Wednesday, February 18, 2009

What's In The Stimulus Package for Home Buyers?

The $15,000 tax credit for homebuyers that passed the Senate was shot down in the final stimulus package. What's left isn't bad, though. Details are still being worked out, but this is what we know at this point.

1) First time homebuyers (defined as those who have not owned a home in the past three years) are eligible.
2) Home must be purchased Jan 1, 2009 through Nov 30, 2009. This part is dumb. If it's supposed to stimulate the economy, why give the credit to people who have already bought?
3) Buyer can deduct $8,000 from the federal income tax they will owe for 2009 OR 10% of home's value, whichever is less. If the buyer owes less than $8,000 in federal taxes, the balance will be refunded to the buyer. Wow!
4) Available to couples with income less than $150,000 and singles with income less than $75,000.
5) Credit must be repaid if buyer lives in the property for less than three years. This is better than the $7,500 tax credit that was offered last year. Last year's tax credit was really just a no interest loan that had to be repaid.

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