$15,000 Homebuyer Tax Credit Added to Stimulus Plan

• February 5, 2009
• 7 Comments

by Will Smith

Homebuyers will be pleased with a major new addition made last night to the stimulus bill currently winding through Congress. The Senate voted by voice to include a tax credit of up to $15,000 for new homebuyers that would be in effect for one year following the passage of the stimulus package. This measure represents substantially more incentive for homebuyers than the tax credit passed last year of $7,500 that has to be repaid over the course of 15 years.

The tax credit is estimated to add $19 billion to the overall package, which currently stands at around $900 billion. It was strongly favored by Republicans, who have chafed at the spending in the current version of the bill and prefer to see economic stimulus in the form of tax breaks and credits. Lawmakers on both sides of the aisle hope that the tax credit will rev up the beleagured housing market.

Republican Senator Johnny Isakson of Georgia, who was the leading sponsor of the new credit, argued that there is precedent for its success. From The New York Times:

Senator Isakson used his own experience selling homes during the housing crash in the mid-1970s to explain how such incentives spur sales. At the time, a bipartisan effort by President Ford and the Democratic-controlled House and Senate approved such a credit, which Mr. Isakson said helped stabilize the housing market. At a news conference earlier today, he called this type of initiative a catalyst that would fuel housing sales. That’s the way he said the cost of the additional tax credit would be offset — through reviving the real estate market.

For more on the tax credit, see The Washington Post, The New York Times, and The Associated Press.

This article originally published at http://dc.urbanturf.com/articles/blog/15000_homebuyer_tax_credit_added_to_stimulus_plan/525

7 Comments

1. Concentrist said at 10:10 am on Thursday February 5, 2009:

   This does nothing for me.  It just adds another $1,000 to my yearly tax bill.  Sure it’s essentially an interest free loan.  But if they are successful at lowering mortgage rates to 4.5% or lower, then we are talk about a net annual difference of ~$400.  Big whoop!  How about a full $15K tax refund?  Now we’re talking!

1. undcmt said at 11:47 am on Thursday February 5, 2009:

   Will this count for DC?  The last $7500 tax credit did not apply to DC home purchases as there is already a $5000 first time homebuyers federal income tax deduction for DC…

1. Matt said at 12:49 pm on Friday February 6, 2009:

   It is a full 15K tax credit…you never have to pay it back.  It was the 7,500 that had to be paid back in 15 years.

1. Nick said at 3:47 pm on Friday February 6, 2009:

   I am no opposed to this, but I think a drop in interest rates to 4-4.5%, (which of course the banks and their lobbyists hate - thus it’s not yet into law), would do far more to stabilize the housing market and the overall economy.

1. Yoni said at 9:56 pm on Monday February 9, 2009:

   I could be wrong but these comments don’t sound like they are coming from people within the real estate industry.  If they did they would agree that this will surely stimulate sales and help the economy. I hope you are correct as to the interest rates which will help tremendously over time.  That said we are going in the wrong direction currently. 
   There are no silver bullets but hopefully more “drops in the bucket” that will help more than hurt in the long run.

1. vanessa said at 10:45 pm on Friday February 13, 2009:

   ok, well I already filed my taxes, I am a co-owner of my house with my boyfriend so I was only able to get back half of the $7,500. If this new credit goes through, can I ammend my taxes to get the better refund, and NOT pay it back? Because as of right now I am obliged to pay it over 15 years. I’d rather not if I don’t have to.

1. Will Smith said at 6:34 pm on Tuesday February 17, 2009:

   Vanessa, unfortunately you’re going to have to pay it back. Read both of these posts (and the comments), which we just posted today:

   * Final Stimulus Includes $8,000 Credit and Reinstatement of Loan Limits
   * Does the Original $7,500 Tax Credit Still Have to Be Repaid?

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