If you were thinking about buying a house this year, you might need to get serious about buying wthin the next few months. There have been rumors that the final economic recovery bill currently being debated by the Senate could include an amendment to help stimulate home buying in the coming year. A few Senators have proposed a $15,000 tax credit for ALL home buyers from the date that the bill is signed into law extending for one full year.
Last July, a bill was signed into law that included a $7,500 tax “credit” for first-time home buyers. Here are the differences between the credit that is active now and the one that has been proposed.
The current $7,500 tax credit:
- It’s not really a credit. It’s like a 0% interest loan from the government. You can claim the $7,500 credit this year, but you’ll have to pay it back over a 15 year period or quicker if you choose.
- It’s only for first-time home buyers or if you haven’t owned a principal residence within the past 3 years.
The Proposed $15,000 tax credit:
- It would be a TRUE tax credit that you don’t have to pay back! You can even claim the credit on this year’s taxes if it passes into law this week. This means that you’d get $15k less any taxes owed back in the form of cold hard cash to put towards a down payment or improvements on your new home.
- It would count for ALL home buyers, not just first-time home buyers. Congress will require that it’s a primary residence so investors can’t take advantage of the credit.
This would be an unbelievable credit if it passes, and I think we will see a huge spike in home sales if this amendment makes it to the final bill when it passes. The process is somewhat complicated like anything Congress does. The Senate and House will have to collaborate to create a final bill that incorporates any and all amendments, and then Obama will sign it into law. So, there’s a possibility that it could still be chopped out of the bill. I will keep you updated when I hear anything.