ILLINOIS HOME LOANS

Senate Wants $15,000 Housing Tax Incentive Bicameral Conference Says NO

Many thanks to Congress for initiating the new tax incentive for purchasing homes, and some more thanks to the Senate for keeping it in the stimulus bill. The bill is now in the Senate. The Senate is starting to strip the bill of pork injected in the house, more kudos to the Senators. Will it make it all the way through? Call your representative to make sure. 

Some may complain that the $15,000 won't do enough for the housing market. Hard to say but I sure hope it does. We know that the $7500 tax incentive didn't do much. Is $15,000 much better? I think so. Imagine being handed a check for $15,000 the next time you file your taxes. What a blessing. Especially for the young couple that needs to buy furniture, plates, paint the house, repair odds and ends, etc. Remember when you bought your first home and how wonderful a $15,000 check would have been to offset unexpected expenses? Of course.

There is 9 trillion dollars sitting in various forms of cash in this country. I'm sure there are lots of parents and grandparents that will recommend their kids and grandkids to get busy.

Take a look at number 5 and 6 below.

Here are the highlights:

1. The tax credit is 10% of the purchase price up to $15,000.
2. The tax credit is for one year (from date of enactment).
3. The credit is available for both new and existing home purchases.
4. This is for primary residences only, and the home must be owner occupied for two years after purchase.
5. There is no income cap (the $7,500 tax credit had an income cap of $150,000 per year).
6. Unlike the $7,500 tax credit, the new credit does not have to be repaid over time.
7. The credit is limited each year to the amount of taxes owed in any one year (with the $7,500 tax credit, buyers received the entire credit and a refund if the $7,500 was greater than taxes for the year). Example: If you owned $10,000 in taxes for 2009, you could only use $10,000 of the credit to reduce your tax bill to zero for 2008. If you owed $3,000 the next year- 2009, you could use the remaining balance of $5,000 to negate what you owed in 2009 but that's it, you're done with the credit. Buyers can split the $15,000 into two separate tax credits to be taken in two successive years.