As the housing market continues to fall due to falling home prices and home sales, and the flood of foreclosures, the government continues to come up of ways to address these problems.
With the $819 billion economic stimulus bill passed by the House, first time home buyers get a $7,500 tax credit. This bill is actually changing the terms of the Housing Recovery Act passed last summer, wherein the tax credit has to be repaid over 15 years, like it is more of a no-interest loan. However, it did not make a big impact. But the current bill under consideration would make the tax credit into a true credit that does not need to be repaid.
Those in the housing industry believe that this credit could pull up the housing market, which has been continuously falling due to increasing number of foreclosures. In fact, economists say, this credit could increase home sales by 10%, or about half a million sales once implemented.
Those who are eligible to avail this tax credit are home buyers who have not owned a house for the last three years, and the new home must be used as a primary residence. However, the credit phases out as income exceeds $75,000 for singles, and $150,000 for couples, totally disappears at $95,000 and $170,000 respectively.
Application is easy, just like on income taxes, claiming it on your return. No other papers or forms involved.
The credit is also refundable so even if it exceeds buyer’s tax liability, the $7,500 credit is still fully available for refund.
This idea is believed to boost home sales. However, it only caters to first time buyers, not to those who will not buy without it. And in the end, it cannot still address the issue that prices will continue to fall.
With the growing number of foreclosures, a stronger tax credit is needed not just by first time buyers but by all homebuyers.
Related Posts:
- Tax Credits to Reduce Tax Foreclosure Property Listings
- Obama Resists Attempt to Add Bankruptcy Law Change in Economic Stimulus Bill to Solve the Foreclosure Problem
- New York Bank Foreclosures: Rules for First-Time Home Buyers
- Federal Government Continue Its Efforts to Prevent Home Foreclosures
- New Federal Program Aims to Aid Grand Prairie Residents Acquire Foreclosures
