$15,000 Tax Credit “Shaved” from Stimulus
February 11, 2009
Post Tags: $15000 tax credit for home buyers removed , Stimulus-Package
$15,000 Housing Tax Credit Removed from Stimulus Package
$15,000 Tax Credit for Housing Removed
To get the stimulus package under the $800 billion mark the $15,000 tax credit passed by the Senate was removed from the stimulus package. At first it was announced it was “shaved” leading some to speculate it was reduced in size or in the scope of who could take the tax credit.
But a few minutes later is was revealed it was removed completely from the package and the bill.
Here is how the proposal and removal of it from the bill are described.
Under the $838 billion Senate proposal, which squeaked through the upper chamber Tuesday, homebuyers of any income would be eligible for a tax credit of $15,000. Yet only those wealthy enough to pay $15,000 worth of taxes over two years would receive the full benefit — and only if the purchased home costs more than $150,000. Otherwise the credit is 10 percent of the home price.
The logic behind the removal of the provision to get the bill under the 800 billion dollar mark which some senators stipulated would have to be the target if they were to support the final bill.
“Nine out of 10 of the people benefiting probably would have bought new homes anyways,” said Barbara Sard, director of housing policy at the Center on Budget and Policy Priorities. “To the extent that that’s the case, it’s really wasteful — and it’s really expensive.” Sard said the Senate proposal does little more than provide “a windfall for people who don’t need it.”
Both above quotes taken from The Washington Independent.
It is true that many people would not be able to use the entire tax credit of $15,000 in two years. There are a limited number of households paying that amount of taxes over a two year period.
It was looked at as another break for the wealthy by advocates for lower income families. On the face of it that does appear to be true.
Housing is where the recovery begins. In some sectors it already seems to be turning around with reduced inventories and slight increases in sale prices.
What housing doesn’t need are more buyers and sellers waiting to see what the government is going to do.
Interest rates are still around 5.5 % for a 30 year fixed loan. I can remember in the mid 90’s when it dropped below 7% for the first time in decades and everyone was saying “It won’t last, better refinance now” Low interest rates are one HUGE positive for housing. It does appear this is being overshadowed by the talk of even lower rates and tax credit stimulus possibilities.
For now, if you were figuring this tax credit into your plans, time to recalculate.
February 11th, 2009 at 10:09 pm
I think we were both right on the sale of your home and downsizing. I am retired and thus do not do debt, only cash. When you are retired, debt truly is a four letter word. With a mortgage, you are right on your home. You are smart where many are not. In the early years of a mortgage, the “owner” is really only renting from the lender.
The 15K in the StimUseless bill would have been great for buyers like me & the RE industry in general. I did not trust the politicians on this one and still don’t on most everything.
Best wishes on whatever you two decide to do. As others have posted below, “just go for it”. :>)
Chris
February 11th, 2009 at 10:29 pm
@chris swenson – Thanks Chris,
You are right, the mortgage factor is the difference. If anyone has paid cash for the property there is now way you come out ahead in the senario described here.
I/we don’t trust them either. I much prefer things work out by market conditions. It is unfortunate that the politicians contributed so much to this situation in the first place. Without their intervention requiring banks to loan to people that did not qualify for a loan we wouldn’t be where we are today.
It will turn around, it is the timing of the turn around that leaves all to wonder. Congratulations on being retired and on being able to buy with cash. That is the best. You pay for what you purchase only once.
We are picking out paint colors now and looking into landscaping. Either move or stay it becomes a win.
Have a great week.
Dave
September 19th, 2009 at 7:44 pm
I heard that there might be a $15000 stimulus I’m guessing for 2010. But right now it is $8,000 this year 2009.Is this right or is the $15,000 stimulus an old package that was instead made into the $8000 pakage that is good only foe=r 2009?
September 19th, 2009 at 8:44 pm
Jason,
The senate had the $15,000 in their bill but when it went to the house it was trimmed back to the $8,000. There is talk of extending the $8,000 credit, and even some chatter about the $15,000 but don’t count on either one being around after Nov. 30, 2009
There is a huge push on right now to extend the program. But there is nothing on the table at this time.