Update: Thursday Feb 12, 4:58pm – the $15,000 home buyer tax credit is apparently being replaced with an $8,000 credit in the “compromise” version of the bill. For the latest, please see this post, “$8,000 Home Buyers Tax Credit: What We Currently Know“.
UPDATE #1: Feb 5, 11:48am – still gathering intelligence, but this version of Senate amendment clarifies that the former requirement that one must be a first-time home buyer is being repealed. This means this credit would apply to any home buyer. Also, the original repayment provisions are being lifted.
This thing is in flux, stay tuned!
UPDATE #2: Feb 5, 3:15pm – The dates originally reported here, in the mainstream media and in the first copies of the congressional record are apparently incorrect. Here is the amendment straight off the sponsoring Senator’s (Johnny Isakson, R-Ga.) website:
(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.
UPDATE #3: Feb 6, 2009 4:10pm – CSPAN reports Senate has reached tentative compromise on Stimulus package. Reporting $780 billion is total compromise. Senate reconvenes at 6:30pm Eastern.
UPDATE #4: Feb 7, 2009 10:39am – Reuters reports that a vote on the Senate version of the Stimulus Bill is slated for Tuesday Feb 10.
UPDATE #5: Feb 9, 2009 4:15pm – The Senate has voted 61 – 36 to advance the “Nelson-Collins” amendment to the Stimulus bill. Essentially, debate is closed and a final vote will be taken tomorrow (Tuesday Feb 10). Passage is expected. Next stop would be a Conference Committee made up of both House and Senate members to hash out differences between the two bills. Here is the text of the version the Senate will likely pass.
—- Original Post —-
The U.S. Senate approved an amendment today to the American Recovery and Reinvestment Act of 2009 (H.R. 1) that would allow a tax credit of up to $15,000 for the purchase of a qualifying residence.
Previously the bill contained provisions for a tax credit of up to $7,500 for the purchase of a new home. The amendment increase the amount to $15,000 and includes new as well as re-sale homes.
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.
The amendment includes the taxpayer’s choice of splitting the credit equally across two years.
Only primary residences
purchased in 2009 qualify. (In other words, you have to buy it this year and live in the home – no investment properties qualify.) SEE UPDATE#2 at top of this post. The beginning effective date is the date of enactment of the legislation.
Personally, I find it difficult to read and interpret House and Senate Bills. The current version of the American Recovery and Reinvestment Act of 2009 weighs in at 680 pages of legal speak. You can read it in all its glory here.
And here is a PDF of the amendment only. Good luck figuring it out without following all the cross references – an exercise certain to induce a world class headache.
I thought the original incarnation of the tax credit only applied to first time home buyers. Apparently this amendment applies to any home buyer. From the initial AP teaser:
The Senate has voted to award anybody buying a home this year a tax credit worth up to $15,000 in hopes of jump-starting the sagging housing market. The homebuyer tax credit offered by GOP Sen. Johnny Isakson would apply to any home purchased as a main residence and would cost taxpayers $19 billion. (my emphasis)
The amendment references section 1400C of the IRS Code, which does pertain to first-time buyers in Washington D.C., but I can’t find any other reference to first-time buyers in the amendment. The full AP article released a couple of hours ago refers to “homebuyers”, not “First time homebuyers” so it’s probably safe to say this amendment applies to all buyers.
My interpretation of this amendment also shows that the tax credit only has to be repaid if within 24 months of purchase, the home is sold or if the taxpayer fails to occupy the home as their principal residence.
As always, I am not a lawyer, a CPA nor a tax expert. If this credit is of interest to you (assuming it becomes law) you would be well advised to consult a tax professional prior to purchasing a home. If you buy a home in 2009, certainly you don’t want to leave a credit of this magnitude sitting on the table.
Will this help stimulate the housing market? Who knows. Clearly it may get someone off the fence. A $15,000 tax credit is a nice little chunk of change. Of course since it’s a tax credit, it is claimed when you file so it’s not like you can apply this to a down payment or closing costs. None the less, 15 grand is 15 grand and surely it will motivate some people to buy. My current opinion (subject to change) is that it will help, but not fix everything wrong with the real estate market.