2009 Economic Stimulus Package and the $15,000 Homebuyers Tax Credit – All the answers to your questions
The American Recovery and Reinvestment Act of 2009 better known as the stimulus bill has a very interesting tax cut that is sure to fire up the real estate market. In the bill as drawn up American’s would receive up to a $15,000 tax credit for buying a home in 2009. I’ve dissected the bill and made it easier to follow than the full amendment.
Congress is looking to get the bill down to $790 Billion and the $15000 tax break may be the first big cut. I’m keeping a close watch.
The $15,000 tax credit for buying a home has been removed from the House version of the bill. The bill contains a budget of $2-3 Billion for maintaining the $7500 tax credit only for first time homebuyers as defined below. The $7500 tax credit will not have to be paid back.
The home buyer tax credit will work like this. All taxpayers who buy a home in 2009 will get up to 10% of the purchase price back in a tax credit up to $15,000 (on a $150,000 home). The bill will not be retroactive and only affect home purchases after the bill is passed.
Currently the bill is set to go through before Friday February 13th. If enacted then, all home purchases after February 13th would qualify for the tax break.
Now there has also been a lot of talk about the $7500 tax break that homebuyers would receive in 2008. This tax credit is much different than the one in the stimulus package due to the way the tax credit is received. In essence the 2008 homebuyer tax break is nothing short of a 15 year interest free loan.
The 2009 stimulus bill’s tax credit does not have to be repaid and is twice as large as the 2008 bill. Those who believe they will qualify for the 2009 break should not file 2008 income taxes until the language is sorted out on the stimulus bill and it is enacted into law. There is a possibility, although small, that some people could get both tax breaks. (The 2008 bill is actually in effect until summer 2009 so some new buyers could get the both credits as well.)
It is also important to note that the 2008 bill only covers first time home buyers while the 2009 stimulus will cover all buyers.
Here are the details on the 2008 first time homebuyer tax break:
Bought a main home in the U.S. after April 8, 2008
Did not own any other main home within 3 years of this purchase
Made less than $95,000 (for individuals) or $170,000 ( for married couples) in 2008
Repaid at $500/year beginning 2 years after you claim the credit on your taxes.
I’ll be updating this frequently with new information as it comes out. As it is right now the 2009 stimulus package has yet to be passed thus all information here could change at any time.
You can bookmark this page now by pressing Control+D (Ctrl D).
Update: Check out the full text of the 2009 tax credit amendment here: http://isakson.senate.gov/Amdt_106.pdf If any new amendments come out they’ll be posted.
Update: The Bill has now passed the senate and will be going to the house where final negotiations will take place between both parties.
This is happening right as I’m about to close on a house, in your article you say it should be retroactive, I heard to the contrary, and I’ve even heard rumors of it requiring a 5% downpayment. All this is probably wild speculation, but in your opinion, should I delay closing until the bill is passed? (I have until Feb. 26th)
In reading this post it seems you are saying that once enacted this credit could be retroactively applied to anyone who bought a home in the 12 months preceding the passage of it? So those who were not first time home buyers in 2008 might have an opportunity to claim the credit on their 2008 taxes?
The 5% downpayment requirement is in a House bill that was referred to committee. The final law will be a compromise between the House and Senate versions. It seems that the current amendment would keep the 7500 repayable credit for purchases from 4/9/08 until the Stimulus date of enactment. This credit would be for 2008 (or 2009?) taxes. The 15000 non-repayable credit would be for purchases from 1/1/09 to 12/31/09. This credit would be for 2009 taxes or split between 2009 and 2010. If you purchased in 08 like me, contact your Senators and Senator Isakson and tell them you want the 15000.
@LJN
The amendment as posted above has all the information regarding the tax credit and it being retroactive to one year. Hopefully this is the final amendment.
My reading of the proposed Senate bill is that it is very clear that ONLY homes that are purchased AFTER the nactment date–you know the date that Pres Obama picks up a Chinese made pen and uses it to sign the bill amking it an enacted statute. The way I read it anyone buying a home one day earlier is plain out of $15,000.
The unintended effect of this language will become obvious, as people start becoming aware of tis provision–delay all closings using any means possible for at least the week before the bill is signed into law–and counton thebankers, real estate attorneys, and prospective homebuyers to start raising cain about getting the bill passed qickly.—-any other move and you risk pissing away $15,000
FILE NOW IF YOU QUALIFY FOR THE OLD CREDIT
IF YOU QUALIFY FOR THE OLD TAX CREDIT YOU MUST FILE NOW, BEFORE OBAMA SIGNS NEW LAW!!!
Isakson’s press release reads: “The amendment would sunset the current $7,500 housing tax credit on the date of enactment.” What does the term “sunset” mean there? In this context, the term “sunset” means that the $7,500 new home buyer tax credit would be supplanted by the proposed $15,000 credit, which applies to all home purchases–not just new homes. “If you are operating under the $7,500 [credit], that’s the one you [have],” says Joan Kirchner, Sen. Isakson’s Deputy Chief of Staff. “Then, from the date of enactment forward, the new one takes over and nobody else gets the old $7,500 [credit].”
That last sentence makes it official as far as I read it.
FILE NOW IF YOU QUALIFY, OR YOU’LL BE SORRY!
See #2 below
http://www.usnews.com/blogs/the-home-front/2009/02/06/the-15000-home-buying-tax-credit-6-things-to-know.html
I am not sure if it is only for 2009. It says “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.
That makes it sound like it is retroactive.
I strongly suspect that neither side really knows what they’re doing. The problem is simply too large, complex, and interconnected with economies of other nations, over which the US has no control. To fix most things in the universe, you have to get it to sit still at least for a short period of time. This is a dynamic situation. If we as a society actually knew what worked, and could establish a cause and effect relationship with any certainty, we would have done it by now. Don’t you think?
When will this tax credit amendment pass? Also when is a good time to start looking for a house to purchase (for this credit)? When will I be able to use/get the credit? I already filed my taxes for 2008, do I have to wait until 2010 when I file for 2009, or can I ammend?
I don’t know if the $15 K credit will be retroactive, but I certainly hope it is not. If the point of the credit is to stimulate the housing market, you achieve nothing by handing out money to people who already bought houses!
I am a Realtor, and my buyer has settlement this Friday and wants to delay it 2 weeks to see what happens with this. The seller has no interest in this. Reading through the amendment sounds like it would NOT be retroactive. Purchases made “on or before the date that is 1 year after such date of enactment” to me sounds like it would be good the day that it is signed and up until 1 year after that date. 1 year after date of such enactment would be a year after it’s signed, and on or before that date, so my feeling would be only the year from when it’s signed through one year after the day that it is signed. The language is very confusing though.
John…you are an idiot…..read this carefully (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.
on or before the date that is 1 year after such date of enactment…this means 1 year after it is passed not 1 year prior…if you aren’t an idiot then you would understand this……..everyone else read really slowly…
@John
I don’t see where you get retroactive from this? I purchased a home in may 2008 so I really hope it is retroactive but after reading the amendment, it appears that this only applies to people who purchase a house after they pass this bill… or up to 1 year after they pass the bill. Any thoughts Jordan? Where did you find this information “This tax credit will also be extended to buyers who have bought a home in the 12 months leading up to the stimulus bill passing.”
We are dealing on a home as we speak and have already filed our taxes, what does that mean for us. Will we still qualify for the 15,000 if the bill passes?
My husband and I closed on our home on Feb 4th, 2009. We are first time home buyers and make under the $95,000. Should we file now and get the current $7500 tax credit, or wait to see if we get the new one? Either way, I don’t want to lose out, and the most we would get back would be $2000 more. BUT, we wouldn’t have to pay it back.
My wife and bought a house in June of 2008 and qualified for the 7500 credit that gets paid back. What happens now?
In this article you first state that you are eligable for the credit if you purchase a home in 2009. Then you go on to say only after the bill is signed into law. Make up your mind before you post an article. which one is it?
Now that the senate has passed its version, is it possible to get an answer to the question of the 15k credit being applied to home buyers purchasing a home in 2009, retroactive from the signing date, or only to those purchases made after the signing date?
The tax credit will only go to buyers who buy a home after the bill is enacted into law which should happen this week.
Its only for purchases after the signing date. Previous home purchasers should look for the $7500 tax credit offered for 2008. The bill will not be retroactive as previously thought.
Here is a question for all of you. I am building a new home. We signed the purchase agreement in September of 2008, however we will not be closing on the home until May of 2009. This issue is not addressed in the bill. Does anyone have a thought on this?!? Who would I even go to and get clarification on this?
Ok. I am almost sick to my stomach about this stimulus bill. It is NOT logical for them to NOT retroactively cover the first time home buyers from April 08 2008 going forward, in my opinion!!!!!! Why on earth would you make the people who purchased a whom in the beginning of the recession (the worse stages) pay back the freaking loan when you are going to give others double the amount for FREE?????????? How can some you so nonchalantly say ITS NOT RETROACTIVE?? You should be screaming that it should be. I know! I know! It doesn’t bother any of you. LOL. It sickens me because we built our home and closed on Sept 25th 2008. We now qualify for the $7500 but it has to be paid back (interest free). That is the most craziest thing about this whole bill. It SHOULD qualify those like me retroactively OR at least not require us to have to pay the $7500 back. If you are like me PLEASE CALL, WRITE AND/0R EMAIL your local senators and representatives and see if you can help fight this. This is CRAZY!!
I totally agree with Clark. Why are the people in 2008 having to pay back the $7500 tax credit? It just doesn’t make any since that those who buy a house now can get double the amount and not have to pay anything back. Those who bought and tried to stimulate the economy when it was falling apart should be compensated for taking a chance with a new home purchase. We should not have to pay back the $7500!!!
Clark and Tim, you need to read the amendments. The new wording does in fact negate the pay back for the April 2008 buyers forward. If you have already submitted your taxes you will find that you will not be paying the $7500 back. I’ve read alot about this, it’s not “written in stone” the bill has not been passed but again the wording for pay back has been changed.
What sickens me is all of you people looking for a cookie jar to stick your hands into. “They get free money, I want free money. Its not fair!” Pathetic. You should all be ashamed.
Jim, it’s simply an avenue to put money back into the system. It’s all very complicated and if you read the Democratic side of the bill they want every homeowner to get the $15,000 credit. There are tax credits being set up for those who do not own homes. Read the Wall Street Journal this morning, it gives you a breakdown. I believe that if we knew all the wording between the lines of the over 1000 page package we would all be more than a little upset.
Wow, Jim, I don’t know how much money you make, nor do I care, but as a first time home buyer and near the poverty line every little bit helps, so I’m sorry if you think I’m looking for a hand-out when I’m really just trying to start a family and looking for any help our government can possibly dish out. Thanks.
I was just wondering if anyone can help me figure out which date will be used to determine when we purchased our home. We signed a purchase agreement on February 2nd and will be closing on the 27th. My wife did not work for half of 2008 because the school that she taught at had major layoffs, so we will not be able to take full advantage of the $15k tax cut this year and we were planning to use the $7.5k to payback some of the money we borrowed for closing ( I know, a mistake). Does anyone know which date will be used to determine our date of purchase?
Right now the proposed legislation is not retroactive, however since the economy has been in recession since the begining of 2008, I hope the tax credit is retroactive. Everyone who wants the tax credit to be retroactive, write your congressional representative and ask them to make it so!
WELL-SAID! I too closed on a home after April 08 in the pit of this crisis. If the article above is valid and this will not be retroactive—we MUST write/call our senators today. Like you, I FEEL SICK
@Lionel
I think you are completely missing the point. Let’s think about the objective of a stimulus package. What the government is trying to do is stimulate home purchases going forward. Paying this retroactively does not achieve this objective. I feel sick from all of the belly-aching. If you want a $15,000 tax credit, go out and buy a new home right now. There is no point in rewarding you for having purchased in the past. It does not in any way help our current housing market. Seriously think about it. Sorry you missed out.
Hold on guys, apparently it’s not gonna happen after all. Just checked the yahoo news half an hour ago the House negotiators wiped out the Senate bill. Well I guess those who are eligible for the $7,500 tax credit - it’s better than nothing… God Bless us all!
So what you are saying is forget about all the tax payers who do what they are supposed to do, pay taxes on time, buy houses that are supposedly going to stimulate the economy, just forget about all those people. You want only those who go out and buy a house now to benefit, that is a great way to look at it…this is classsic politics. The little guy and the good guy get left out in the rain again.
Democrates/Obama!
You are willing to have close to $800 billion spending arguably not stimulative, but you are not willing to include $35 billion to give $15000 tax credit for home buyers to help you resolve the home inventory problem, which is the root of this recession?! You are ruining your country! What message are you sending! All Democrates care for is to solidify their power base and put our country in a irreversible path of dependence on the bigger and bigger Government who has not proved a bit their accomplishment. Yeah, Rush it through! Rush it through! Let’s destroy America with lightening speed! YOU GO OBAMA! YOU GO DEMOCRATES!
It would be crazy to make this retroactive! It is a stimulous bill! Giving you a credit for something you bought in the past will not stimulate the economy. You are free, just like everyone else, to go buy a house and claim the credit! In doing this, you will help stimulate the economy. Quit looking for handouts! That is the problem with most of this bill!
Another point one may want to consider is whether this is a refundable credit, after reading the bill it does not seem to be. This means that the Taxpayer will only receive a credit for the Tax Liability on the Taxpayer’s 2009 and 2010 Tax Returns. Thus, most people will not see $15k.
The House bill removed the $15,000 tax credit for buying a home. Forget about it, this bill will now go to the senate for a final vote.
The House and Senate Democrats behind closed doors killed the Isakson Ammendment (which passed the Senate 100 - 0 BTW)and the new car purchase credit. The Isakson Ammendment, if you read it, clearly states that the non-refundable credit could be claimed on 2008 taxes …. That means that it would have been retroactive. Being non-refundable means that it isn’t a welfare check, merely tax forgiveness up to 15000. If you paid in 4000, you would only get 4000 back. They chose to kill a housing credit to build new schools ….. Hmmmm! Don’t you need students to fill these schools that live in HOUSES? This is an obvious payoff to the Government schooling industry instead of stimulus to the engine that moves this country. OH, but Caterpillar will rehire “some” of the 20,000 people they just laid off because the demand for Govt paid construction will surely be worth more! What a Joke!
Too many people got excited too soon about this $15000 tax credit, including myself. The money I would have spent in home depot, furniture store, etc. That’s the money that would have stimulated the economy, because I would have spent that money buying furniture and everything else I need for the house. $40 tax credit a month or $500 a year will not stimulate the economy, because for that money I can by squad.
It’s not goiing to happen.
I know one thing.
I’ll never vote again in my life. Because I’m not rich, I’ll never vote again. What’s the point, really? Politicians work only for rich people (like them selves). Because all this bailouts and stimulus BS it’s not helping a little guy at all. It just gives more money to the rich, billions in bonuses etc.
Wow, I’ll get an extra $20 per pay period or month. That should really stimulate the economy, what a joke. Wow, I’ll go on a spending/shopping spree with $20. Can’t even order a pizza for that money.
I’m in a process of buying a home and was really looking forward to $15000. They should all go to hell. They’ll never get my vote again.
They are morons. The tax credit would have shored up the housing market and prices. I will not be buying a house now. Good Job Congress!!
Go to bloomberg site, it mentioned there that the $15,000 tax credit was just reduced to $8,000. Though the amount was trimmed down hopefully it remains “free” credit, and also the $7,500 would be ammended.
Here’s the URL
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aiM_rr98lSVk
The trickle down effect of stimulating housing purchases would have been far more beneficial to the country than the “cost” of the tax credits - the reason Montana’s Senator Baucus used as an excuse for axing one of the best parts of the stimulus bill !!!
EOM
from my understanding of everything the 15,000 is out but the 7,500 originally proposed that you DO NOT have to pay back is still in effect??????
also is this going to be in effect from date of bill enactment or retroactive?
Does the congress and the president have a concrete date of passage of this bill yet? Is it still Presidents day or is it later now?
They really screwed this up. Bringing it back to only first time home buyers? First time home buyers are not going to turn the housing market around in the places most hard hit: Florida, California, etc. History says that if the housing market does well, so will the economy. Most people didn’t even know that the first 7500 (bill passed last year) had to be paid back, and it didn’t do a whole lot when that was passed. What on earth makes them think that this will make a difference? Washington really dropped the ball on this one. To get this economy going, we need to get back to basics: create jobs and get people spending money. There goes half of that.
Jordan, if we bought in 2008 and qualified for the 7500 do we still have to pay the it back or does this amend the original bill as well so that no one has to pay the 7500 back no matter when you purchased your home?
Can I just say I’m tired of always being left out. I live in the northeast in the city where if you want to live in a decent neighborhood you are paying at least 300K. THe public schools stink so I have to pay for private education. Because I’m single, I’m taxed to the hilt. I purchased my first home in December stretching out on faith and hoping for a tax break. I didn’t get a stimulus check because of my income. I don’t get financial aid for my daughter because of my income and I don’t qualify for for the 7500 because of the income limits. When do plain working folks get a break?
Rhonda, I understand your frustration. Although, I would rather be in your situation where I owned a 300K home, and could send my child to a private school (don’t have kids yet though). The stimulus package you speak of was only $300 bucks for me, and paid for “some” graduation entertainment. It was gone by sunday and I got it that friday. Add filling up my car at 50.00 to get to work for 3 days only and that little stim package wasn’t worth the paper they printed it on. Just remain faithful, hopeful and adamant . . . things will get better for us all!!! @Rhonda
Now, I’m really lost, is the $7500 tax credit from last year retroactive or not?
So we are clear, the 2008 tax credit does or does not have to be repaid?
As of right now, the tax credit is not retroactive. The people who have bought a home in 2008 and closed on it before the bill passes, they will qualify for the 7,500 but will still have to pay it back. Until the details get put out there, which they haven’t all of this is rumor. We hope they will change it for those of us who have bought a home allready but if not, this is still a good deal.
I agree.
According to this from CNN (http://www.cnn.com/2009/POLITICS/02/13/stimulus.winners.losers), it is $8000.
We am not a first-time homebuyer. We are building a new home. It will finish and the construction loan will be converted to a mortgage in 2009. Do we qualify for anything?
your date of purchase would be the date you signed the deed and it was recorded at the register of deeds- not the date you agreed to buy the house, ie- purchase agreement date@Dan
@Clark
uggh i agree with you. that is not fair it should be either we all pay it back or no one does.
Thanks for all the great information here and reading the comments provided a lot of insight as well. I published a similar piece and the type of responses is eye opening.
I am wondering I cant afford to buy a regular home, I am on social security and my income is 673.00 a month, will the first time home buyers that buy any kind of home, qualify for anything. To help them have a home of any kind,a manufactured home or a fifth wheel trailer or a motor home
to live in. I am senior and disabled is there a program for us who worked our whole lives here in the United States of America, we give all our aid for schooling to foreign students with basically no restrictions Program W>A>I>V>E Pays for child care, transportation, education, all expenses and housing. for students that come from foreign countries and then they go back to the countries they love, and use that education that our hard working dollars paid for in taxes when our own kids cant get much of anything if they have parents that make too much money. go figure?????
qualify for a first time home buyers loan or
yay another waist! Too bad Americans have become so weak, they can’t make a stand (or can’t afford to) instead we just watch our money go out the window to big business and banks who have the full support of the government and we the people fight for the crumbs left over. If I were to act like our leaders I would be thrown in jail for life. I guess we get a front row seat to seeing how a trillion dollars (plus) goes to every pos “too big to fail” irresponsible scum instead of “the people” once again (and again, and again, and again, and well you get the point). Amerika is most definitely not worth the price of admission any longer.
I am building a home for the first time. What do I need to do now to get this credit. Can this money go toward a down payment or does it come as part of my tax refund? Thanks.
@Mike Dale
The bill has been canceled.
Hello all, i purchased a home in April of 2009. i was going to hold off in claiming the stimulus for the 09 taxes. i was told that if i do not claim that stimulus before November of 09 i will loose it? is this correct? does anyone have any information on this? thank you.
Hi, my husband and I bought a house in Feb. 2009.. it is his second house.. are we qualified for the repeat homebuyer stimulus? he owned his first house for 2 years before we bought a new one.. thanks..
My husband and I are about to buy a beautiful used 5th Wheel which will end up costing around $40,000. We are getting reading to begin living and traveling in it. Does a 5th Wheel qualify? I read that an RV with an engine qualifies and a travel trailor secure to land qualifies but I can not find specifically for a 5th Wheel that is obviously a house that we will be living in yet traveling like an RV would qualify. Thanks for any information.
The poor folks that got the 2008 New Home Buyer deal got “ed” compared to the 2009 package where they will not have to pay the money back. Is congress going to adjust the requirements on the 2008?