UPDATE Nov 6: According to UPI, President Obama has signed this legislation. NOW it’s official.

The extension of the existing $8,000 tax credit for first time homebuyers is now all but a done deal.

Moments ago, the House of Representatives passed HR 3548 – The Unemployment Compensation Extension Act of 2009 with a vote of 403 -12.

“Whoa, hold on there Jay. You said the tax credit extension was passed. What’s up with linking to some unemployment legislation?”

That would be because the Senate attached an amendment (SA 2712, Section11) to HR 3548 that extends (and expands) the home buyer tax credit. The Senate passed the amended HR 3548 on Wednesday by a vote of 98 – 0.

The bill now moves to President Obama’s desk for his signature into law. Some mainstream media is reporting the President will sign this on Friday, November 6. THEN, and only then, will the tax credit truly be extended and expanded (regardless of whatever you may read on Twitter, on blogs, and in the press).

So what’s in the bill?

Amendments are difficult to read as they cross-reference multiple documents and contain gobbledygook that looks like this:

(1) by striking “and” at the end of subparagraph (M),

(2) by striking the period at the end of subparagraph (N) and inserting “, and”, and

(3) by inserting after subparagraph (N) the following new subparagraph:

“(O) an omission of any increase required under section 36(f) with respect to the recapture of a credit allowed under section 36.”.

Good luck deciphering that…

Here’s what I’ve gleaned from reading the amendment, cross-referencing it, and digesting various media reports:

The “New” Home Buyer Tax Credit Details

• The existing $8,000 tax credit is extended to May 1, 2010. (The credit is for 10% of the home purchase price, up to $8,000.)
• If a home buyer is “into a written binding contract before May 1, 2010”, and they close on that contract before July 1, 2010, the tax credit can be claimed.
• A new tax credit for “long-time residents of same principal residence” has been created. This has been reported in many places as a tax credit for “move up buyers”. Here is the actual verbiage of the new tax credit for existing home owners:

  EXCEPTION FOR LONG-TIME RESIDENTS OF SAME PRINCIPAL RESIDENCE.–In the case of an individual (and, if married, such individual’s spouse) who has owned and used the same residence as such individual’s principal residence for any 5-consecutive-year period during the 8-year period ending on the date of the purchase of a subsequent principal residence, such individual shall be treated as a first-time homebuyer for purposes of this section with respect to the purchase of such subsequent residence.

• The tax credit for existing “long time resident” home owners purchasing a new home is 10% of the purchase price, up to $6,500.
• The old $8K credit had income limits of $75,000 for singles and $150,000 for married couples filing jointly. The income limits have been increased to $125,000 / $225,000.
• No credit shall be allowed for the purchase of any residence if the purchase price exceeds $800,000.
• All of this applies to primary residences only. No second home or investment properties are eligible for the tax credit.
• For members of the Armed Forces deployed on duty outside the United States, the tax credits are extended to May 1, 2011 (must close before July 1. 2011) Must be deployed outside the U.S. for at least 90 days between Dec 31, 2008 – May 1, 2010.
• “Fraud prevention” measures have been implemented. The tax credit can not be claimed by anyone under 18 years of age (some knucklehead tried to put it on the tax return of a four year old). Also, a “properly executed copy of the settlement statement used to complete such purchase” must be attached to the tax return claiming the credit (I take this to mean a copy of the signed HUD-1 Settlement Statement. But check that with your tax advisor!)

That’s it in a nutshell.

Of interest: According to economists at Goldman Sachs, around 70% of all current homeowners would be eligible for the expanded home buyer tax credit. The NAR and other Realtor Associations will no doubt be salivating over the extension and expansion of the tax credit. Some Senators have said that the chances of the tax credit being extended again come next April 30 are virtually zero.

Personally, I’m not a fan of the tax credit extension. I realize that flies in the face of a large majority of my fellow real estate agent / broker brethren, but that’s how I feel. It’s going to cost a TON of money (almost $11 billion by some estimates), and I am far from convinced it encourages people to buy homes (and if it does, that’s one BAD reason to buy a home).

Disclosure: I am clearly not an elected politician and my interpretation of the legislative text could be incorrect. Also, I am not a lawyer nor a tax professional, nor do I have any desire to be either. You should seek their counsel.

AND DON’T FORGET!! Until President Obama signs this bill, it’s not in effect!

Sources:

HR 3548
SA 2712 (Sec 11 is the applicable section)

Associated Press: Congress set to expand homebuyer tax credit
Wall St Journal: Tax Credit Extension Would Keep Home Prices Up
CNN Money: Senate throws a lifeline to the jobless

National Association of Realtors, Government Affairs: Here is a GREAT summary of the current and proposed home buyer tax credits (PDF file).

On Wednesday our friends at the IRS announced their first successful prosecution related to fraud involving the first-time homebuyer tax credit.

On Thursday July 23, 2009, a Jacksonville, Fla.-tax preparer, James Otto Price III, pled guilty to falsely claiming the first-time homebuyer credit on a client’s federal tax return. Price faces the possibility of up to three years in jail, a fine of as much as $250,000, or both.

Ouch.

There is more detail in an article posted at jacksonville.com. Things like Mr. Price was on probation for forgery, he was indicted on 35 tax-fraud counts (15 involved the first time home buyer tax credit) and my favorite part of the article:

Price, a married father of three, told U.S. Magistrate Howard Snyder he didn’t think he was in the wrong until he read the statute he was charged with.

Are you kidding me?

You make up addresses, you flat out lie and tell your clients you can qualify for the tax credit by working two jobs, and you skim a thousand bucks off your clients refund and you don’t think you are in the wrong?

Have fun in the pokey.

Folks, here’s the deal. Even if you have someone prepare your taxes, YOU are still responsible for the accuracy of the return. The tax code is ridiculously complex, but if you see things on your return like the address of some home you don’t know exists, if someone tells you that you get a homebuyers tax credit for working two jobs, then think about what you’re signing. If it doesn’t make sense, don’t sign the return.

Mr. James Otto Price may be the first person arrested for home buyer credit tax fraud, but I assure you he won’t be the last.

Yo! –> Need more info on the $8000 first time homebuyer tax credit?

Photo Credit: abardwell on Flickr. Creative Commons License.

Last week, National Public Radio reporter Mike Pesca sent me a link to the GOPs latest proposal for “The Responsible Homeowners Act” (PDF file). It contains several provisions, including the resurrection of the $15K home buyer tax credit that was briefly a part of the Stimulus Bill passed in February (and discussed on this blog at length).

Here’s what is in the plan with regard to a $15,000 Home Buyer Credit:

$15,000 Home buyer Credit: To spur home purchases across-the-board, House Republicans propose a $15,000 home-buyers credit for all purchases of primary residences provided that the buyer puts 5% down (covers purchases made before July 1, 2010). The down-payment requirement encourages responsible home ownership and will ensure that we do not repeat the mistake of the past where individuals ended up with more home than they could afford through the use of zero-down-payment loans.

Mike asked for my thoughts on this, and here’s what I told him:

This sounds *very* similar to the original $15K proposal that was nixed before the bill reached the President.

There was not (that I recall) a down payment requirement in that original version.
The down payment minimum of 5% concerns me for one reason — the current down payment requirement on FHA loans is 3.5%. So by requiring a minimum of 5%, many FHA buyers may be excluded. I understand (and agree completely) that some down payment should be required, but to exclude FHA buyers is not a good idea in my opinion. The best solution would be to simply write language along the lines of "a minimum down payment of 5% will be required (3.5% for those using FHA loans)". Or something to that affect. Obviously I’m neither a Congressman nor an attorney (nor do I have any desire to be either!).

The original plan also allowed for the $15K credit to be split equally across two years. I think it’s important that stay in this new plan as many (MANY) people do not have $15K of tax liability in one year. I don’t see any mention of this in the link you provided (and thanks for that by the way!). I’d also like to see the credit be "refundable" like the current $8K credit and not require re-payment (like the current credit and the original $15K proposed credit was.) I understand this document is likely just a summary and doesn’t include all the details — or maybe they haven’t even worked out details yet.

I *really* like that it’s not limited to first time buyers only.

Also of interest in the proposal:

• A $5,000 refinancing credit.
• Incentives for voluntary refinancing to keep homeowners in their home.
• Mortgage modifications, not lawsuits.
• Incentives for neighborhood investors.
• Not rewarding those who created the problem.

There are not a lot of details in the plan summary but it is, if nothing else, thought provoking. The text of the full bill is available here. I haven’t had the time to read it, but it apparently goes into far more detail that the summary linked to above.

H.R. 1903 was introduced in the House on April 2 and was subsequently referred to the Committee on Ways and Means as well as the Committees on Financial Services and the Judiciary. There are 11 co-sponsors, all Republicans. Given the current make up of the House, I have a feeling this one will die in committee…

We’ll be keeping track of this and bring you whatever we can dig up!

Finally the job offer I’ve been waiting for has come through!

Earlier this morning I was offered a position as a “Social Media MGPE” (Manager/Guru/Prognosticator/Evangelist) for a major player in the real estate industry.

I’m just following the path blazed before me by such notable real estate bloggers as:

• Dustin Luther – Move
• Joel Burslem – Inman News
• Rudy Bachraty – Trulia
• Daniel Rothamel – Inman News
• Jeff Corbett – Active Rain
• Frances Flynn Thorsen – Trulia
• Reggie Nicolay – Cyberhomes
• Michael Price – Diverse Solutions
• Todd Carpenter – NAR

How cool is that? Finally, after delivering countless seminars and presentations on the use of Social Media in Real Estate, for which I was never paid a plug nickel, I’m going to make ridiculous amounts of money doing what I love – teaching others how to incorporate social media into their business.

I can’t disclose who I’ll be working for, or how much I’ll be making – other than to say “They are huge” and “it’s a boatload”.

Perhaps by next April Fool’s Day the details can be released.

Nota bene:  In all seriousness, while I personally know all of the above listed folks, and they are super smart people and wonderful human beings, what the hell am I, chopped liver? If someone really is looking for a SM MGPE, freaking call me and let’s talk!

UPDATE: See this post for details released on March 4, 2009 regarding this plan.

The mainstream media, the blogiverse and the average Joe on the Street are all abuzz today with the “Mortgage Rescue”, “Homeowner Affordability and Stability Plan", “Homeowner Bailout” – pick your title.

Announced yesterday right here in our backyard of Mesa, Arizona, the President delivered his $75 billion (and counting) plan to stave off foreclosures.

I’ve made it pretty clear here in many past articles that I’m not a fan of big government and/or government intervention in a free market. Color me a conservative – it’s not a crime. But, and I say this with much trepidation, now may be time for the government to do something.

Things I like that Obama said:

But I also want to be very clear about what this plan will not do: It will not rescue the unscrupulous or irresponsible by throwing good taxpayer money after bad loans. It will not help speculators who took risky bets on a rising market and bought homes not to live in but to sell. It will not help dishonest lenders who acted irresponsibility, distorting the facts and dismissing the fine print at the expense of buyers who didn’t know better. And it will not reward folks who bought homes they knew from the beginning they would never be able to afford.

Speculators (who made up a large chunk of the Phoenix housing market boom) shouldn’t be bailed out. All investments carry risk. These investors knew that (or should have known that) going in. For those “investors” that jumped on the housing market boom without doing their research, oh well. The responsible homeowner and taxpayer shouldn’t have to pay for your ignorance and failure to complete your due diligence.

I’ve seen too many people using their homes like ATM machines. Anyone who thinks home values only increase hasn’t done the 3 minutes of research required to dispel that fallacy. These people need to reap what they have sown. Sorry if that sounds callous.

. . . we will create new incentives so that lenders work with borrowers to modify the terms of sub-prime loans at risk of default and foreclosure.

While it’s unfortunate that lenders need to be incentivized to do what needs to be done, the simple fact is they do. Most of this plan will be voluntary on the part of lenders. Perhaps the planned incentives will motivate some to play that otherwise wouldn’t have.

Things I don’t like that Obama said:

My administration will continue to support reforming our bankruptcy rules so that we allow judges to reduce home mortgages on primary residences to their fair market value – as long as borrowers pay their debts under a court-ordered plan.

Judges are people too, but they are not mortgage or financial experts. To give them the power of reducing principal balances – if unchecked and without proper education/training – is asking for trouble. How many will take the radical step of filing for bankruptcy just to get their principal balance reduced? As Jeff Corbet so eloquently pointed out in his great piece on “MObamanomics”, this provision may motivate lenders to pursue loan modifications. But I’m not sure that justifies a radical step like this.

Through its existing authority Treasury will provide up to $200 billion in capital to ensure that Fannie Mae and Freddie Mac can continue to stabilize markets and hold mortgage rates down.

It’s not holding mortgage rates down that I don’t like. Lower rates (if people can take advantage of them) are generally a good thing. It’s the slinging around of staggering amounts of money that concerns me. $75,000,000,000 here, $200,000,000,000 there, $787,000,000,000 for what some are calling only “Phase 1” of the stimulus package. Hell, I’m wearing out the “0” key.  We’re throwing trillions of dollars at these problems like it’s nothing. That frightens me. I’m not fond of the idea of every future descendant of the Thompson clan having to pay for our mistakes.

What I wish Obama had said:

Elimination of pre-payment penalties: I rarely hear this being discussed. Right now there are tens (hundreds?) of thousands of people (typically with sub-prime loans) basically locked into a current mortgage because they can’t refinance due to (often ridiculous) pre-payment penalties. Many times reducing a mortgage payment by only a couple of hundred of dollars a month would help someone on the edge keep from defaulting on their mortgage.  “Waiving” pre-payment penalties might allow some to refinance, thereby saving their home from foreclosure.

Call me crazy, call me a heretic, call me whatever. What’s about to follow will likely piss some people off. Oh well.

Falling home prices are not all bad: What I see very few people mentioning is that there are some good things about declining home prices. OK, I am a homeowner. Of course I’d love to see my home’s value increase every single day. This isn’t a realistic expectation, but I’d still love it. The simple fact is, declining home values mean homes become more affordable. Better affordability means more people can buy a home. It’s basic economics folks – Demand curves and the Law of Supply and Demand and such. This market will reach equilibrium, with or without government assistance. That equilibrium point may lie lower on the price axis then people would prefer, but the government mucking about isn’t going to change fundamental laws of economics.

On reduction of principal balance

This is a tricky one. Many are saying that unless existing mortgage balances are written down to existing market values, nothing will help. My problem with this is two-fold. Primarily, I simply don’t know how this could possibly be managed. There aren’t enough appraisers on the planet to determine “market value” of every existing home – or even just for homes where the owner wants their principal reduced (which would be basically anyone that bought, or did a cashout refi, on a home in the past 2 or 3 years).

What about the prudent home buyer that saved for a down payment, didn’t use the ATM feature of the boom, and is not currently underwater? They get to slog along as they are now, while the neighbor that refinanced and got cash for the new car and a trip to Disney World gets his principal balanced reduced. In other words, some of get to finance others transgressions. That should go over well.

And when does the writing down of balances stop? Do we just write down mortgage balances carte blanche when prices continue to decline? In 2012 (or whenever) when there is another downturn in home prices, do we engage in another wholesale write down? Home values are cyclical, always have been, always will be. Setting a precedent that the government will step in with a wholesale write down when prices decline could be a recipe for future disaster. 

Will this mortgage rescue plan work?

I don’t know, but I have my doubts. Many of the details are to be released on March 4. Until then, we can only speculate and assume – neither of which are particularly good things to do.

Most disturbing seems to be one of the guidelines that will help people who are underwater on their mortgages limits refinances to 105% of current market value. Prices in Phoenix have dropped 30 – 50% depending on where you look and whose statistics you believe. 5% wouldn’t seem to touch it.

Clearly this isn’t a cure all. Obama even made that point. A step in the right direction? Maybe. Opening a big giant can of crap that may take a generation to undo? Maybe.

I’m not smart enough to know all the answers. A large part of me says that we suffer through it, painful as that will be, and let the market correct itself. I happen to think it will. Guys with Nobel Prizes in Economics think so too.  I suppose a nudge in the right direction could speed things up and/or  lower the pain threshold. But we need to be very careful. I’m not sure we are thinking all the ramifications through as Congress passes trillion dollar bills the no one has read and we start doinking with fundamental economic laws and principals.

I’d love to hear your thoughts. . .

Others Opine:
Morgan Brown at Blown Mortgage
Tom Royce at The Real Estate Bloggers
The White House Blog (yes, that White House)
Jeff Corbet, The X Broker on AR
Michelle Malkin
Chris Butterworth at The Phoenix Agents
Spencer Rascoff (Zillow COO) on Active Rain
Greg Swann on Bloodhound Blog
Have a good link? Drop it in a comment and I’ll add it to the list.

President Obama is set to introduce his “Homeowner Affordability and Stability Plan” in a speech in Mesa, AZ today at about 10:15 (MST).

The full text of Obama’s speech is available here. (Note this is the prepared text of the speech. What is actually delivered could differ, though I suspect it will be very close to this.)

Some details of the Homeowner Affordability and Stability plan are available at the whitehouse.gov blog.

I’ve got interviews with two radio stations and the East Valley Tribune scheduled for later this afternoon for my reaction, and of course I’ll share that reaction here as well.

Those reading here over the past week know we’ve been obsessing over the about-to-become-law tax credit for first time home buyers. Several iterations were bantered about Congress before the dust finally settled.

Yesterday both the House and Senate passed the stimulus package (officially now called the “American Recovery and Reinvestment Act of 2009”)  that included revisions to an existing first time home buyers tax credit. Courtesy of the National Association of Realtors (NAR), here is a nice breakdown comparing the two. The stimulus bill is expected to be signed into law by the President early next week.

FIRST-TIME HOMEBUYER TAX CREDIT
As Modified in the American Recovery and Reinvestment Act
Major Modifications Bolded
February 2009

FEATURE	CREDIT AS CREATED JULY 2008 APPLIES TO ALL QUALIFIED PURCHASES ON OR AFTER APRIL 9, 2008	REVISED CREDIT – EFFECTIVE FOR PURCHASES ON OR AFTER JANUARY 1, 2009 AND BEFORE DECEMBER 1, 2009
Amount of Credit	Lesser of 10 percent of cost of home or $7500	Maximum credit amount increased to $8000
Eligible Property	Any single family residence (including condos, co-ops, townhouses) that will be used as a principal residence.	No change All principal residences eligible.
Refundable	Yes. Reduces (or can eliminate) income tax liability for the year of purchase. Any unused amount of tax credit refunded to purchaser.	No change Purchasers will continue to receive refund for unused amount when tax return is filed.
Income Limit	Yes. Full amount of credit available for individuals with adjusted gross income of no more than $75,000 ($150,000 on a joint return). Phases out above those caps ($95,000 and $170,000).	No change Same income limits continue to apply.
First-time Homebuyer Only	Yes. Purchaser (and purchaser’s spouse) may not have owned a principal residence in 3 years previous to purchase.	No change Still available for first-time purchasers only. Three-year rule continues to apply.
Revenue Bond Financing	No credit allowed if home financed with state/local bond funding.	Purchasers who utilize revenue bond financing can use credit.
Repayment	Yes. Portion (6.67% of credit or $500) to be repaid each year for 15 years, starting with 2010 tax filing.	No repayment for purchases on or after January 1, 2009 and before December 1, 2009
Recapture	If home sold before 15-year repayment period ends, then outstanding balance of repayment amount recaptured on sale.	If home is sold within three years of purchase, entire amount of credit is recaptured on sale. Applies only to homes purchased in 2009.
Termination	July 1, 2009 (But note program changes for 2009)	December 1, 2009
Effective Date	Purchases on or after April 9, 2008 and before January 1, 2009. Repayment to begin for 2010 tax year.	All revisions are effective as of January 1, 2009

You can download a PDF version of this home buyer tax credit comparison here.

There were a few other measures in the bill that could impact the housing market, most notably the reinstatement of higher FHA, Freddie Mac and Fannie Mae loans for 2009 (which look like they will be $356,250 for FHA and $417,000 for Fannie and Freddie in Maricopa and Pinal counties). There is also a tax credit for homeowners for purchases of qualified new furnaces, windows and insulation.  More on this as it becomes available.

Will this revised tax credit stimulate a housing market recovery? Maybe. Maybe not. Personally, I think the Senate’s version which was a $15,000 tax credit (that could be evenly split over two years), wasn’t subject to income restrictions and most importantly was for ALL, not just first-time, buyers would have been more successful. But that’s water under the bridge. It’s gone. What we have is what we have. This is a nice incentive for first-time buyers, and the fact that it is both refundable and does not have to be repaid is a significant improvement over the existing “credit” (which was really a zero interest loan).

I think it will help, but it’s certainly not a cure for the beleaguered real estate market. 

Of Note: I am not a tax professional, nor do I play one on TV or the Internet. You should seek advice from a CPA or professional tax preparer. If the IRS comes after you with guns blazing for anything you read in this post or anything you think you read in this post, it’s not my fault. Seek professional help!

Today the U.S. House of Representatives passed the Stimulus Bill. It now moves to the Senate, where a vote is expected around 7:00pm Eastern time tonight. Update: The Senate passed the Stimulus bill at 10:45pm (EST) on a 60 – 38 vote.

You can read the full text of the stimulus bill here and here (it’s split into two parts due to file size).

Do that, and you’ll be way ahead of the people that voted on it. It was released at 10:45pm last night and passed on a 246 – 183 vote about 14 hours later.

If digesting 1,091 pages of legislation isn’t your idea of fun, you can read the Joint Explanatory Statement of the Committee of Conference that boils down the nuts and bolts of the bill. It’s also in two parts and only totals 421 pages. (Part 1.  Part 2)

I’ll post my analysis of the real estate related portions of the bill sometime over the weekend. I prefer to read it before I comment on it…

In the mean time, here’s a couple of short videos that capture my thoughts on the fact that we’re passing expansive and expensive legislation that no one has read.

Update: Saturday Feb 14 — here is an article with a chart highlighting the changes in the first time home buyers tax credit. It is expected to be signed into law by Feb 16. The Stimulus Bill was signed into law by the President on Feb 17.

“It’s $15,000. No wait, it’s $8000. Or is it $7,500? It has to be paid back. No it doesn’t! Yes, it does! It’s only for first time home buyers. Nuh uh!”

That’s about what the conversation sounds like if you are trying to figure out what the latest incarnation of the Stimulus bill contains with regard to a tax credit for home buyers.

It’s confusing as hell. Believe me, I’ve read a lot about it.

Here’s what we know to be the absolute truth so far:

Nothing. The simple fact is, the compromised version of the stimulus bill has not been voted on by either the House or the Senate. Until it is, it can change.
If you try hard enough and read enough of the (literally) tens of thousands of news articles you can find whatever answer you want. Such is the nature of legislation of this magnitude. It is in almost constant flux. But if you read enough, common themes start to come across. . .

Here is the general consensus on the $8000 home buyer tax credit so far:

• The $15,000 tax credit for home buyers that was in the Senate’s version has been reduced to $8,000.
• The $8,000 tax credit will only be for first time home buyers (opinion seems mixed on whether that means you can’t have owned a home for two, or three years).
• Unlike the already existing $7,500 first time home buyer “credit”, the new $8,000 is a true tax credit – it does not have to be repaid.
• There is likely going to be an income cap. Make some level of income and the credit will either be phased out or eliminated. I’ve seen very little speculation on what that limit will be.
• Opinion seems to be split on whether or not the tax credit will be refundable, or can only be applied against your actual tax liability.

I stress “general consensus” because again, nothing has been finalized. Reports yesterday indicated a House vote was likely today. The mainstream media is now reporting a House vote is likely tomorrow (Friday  Feb13) with a Senate vote over the weekend and the President signing Monday.

You’d think the House of Representatives would be discussing the stimulus package at this very moment. A quick check of C-Span Live though shows  Representatives from Pennsylvania discussing the Pittsburgh Steelers Superbowl win. Yes, the House is debating at this moment in time whether to pass House Resolution 110 congratulating a football team. Whether to support “National Wear Red Day” is up next.

You can’t make this stuff up.

Latest Update Feb 11, 7:00pm – Reader hagfish digs this up from Bloomberg (Thanks hagfish!):

Bloomberg reports the proposed $15,000 tax credit for homebuyers was reduced to $8,000 according to Senate Finance Committee Chairman Max Baucus, a Montana Democrat. No details on whether the credit is refundable, repayable, limited to first-time buyers, etc.

And this was just printed about 30 minutes ago (10:25pm MST) in the LA Times:

First-time home buyers could qualify for an $8,000 tax credit.

The credit is slightly larger than the $7,500 credit in existing law, but it is substantially less than a proposal in the Senate bill that would have boosted the credit to $15,000 and broadened the eligibility.

In addition, the compromise bill waives a requirement that the tax credit be repaid. The credit applies only to homes bought between Jan. 1 and Aug. 31 of this year.

Homeowners who install new doors, windows or furnaces to make their home more energy efficient would be able to get as much as $1,500 back through new tax breaks.

Various news agencies are reporting the bill may be signed into law as early as Friday.

— ORIGINAL POST FOLLOWS —

The $15K home buyer’s tax credit has apparently been removed from the stimulus bill. Some reports are coming in that the Compromise Committee has stripped all of the $15,ooo tax cut provisions from the bill that will now be voted on by the House and Senate and sent to President Obama for signature, probably by week’s end.

From the Associated Press:

Working to accommodate the new, lower overall limit of the bill, negotiators effectively wiped out a Senate-passed provision for a new $15,000 tax credit to defray the cost of buying a home, these officials said.

It’s now 12:51pm MST and I’m listening live on FOX News to Senator Harry Reid, (D-NV) Senate Majority Leader announce a $789 billion compromise on the stimulus bill has been reached, but there is no substance as to what has been cut and what remains.

As best I can tell, the currently existing $7,500 tax "credit” for first time home buyers is not affected by this act. It remains as is (and it is really a zero interest loan, not a tax credit). More info on the $7,500 first time home buyer incentive is available at the IRS. We’ll need to get a look at the final compromise to know for sure.

I am so-not-a-fan of big government nor of the tax system in general. But if one is to believe what we’re hearing from Washington, we are teetering on the brink of a depression (and a total economic collapse if you believe what some are saying). To gut the “Stimulus” package of the one thing in it that might have helped kick start the real estate market makes no sense to me. Was it a perfect solution? Of course not. But the next time I hear some politico spouting “We’ve got to do SOMETHING! We can’t just stand by and watch!” I think I’m just going to unplug my TV and Internet connection.

Update: This whole thing is, of course, not quite over. Recall your High School civics class — the compromise bill still has to pass both houses of Congress and be signed into law. With the three Senate “Republicans” that crossed over and voted with the Democrats in the group that worked out the compromise, passage is all but assured. What we do not know is exactly what is in the bill. As soon as it’s made public, I’ll post it here on the blog.

Reuters is reporting that a smaller $7,500 credit may be in the compromised bill. And confusion will reign supreme once again. There already is an existing law providing first time buyers a $7,500 “tax credit” that is in fact an interest free loan. The original House version of the Stimulus bill repealed the requirement for that credit to be repaid, turning it into a true tax credit. I’m not even going to speculate what, if, or how this compromise bill will affect that, or create a new $7,500 credit. Because until we lay eyes on the text of the passed bill, speculation is all it will be.

Stay tuned….

Others Opine:
15,000 Home Buyers Tax Credit Smoke and Mirrors