Some of the regulations and filing requirements haven’t been released, but the latest stimulus bill has eliminated the $7,500 tax credit and turned it into an $8,000 credit. Unlike the 7500 credit, the $8000 credit doesn’t need to be repaid. To qualify for the $8,000 credit, you must earn less than $150,000 in adjusted gross income for couples filing jointly. Also, you must stay in the house for three years or there may be some payback penalties involved.  

The $8,000 credit is good for homes purchased by first-time buyers, defined as anyone who hasn’t owned a home in the last three years and purchased between January 1^st and November 30, 2009. You can even take the credit on your 2008 taxes if you have not already filed.   

This Week’s Real Estate Insight

A tax credit is a dollar-for-dollar reduction in your actual taxes due. An $8000 tax credit reduces your $9000 tax bill to $1000. The National Association of Realtors estimates the tax credit will result in over 250,000 houses sold.

 

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 The big news this week is the signing of the $789 Econmic Stimulus Package. The original $15,000 credit has been scaled back to $8,000, but  drops the repayment feature for buyers who hold on to their property for at least three years. Here are some of the other highlights in the bill that pertain to housing:

• FHA and conforming loan limits: The 2008 limits have been reinstated for 2009 except in those communities where the 2009 limits are higher. Additional increases in individual communities may also be available at the discretion of the secretary of the U.S. Department of Housing and Urban Development.
• Foreclosure mitigation and neighborhood stabilization. Funding for states and localities to be used for neighborhood stabilization activities for the redevelopment of abandoned and foreclosed homes are authorized. Some news reports put the funding level at $2 billion.
• Rental assistance. Up to $1.5 billion for short-term rental assistance and other aid for families during the economic crisis.
• Transportation infrastructure. Up to $29 billion for highway construction projects, $8 billion for rail projects, and $5 billion to weatherize low-income homes.
• Rural housing development. Increased funding for the Rural Housing Service direct and guaranteed loan programs.
• Energy efficient housing. Grants for energy retrofits for federally assisted housing (Section 8), funding for energy efficiency and conservation block grants to states, and Increases in the residential tax credit through 2010 for certain energy efficient upgrades.

This Week’s Real Estate Insight:

According to The National Association of Realtors, eliminating the repayment provision on the first-time homebuyer tax credit could drive more than 200,000 additional home sales, which will help stabilize home values. The National Association of Home Builders had estimated a $15,000 tax break for all homebuyers would have generated nearly 500,000 home sales

 

 listen to this week's show here: [48:12m]: Play Now | Play in Popup | Download