Housing stimulus bill – nice name, who wouldn’t want it? Me, for one. It is a shell game. The most talked about provision – the $7,500 tax credit for first-time buyers is hollow.
First, this is credit up to 10% of the purchase price, so there’s no incentive to purchase anything more than a $75,000 home. Actually there’s no incentive at all once you read the bill. Just curious, how many homes for less than $75,000 have you seen in your market?
Second, it is a tax credit, not a grant. It doesn’t come off the purchase price either. It is strictly a federal income tax credit that isn’t realized until the eligible purchasers file their tax returns. There’s an entire list of stipulations to even qualify for the credit – including a “modified adjusted gross income” of no more than $75,000 and less than $150,000 for married couples.
Worse yet, this credit is temporary and has to be repaid. In the initial year, if someone’s tax liability is not at least $7,500, they only get to realize the credit up to that amount.
Beginning in year two, the new homeowner has a tax liability of $500 to begin repaying the loan. Years 3, 4, 5 – same thing. If they sell the home, the entire balance is due in that tax year.
Sounds a lot like a student loan. Doesn’t sound much like a stimulus – unless you’re an accountant.
We don’t need this bill – not now, not ever.
* For more information about my consulting and coaching services, visit my website stevehoffacker.com. I also maintain a regular blog on the real estate network Active Rain, and you can join this site and begin participating in the fun and networking opportunities by clicking here.
0 comments:
Post a Comment