We can have a long debate about the latest stimulus package and whether it is a good thing of a bad thing. There are plenty of opinions on both sides and I will bite my tongue for now. There is one part of the bill that passed the United State Senate last night that I wanted to share with you as a potential home buyer.
You may have heard by now about the potential $15,000 tax credit for home buyers. The amendment will replace the current $7,500 tax credit for first time home buyers that is currently planned to expire in July of 2009. I have read the amendment two times, and being a former state representative you would think I could read a bill by now, but it is still somewhat confusing. Here is how I read it to be different from the current $7,500 tax credit.
- The $7,500 tax credit is for first time buyers while the $15,000 is for any buyer who will use the house as a primary residence.
- The $7,500 needs to be paid back, interest free, over 15 years while the $15,000 does not need to be paid back if you live in the home for 2 years.
- The $15,000 is a maximum and based on 10% of your purchase prise. So if you purchase a home at $100,000 you will get a $10,000 credit.
- The new amount will start on the day the bill is signed and be in effect for one year. It will not be retroactive.
Also likely to come some time before the stimulus package is finalized is an amendment that could greatly lower interest rates to as low as 4%.
*I am not an expert on this subject, this is my best understanding of the amendment from my reading of it. Also this has only passed the Senate and will need to pass the House and most likely a conference committee between the two chambers and could be changed at any one of those steps.