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Old 02-06-2009, 04:06 PM
 
Location: SE Michigan
1,213 posts, read 4,242,051 times
Reputation: 674

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Quote:
Originally Posted by akcher View Post
That is for the $7500 First Time Home Buyer Credit.

The $15000 Home Buyer Credit proposed by Isakson in the Stimulus bill of 2009 would over write that credit if it passes and it is very different.
So, please explain in plain english how they differ. People who qualified for the 1st time home buyers are saying that their refund is whatever they were due anyway PLUS an extra $7500.

Is this a tax credit that instead of paying taxes on $85,000, now I will pay taxes on $70,000?

Because that will not amount to very much. Maybe several hundred dollars. Certainly not even $7500.

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Old 02-06-2009, 04:20 PM
 
Location: Los Angeles
283 posts, read 707,029 times
Reputation: 205
I am copying this from another forum but she explained it pretty good.

Quote:
For the sake of clarity, let's assume this amendment in its present
form becomes law on February 16th (Presidents Day). This means
it actually goes into effect the next day on February 17th.

Here's how the two tax credit programs would shake out:

Any first time homebuyer meeting the income limits and who purchases
a home from April 9th, 2008 to February 16th, 2009 would qualify for a credit
up to $7,500 (really an interest-free loan that acts like a credit). The funds
would be paid back over a 15 year period.

Anyone who buys a home from February 17th, 2009 to February 17th, 2010
would qualify for a tax credit up to $15,000. This money never needs to be
repaid.

At the taxpayer's convenience, the 7500/15000 tax credit can be spread out
over 2 years. So you don't have to use the entire credit in the same tax year
if you don't want to. Additionally, at the taxpayer's convenience the home
purchase tax credit can be claimed on the previous year's tax return. So if you
buy a house this year, you can claim it on the 2008 return. If you buy in 2010,
you can claim it on the 2009 return.
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Old 02-06-2009, 04:42 PM
 
14,814 posts, read 18,825,463 times
Reputation: 11777
Quote:
Originally Posted by akcher View Post
That is for the $7500 First Time Home Buyer Credit.

The $15000 Home Buyer Credit proposed by Isakson in the Stimulus bill of 2009 would over write that credit if it passes and it is very different.
I don't know about that,
because Isakson is proposing an ammendment
Isakson amendment gives $15K tax credit to homebuyers - Atlanta Business Chronicle:



FYI, I'm putting this information here again that I found in the IRS webpage

Tax Credits Provide Funds for First-Time Homebuyers, Childcare, Education and More (http://www.irs.gov/newsroom/article/0,,id=202107,00.html - broken link)
At the bottom of the page

Credits Save Taxpayers Money
These credits can increase a refund or reduce a tax bill. Usually, credits can only lower a tax liability to zero. But some credits, such as the EITC, the child tax credit, the Recovery Rebate Credit and the first-time homebuyer credit, are refundable –– in other words, they can make the difference between a balance due and a refund.

http://www.irs.gov/newsroom/article/...187935,00.html

Q: I don’t owe taxes and did not have taxes taken from my paycheck, do I qualify for the credit?
A: Yes, the credit is fully refundable, and you can claim the credit even if no taxes were withheld from your paycheck.
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Old 02-06-2009, 04:44 PM
 
Location: West, Southwest, East & Northeast
3,446 posts, read 6,453,027 times
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Quote:
Originally Posted by akcher View Post
I am copying this from another forum but she explained it pretty good.
But it is not a cash payment (rebate) to homebuyers. The $15k tax credit can only be used to reduce the tax liability a taxpayer owes the IRS.

I suspect very few people will use much (if any) of the $15K tax credit over the two years it is allowed. In fact, with a new mortgage most all of the mortgage payment goes toward interest (instead of principle) lowering the taxpayer's tax liability.
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Old 02-06-2009, 04:47 PM
 
50 posts, read 263,589 times
Reputation: 49
Dopo...stop confusing here..everyone is waiting for the news.. all your information is from old amendment.

NEW AMENDMENT IS NOT YET WRITTEN COMPLETELY.

nobody knows about this FOR 100% SURE
1. 7500 or 15,000 ( proposed and agreed by word is $15,000
2. Tax break or tax credit ( proposed tax break )
3. Dates for eligibility - Senator only know about this as of right now. ( They may play a trick by collecting the information from Real estate like how many house construction in the market, plan according to that)...NO one KNOW ABOUT THAT
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Old 02-06-2009, 04:57 PM
 
Location: Los Angeles
283 posts, read 707,029 times
Reputation: 205
Quote:
Originally Posted by Kootr View Post
But it is not a cash payment (rebate) to homebuyers. The $15k tax credit can only be used to reduce the tax liability a taxpayer owes the IRS.

I suspect very few people will use much (if any) of the $15K tax credit over the two years it is allowed. In fact, with a new mortgage most all of the mortgage payment goes toward interest (instead of principle) lowering the taxpayer's tax liability.
I never said it was a cash payment.

Let take my senario for example and let's say the stimulus passes. I paid $12,000 in federal taxes last year. My tax liability is $14,500. If it wasn't for the stimulus bill I would have owed $2500 to IRS. Factor in the credit, I would be getting receiving a refund of $12,000 and would not owe the IRS $2500. I never implied I would get all the $15,000 back.
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Old 02-06-2009, 06:13 PM
 
199 posts, read 474,759 times
Reputation: 69
What part of the $15,000 home buyer tax credit don't you understand?

Because so many people coast to coast have been asking questions about the Senate version of the economic stimulus package, Luke Mullins at the U.S. News & World Report Home Front blog has compiled the answers to six of the common questions:

1. I recently bought a home and qualified for the $7,500 new home buyer tax credit. Should this provision become law, would I qualify for it [as] well?

The short answer is no, says Rob Dietz, an economist for the National Association of Home Builders. "The effective date of the ... amendment is the date of enactment," Dietz says. "So if you've already completed a purchase, you would not be qualified for the new program."

2. 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]."

3. What are the odds of this provision becoming law?

The $15,000 home-buying provision is a component of the massive -- and increasingly controversial -- economic stimulus package. The House of Representatives has already passed its version of the stimulus bill, and the White House is putting pressure on the Senate to do the same. However, the size of the package -- which now totals more than $900 billion -- has prompted some Republican senators to try and slash provisions to lower the tab. Still, Kirchner argues that the $15,000 tax credit enjoys strong support from the National Association of Realtors and the National Association of Home Builders and will remain in the stimulus bill that is signed into law. "Because of the way that it was adopted -- unanimously, they didn't call a roll call vote because both sides agreed to accept it -- this provision is in," Kirchner says. Scott Talbott, senior vice president of government affairs at the Financial Services Roundtable, also predicted that the amendment would make it into the final package. "It’s a targeted solution that will address housing as well as taxpayers -- both of which need help," he said.

4. Does this tax credit need to be paid back?

Nope. That's a key distinction from the $7,500 first-time home buyer credit, which was "actually a 17-year repayment, which translates into a no-interest loan," Dietz says.

5. Is there an income limit or any other restrictions on participation?

The tax credit would be limited to primary residences and does not come with an income restriction, Kirchner says. "You must occupy [the property] for at least two years as your primary residence," she says. It applies to "any home, meaning a condo, a house, foreclosed, new, [or] previously owned."

6. Can I take the credit during tax year 2008?

Yes, says Chris Cook, a legislative assistant to Sen. Isakson. Even if you buy a home in 2009, the provision would enable you "to file your taxes as if you purchased your home on Dec. 31 of 2008," he says.
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Old 02-06-2009, 06:14 PM
 
199 posts, read 474,759 times
Reputation: 69
Rates not going down - I think both of these need to happen together for any real increase in new home sales.

The Senate just killed a proposal to drive mortgage rates down to 4% to 4.5%. The amendment to the stimulus bill would have had Fannie Mae and Freddie Mac buying those low-rate mortgages on the secondary market. Jumbos would not have been included.

New York Democrat Charles E. Schumer, an opponent, said the plan was too expensive and would mainly benefit lenders, who would collect refinance fees.
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Old 02-06-2009, 08:11 PM
 
Location: Carpenter Village, Cary
386 posts, read 672,114 times
Reputation: 269
Okay, say a person pays $3,600 a year in federal income taxes (whether it is taken from her paycheck or paid in April is moot) plus has $3,000 taken for social security and medicare (FICA). This person buys a $120,000 home and thus would be eligible for a tax credit of $12,000. Would this person only be able to get the $3,600 back times two years, for a total of $7,200? Or is the FICA in play as well, which would take it up to the $12,000?

If someone is going to buy our condo as a primary residence, they aren't going to have a huge salary, and thus not a very big tax bill. That "primary residence" part is killing me.
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Old 02-06-2009, 08:21 PM
 
1 posts, read 3,274 times
Reputation: 10
It doesn't make a whole lot of sense for this 15K to be a non-refundable credit, when the previous one was refundable. If this is true, many home buyers, especially those with lower incomes, and thus lower tax liability, would get much less of a credit than they would under the previous legislation.

This year, I paid ~$4300 in federal taxes and was owed a $500 refund. Under the current legislation, If I bought a home under the current legislation, I would get a refund of $500 + 7500 - $8000, and would have had to pay back the $7500 over 15 years, in the form of an additional $500 tax liability annually.

The stimulus bill that passed the house of representatives last week kept the credit at $7500, and eliminated the recapture provision. but it was still a refundable credit. I though the Senate legislation was just increasing the value of the credit, not changing it to a non-refundable credit?

In my personal example above, I would only get a refund of my total tax liablity for 2008, $4300, and could apply the balance of the 15K to 2009's taxes, (maybe $4500-4700) for a total credit of about 9K over two years, and I would lose the rest?

Well, I guess it's still better than 7.5K, for me at least. But isn't it possible that people with less federal tax liability than myself would be better off under the old legislation?
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