New Home Buyer Tax Credit – 2009 Economic Stimulus Package

Posted by freetaxadvisor

February 9, 2009

As per the current news (Feb. 9^th 2009), there are provisions in the $827 Billion economic stimulus package proposed by Congress and President Obama, that includes $15,000 tax credit for a first time home buyer. This can give tremendous jolt to the US economy in a positive way and can stimulate home purchases by thousands of people.

Government Tax Credit For First Time Home Buyers:

So far what it looks like is that government is proposing to give tax payer a $15,000 tax credit on a home purchase. Here is one of the proposal or a bill still in work.

“Senator John Ensign, Chairman of the Republican Policy Committee, drafted an economic recovery plan that will help fix the housing market, create jobs and provide tax relief to middle-class families and small business owners. The bill, titled the Fix Housing First Act, is scheduled for a vote today”.

“The underlying problem with our economy is the deteriorating housing market,” said Ensign. “In Nevada, just a few short years ago housing prices were through the roof. Now, we’re leading the nation in foreclosures. We need to address the root problem, and my bill does that by helping homeowners stay in their homes.”

Ensign’s plan costs half as much as the trillion dollar stimulus bill currently being considered. The Fix Housing First Act also includes a $15,000 homebuyer tax credit, tax cuts for the lowest tax brackets and tax relief for small businesses so they can help boost our economy. The lowest tax brackets would be lowered from 15% to 10% and from 10% to 5%.

This is a very good news for the US home buyer in 2009 if this bill passes and becomes a law. $15,000 credit for your IRS tax will give huge jolt to the housing market in a positive way. If this is really a tax break then basically government is paying portion of the home price for you to buy a house. Also Current mortgage rates are much more consumer favorable than ever before.

There will be some stipulation however, like consumers will have to live in the house for at least two years and should be considered their primary residence. This tax credit was approved by house and senate in hope to boost the real estate and the economy but it only helps in less expensive regions. This bill is still not signed by president today Feb. 9^th 2009. As people say in the Accounting world that you should think about taxes early in the year and not in December, this is the time to think about you tax bill for 2009. However observers are more skeptical about success of this bill as issues are more severe in the regions with high real-estate prices. States like California and New York will not get help because home prices are too high in those areas and $15,000 isn’t that big of an amount to support very high home prices in those markets. So this tax credit might be beneficial in areas that are less expensive.

If this bill is signed by President then this will create one of the best home buying opportunity in a century if not more. Home price is down, mortgage rate is down and a tax credit to help you a buy a home. Wow that is best of all World, one should not miss this opportunity. Time will pass, bad time will be over and you will have nothing but regrets that you did not take the opportunity that was presented to you. Current thirty year mortgage rate is at historic low, 5.0% and may go down further.