More Details on $15,000 Tax Credit — It Does Not Have to be Repaid
By: Diane Tuman, Zillow Content Manager | February 5, 2009
Here are more details on the proposed $15,000 home buyer tax credit, an amendment which is part of the now-proposed $900 billion economic stimulus package working its way through Congress. This is directly from the Web site of Georgia Senator Johnny Isakson (R), the prime sponsor of this bill (who, by the way is a former real estate broker):
Specifically, Isakson’s amendment to the pending economic stimulus bill would provide a direct tax credit to any homebuyer who purchases any home. The amount of the tax credit would be $15,000 or 10 percent of the purchase price, whichever is less. Purchases must be made within one year of the legislationʼs enactment, and the tax credit would not have to be repaid.
The amendment would allow taxpayers to claim the credit on their 2008 income tax return. It also seeks to prevent misuse by only allowing purchases of a principal residence and by recapturing the credit if the home is sold within two years of purchase. The amendment would sunset the current $7,500 housing tax credit on the date of enactment.
Isakson has pushed hard for a non-repayable tax credit for homebuyers because he knows that it will work. In the mid-1970s, America faced a similar housing crisis when a period of easy credit and loose underwriting flooded the market with new construction. Interest rates rose, the economy slowed and America was left with a three-year supply of vacant homes. Congress responded by passing a $2,000 tax credit for anyone purchasing a new home for their principal residence. Isakson believes the results were clear and swift as home values stabilized, housing inventory dropped and the market recovered.
See what people are saying in Zillow Advice about the $15,000 tax credit proposal:
This proposal, if passed, will cost the government $19 billion. We will publish more information as it becomes available. Please check back.
UPDATE: More recent blog posts about the $ 15000 homebuyer tax credit:
$ 15000 tax credit - 3 most frequently asked questions
What Does The $15,000 Tax Credit Mean To You?
- Stumble it!
- Categories: 8000 tax credit, Real Estate Industry, Zestimate
Comments
28 Comments so far
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Geoff on February 5, 2009 11:05 am
Proofreading comment: “The amendment would allow taxpayers to claim the credit on their 2008 income tax return.” Since the program lasts 1 year, should this be corrected to state 2009 tax return?
KellyV on February 5, 2009 11:17 am
You will have to wait for the ammendment to be passed, but depending on the time limits, you’ll have one year from the purchase date to take that deduction. The current $7500 tax credit is for first time home buyers only.
bob on February 5, 2009 12:03 pm
if I own my home now, does it mean no tax credit if I sell & buy a more expensive home?
John on February 5, 2009 3:52 pm
It’s too bad this isn’t retroactive - NO first time buyer should buy a home until they enact this — could have an adverse affect. Why not include all purchases during this year (including Jan and Feb, etc)
Tim on February 5, 2009 7:52 pm
If it is the same standards as the 7500, then it can be claimed on 08, even if you bought in 09, or on your 09 taxes. Its your choice. If you’ve already filed 08’s then I’m not sure of 08, but you’ll be able file for it in 09. They are also allowing you to lower your taxes held through your pay check in the amount of 15000, 7500 currently, so you would have a bigger down payment. So there are actually two ways to come by this money.
$15,000 Tax Credit Conundrum | Zillow® Blog on February 6, 2009 1:53 pm
[...] My colleague, Diane has done a great job answering some of these questions already. The $15,000 tax credit will replace the current $7,500 interest-free loan given to first-time buyers, and this one doesn’t…. [...]
MDM on February 6, 2009 10:26 pm
Please send an email to the senator and ask him to include the 2008 home buyers for the home buyer credit. I did.
I had to move out of my first home due to all the foreclosures around me and my neighborhood declined - we were broken into - our new neighbor was now a renter who is a night club striper with a vicious dog. Bad stuff.
We emptied our pockets to protect our safety, and we could really use to help to buy our way out of the first house before we have to foreclose.
Dan on February 6, 2009 10:47 pm
What if you plan on building a house? Is the closing date considered to be the purchase date, or is it the date when you sign the contract to build the house?
FundPicker on February 6, 2009 10:54 pm
Before anyone gets too excited about $15,000, you should notice that it is limited to your tax liability for the year. If you compute your tax as $5000 on your 1040, that’s all you would get. The bill does allow you to take this over two years. I ran through an example on my blog, http://www.stupidcents.com.
Charles on February 7, 2009 8:37 am
I currently qualify for the 7500 credit. I purchased my fist home in June of 08. If this passes do I lose out all together, or would I still be eligible for the 15k?
Susy P on February 7, 2009 1:08 pm
HOLD ON EVERYONE! We have to wait until the details are announced and read the fine print. From what I understood after reading the ammendment myself is that the credit is limited to your tax liability. In other words, you can take the credit up to the amount of your tax liability for two tax years. Not everyone will quailfy, expecially the lower income. I know it sounds confusing….see the link below and read page 3 “LIMITATION BASED ON AMOUNT OF TAX” Looks like the repuplicans are looking out for the middle class….NICE!
http://isakson.senate.gov/Amdt_106.pdf
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Nick on February 7, 2009 3:07 pm
So how do they put a price tag on the bill?
is $19billion set aside and when it runs out you’re out of luck? Or will the actual cost be $15000 times however many qualified families take advantage of this and buy their primary residence?
$19billion would cover about 1.267 million homes priced at or above $150,000. What happens if 2 or 3 million homes are bought by qualified buyers within that year?
JoeN on February 8, 2009 1:18 am
Dan,
For the purposes of the tax credit, the purchase date is the date when closing occurs not the date when you sign the contract to build the house.
r.chapel on February 8, 2009 12:44 pm
How about making this available for All who have mortgages instead of only for new buyers?
I have a mortgage that I keep paid on time by not buying other things that I’d like, and I see no mention of help for those of us that actually WORK and pay our bills.
There seems to be plenty of help for everyone here illegally regardless of their immigration status, and for those citizens who choose not to work, but are willing to let the taxpayers support them.
I’m not talking about the disabled, or ANY military veteran, these people both need and deserve help and often are penalized by the very systems set up to aid them.
I hope you take these things into consideration before you vote for any bills on this subject.
r.chapel
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Alex on February 9, 2009 6:41 am
If you read the amendment as it was written by Johnny Isakson, it states that the $15K tax credit will only apply to people who purchased AFTER the passage of the bill.
—————-
(b) LIMITATIONS.—
(1) DATE OF PURCHASE.—The credit allowed under subsection (a) shall be allowed only with respect to purchases made—
(A) after the date of the enactment of the American Recovery and Reinvestment Tax Act of 2009, and
(B) on or before the date that is 1 year after such date of enactment.
—————-
It also says it will SUNSET (remove from law) the $7,500 tax credit from law on the day of the stimulus bill passage.
—————-
(c) SUNSET OF CURRENT FIRST-TIME HOMEBUYER
CREDIT.—
(1) IN GENERAL.—Subsection (h) of section 36 is amended by striking ‘‘July 1, 2009’’ and inserting ‘‘the date of the enactment of the American Recovery and Reinvestment Tax Act of 2009’’.
(2) ELECTION TO TREAT PURCHASE IN PRIOR YEAR.—Subsection (g) of section 36 is amended by striking ‘‘July 1, 2009’’ and inserting ‘‘the date of the enactment of the American Recovery and Reinvestment Tax Act of 2009’’.
(d) EFFECTIVE DATE.—The amendments made by this section shall apply to purchases after the date of the enactment of this Act.
—————-
This is obviously so people don’t try to milk it twice as the 2008 law had it ending July 1, 2009.
http://isakson.senate.gov/Amdt_106.pdf
So it appears to be that $7,500 is for before the act (as is applicable for the 2008 law) OR $15,000 for after the act (up to 1 year).
From what I’ve read :
- $7,500 is a tax credit and has to be paid back w/o interest in 15 years starting 2010.
- $15,000 is a tax credit over 2 years. You do not necessarily get it all depending on your tax situation, but you do not have to pay it back.
duh on February 9, 2009 6:48 am
This $15000 stimulus is a JOKE!
Only for high income high tax bracket people to benefit since it will be only a tax CREDIT and only against taxes due , not refundable if no or little taxes due and only for owner occupied homes.
Very discriminatory!
Make it for all to use to have any real benefits.
as I see it it is like hope now or hope for homeowners programs which did absolutely NOTHING!!
Raymond on February 9, 2009 11:31 am
Just when I was getting ready to move on getting a house built. This is going to harm me, more than help me. I make 56K a year, family of four. Was going to use the $7,500 first time buyer credit (I did not mind paying it back) to help with down payment and 12.99% credit card. Yes I only have one card. Now if I read this correctly I would get back only what I paid in for the next two years in taxes. Problem is I would get most of that back anyways with current deductions, and future itemized deductions from mortgage interest and property taxes. This bill is just a white wash, to help those of sizable incomes. If this bill passes, unfortunately so will I on buying a house right now.
john barksdale on February 12, 2009 5:44 am
Are there any provisions that apply to military members who are deployed or living overseas? I’m referring to the primary residence requirement.
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Missy on February 13, 2009 12:48 pm
I just read the newest version of the tax credit! i have one question, i already filed and received my $7500 back. Does this mean my credit is automatically forgiven or do i need to file an amendment of some sort? anyone that can help ease my mind would be a blessing to me. thank you
Temporary credit for home buyers: The bill increases the size of an existing temporary and refundable first-time home buyer credit to $8,000, up from $7,500. It also removes the requirement under current law that the credit be paid back if the buyer stays in the home for at least three years. And it would extend the credit’s expiration date to Dec. 1, 2009, from July 1. Those eligible for this credit must have purchased a home after Jan. 1, 2009, and before Dec. 1, 2009.
Prince William Homes on March 1, 2009 7:25 pm
Congress has really sold out the people with the passage of a stimulus bill they didn’t even read.
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travis on August 3, 2009 6:09 am
will deployed soldiers who are deployed the whole year 0f 2009 cant buy a house before dec 1 2009 still get a chance to recieve the 8000 tax credit.
100% Mortgage on August 14, 2009 9:50 am
They should, surely since they are fighting for the country.
mriam on November 21, 2009 4:08 am
why they dont send that money for the working people to fix the homes and the economy and have that money in your hand to buy chritmas present for the family that there in trouble pain the bills this people dont have compasion for those aout dear please think abouted is the true.
Kia on November 28, 2009 5:25 am
It depends on your predicament i guess as to how you feel abouot the tax credit. We just need to make sure the right people get the help.