Is it a credit? Loan? Gift from above?
The effect of this bill/amendment/law/stimulus/thing will be a matter of perception – perception by buyers as to whether they just gained $15k and be sellers as to whether they should hold out for a higher price because the buyers now have $15k more.
Two of the best posts I have seen (please feel free to point out others) -
If the bill passes both the House and Senate, and is signed into law by the President (which is expected, currently. Possibly by the end of the week) then an amount equal to 10% of a home’s purchase price, not to exceed $15,000, could be applied as a tax credit.
This is like every SELLER getting a $15,000 price reduction, complements of Uncle Sam and President Obama! Big NEWS for both buyers AND sellers of homes. Watch the news VERY closely in the coming days.
Read the whole thing at OpenCongress – somehow I doubt any of our elected representatives have … what with 276 amendments and all.
Amendment 106 (which is key), passed.
S.Amdt.106 Pass To amend the Internal Revenue Code of 1986 to provide a Federal income tax credit for certain home purchases.
Senate Amendment 145 was offered:
S.Amdt.145 Offered To improve the efforts of the Federal Government in mitigating home foreclosures and to require the Secretary of the Treasury to develop and implement a foreclosure prevention loan modification plan.
Senate Amendment was passed:
S.Amdt.161 Pass To provide $2,000,000,000 from the HOME program for investment in the low income housing tax credit projects.
Update 07 February 2009: It appears that the bill will come to a vote Monday or Tuesday.
Update #2 07 February 2009: Calculated Risk has as clear an explanation of an as-yet-not-understood-or-really-agreed-upon bill as I’ve seen. Read the whole thing.
First the details (as far as I can tell):
# The tax credit is 10% of the purchase price up to $15,000.
# The tax credit is for one year (from date of enactment).
# The credit is available for both new and existing home purchases.
# This is for primary residences only, and the home must be owner occupied for two years after purchase.
# There is no income cap (the $7,500 tax credit had an income cap of $150,000 per year).
# Unlike the $7,500 tax credit, the new credit does not have to be repaid over time.
# The credit is limited each year to the amount of taxes paid 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)
# Buyers can split the $15,000 into two separate tax credits to be taken in successive years.
Update 11 February 2008: It’s dead. In the words of the Real Estate Bloggers:
And now we have a double whammy. Potential homebuyers have been sitting on the sidelines waiting to see if the government meant for us to get the $15,000 to buy a home. So instead of making offers in February they have been led on a dance by politicians.