home. The amount of the tax credit would be
$15,000 or 10 percent of the purchase price, whichever is less.
Purchases must be made within one year of the legislationâ€™s enactment,
and the tax credit would not have to be repaid.
amendment would allow taxpayers to claim the credit on their 2008
income tax return. It also seeks to prevent misuse by only allowing
purchases of a principal residence and by recapturing the credit if the
home is sold within two years of purchase. The amendment would sunset
the current $7,500 housing tax credit on the date of enactment.
has pushed hard for a non-repayable tax credit for homebuyers because
he knows that it will work. In the mid-1970s, America faced a similar
housing crisis when a period of easy credit and loose underwriting
flooded the market with new construction.Â Interest rates rose, the
economy slowed and America was left with a three-year supply of vacant
homes.Â Congress responded by passing a $2,000 tax credit for anyone
purchasing a new home for their principal residence.Â Isakson believes
the results were clear and swift as home values stabilized, housing
inventory dropped and the market recovered.
So, here's the MILLION DOLLAR question that everyone wants to know:Â What do we do and how can we take advantage of this?Â I've got my suggestions, what's yours?Â If you want to hear my thoughts; call me or e-mail me and I'll be happy to share my thoughts.Â However, I'd love to hear your feedback and comments here, so please feel free to share!