There has been much talk about the stimulus package and some recent changes have caught the eyes of people in the real estate industry as well as home buyers and sellers. On Wednesday the Senate passed an amendment that will include a $15,000 home purchasing tax credit in the American Recovery & Reinvestment Act of 2009 for anyone buying a primary residence within the one year period from the time this bill is passed. US News and World Report outline the details.
It is important to note that this bill has not passed yet but many potential buyers are asking questions in regards to this tax break. Ken Dickerson of RWF Mortgage in Chicago summarizes the important details:
- The tax credit is the lesser of 10% of the home price or $15,000 and can be spread equally over 2 tax years.
- The housing tax credit can be used for purchases of primary residences only…no investment properties or second homes.
- The home purchase can be an existing home, a newly constructed home, or a bank foreclosure home…but the purchase must be completed within 1 year of the passage of the American Recovery and Reinvestment Tax Act of 2009.
- The home buyer does NOT have to be a “first time home buyer” to qualify for this housing tax credit, unlike housing stimulus based tax credits from last year.
- This 2009 housing tax credit does NOT have to be repaid to the government unlike the $7,500 first time home buyer tax credit from last year UNLESS you cease to make it your primary residence within the first 24 months (i.e.. sell within 2 years).
This is great news for home buyers, if it passes, and can go a long way towards stimulating demand for new home purchases.
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