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What's in the Stimulus Bill for the Housing Market?

The government stimulus plan passed on February 13th created an $8,000 tax credit for first-time home buyers, but does the bill really limit the credit to those who have never owned a home? No. Under the stipulations of the bill, first-time buyers are defined as those who have not owned a home within the past three years. Those with questions about their eligibility should consult a real estate or tax professional.

The good news for home buyers is that, unlike some government programs, this one is quite simple. Tax payers who purchase a home between January 1, 2009 and December 1, 2009, who earn no more than $75,000 if single, or $150,000 if filing jointly, can deduct $8,000 from their tax return. This is a refundable tax credit which means if your tax liability is less than $8,000, the government will refund the difference.

Intended to stimulate the housing market, and differing from the provisions in the older version of the bill, this credit is free money and does not have to be repaid. The only caveat is that you must live in the home for at least three years; moving sooner does require repayment.

For those who do not qualify or do not plan to move in the near future, there are provisions in the bill that will allow for energy improvements such as upgrading windows, installing energy efficient HVAC systems, adding insulation, or purchasing energy efficient appliances. Tax credits offered in this provision can be as much as $1,500 for qualifying purchases.

And for those facing foreclosure, the government has allotted more funds to encourage banks to modify existing mortgages. Homeowners who are facing or near foreclosure should immediately contact their lender to begin the modification process. However, homeowners must be on guard for “scam artists” who are preying on the fears of unsuspecting mortgage holders. Most of those who offer to save homeowners from foreclosure in return for payment of hundreds or even thousands of dollars are only thieves whose “help” not only results in lost dollars, but worse, can contribute the loss of a home.

 

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