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The Proposed $15,000 Tax Credit For Home Buyers in 2009

By Erik Folgate

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:

  1. 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.
  2. 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:

  1. 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.
  2. 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.

Erik Folgate
Erik and his wife, Lindzee, live in Orlando, Florida with a baby boy on the way. Erik works as an account manager for a marketing company, and considers counseling friends, family and the readers of Money Crashers his personal ministry to others. Erik became passionate about personal finance and helping others make wise financial decisions after racking up over $20k in credit card and student loan debt within the first two years of college.

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  • ekrabs

    Wow, that’s amazing.

    I’m not at a point in my life where I need to buy a house yet….

    But this at least makes me pause to rethink it!

  • Darryle

    I’m actually looking right now and want to take full advantage of the credit this year, but unless you ask for an extension on your taxes, you may not close on the house before April 15th or whatever the deadline is for filing taxes this year. It’s a very short window to make this year’s return.

  • author

    Hey Darryle, the final amendment kept the tax credit only for first time home buyers, increased it to $8,000 and made it a TRUE tax credit, rather than a zero interest loan from the government.

    It is my understand that you can claim the credit on this years taxes BEFORE you actually close on the house. As long as you know that you’ll buy this year, go ahead and claim the credit. If the IRS audits you, then you’ll be able to show proof of purchase once you close on the house, and if something happens, then just keep the money aside and pay it back if you never end up buying the house. I am sure some dishonest people will try to do this without the intent of buying a home, but I am also sure that the IRS will closely monitor the people that claim the credit.

    Speak with a CPA that you trust about this, because they always stay up-to-the-minute on the fine details of these new credits passed into law.

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