Stimulus Package Tax Credit is Uncertain

I am not an economist and certainly do not have the answers to resolve the current economic conditions we face around the country, even if to a much lesser scale in the Fort Bend County area. In our area, including Sugar Land, Missouri City, Richmond, Rosenberg, and others, we have not seen the rapid loss in equity to the extent this has occurred in other areas of the country. But, struggle none the less, we have.

With the ailing economy and rising unemployment, Senate Democrats have seemed to reach some preliminary agreements with  Republicans  that include spending cutbacks, necessary to get some moderate Republicans on board to approve the enormous stimulus package with a current price tag of around $920 billion.

Sen. Johnny Isakson (R-GA)

A provision currently in the bill would significantly impact the housing market and assist home buyers for the next two years was proposed by Sen. Johnny Isakson (R-GA).  Senator Isakson's proposal adds $36 Billion to the package and would offer up to $15,000 in tax credits to anyone that buys a home in the next 2 years.

This proposal is not certain, however, according to Senate Democrats.   This proposal and another that would provide a $1,500 tax credit to buyers of American made vehicles could be trimmed or eliminated all together.

It is interesting to note that even if the home purchase credit remains in the package, The Washington Post reported that Isakson still might not support the package.  Go Figure.

Will the Stimulus Package Tax Credit help you directly?

Perhaps the answer to a couple of these questions might help you determine this.

1. I bought a home and qualified for the $7,500 credit that has to be paid pack, will I qualify for the  this new $15,000 credit? The short answer is no, says Rob Dietz, an economist for the National Association of Home Builders. "The effective date of the amendment is the date of enactment," Dietz says. "So if you've already completed a purchase, you would not be qualified for the new program."

2.  Does the $15,000 tax credit have to be paid back? Nope. That's a key distinction from the $7,500 first-time home buyer credit, which was "actually a 17-year repayment, which translates into a no-interest loan," Dietz says.

3. Are there income limits or other restrictions to participate? The tax credit would be limited to primary residences and does not come with an income restriction, says Joan Kirchner, Sen. Isakson's Deputy Chief of Staff. "You must occupy [the property] for at least two years as your primary residence," she says. It applies to "any home, meaning a condo, a house, foreclosed, new, [or] previously owned."

4. Can I take the credit during tax year 2008? Yes, says Chris Cook, a legislative assistant to Sen. Isakson. Even if you buy a home in 2009, the provision would enable you "to file your taxes as if you purchased your home on December 31 of 2008," he says.

5. What are the odds of this provision becoming law? Who knows for sure, right? The $15,000 home-buying provision is a component of the massive–and increasingly controversial–economic stimulus package. The House of Representatives has already passed its version of the stimulus bill, and the White House is putting pressure on the Senate to do the same. However, the size of the package–which now totals more than $900 billion–has prompted some Republic Senators to try and slash provisions to lower the tab. Still, Kirchner argues that the $15,000 tax credit enjoys strong support from the National Association of Realtors and the National Association of Home Builders, and will remain in the stimulus bill that is signed into law. "Because of the way that it was adopted–unanimously, they didn't call a roll call vote because both sides agreed to accept it–this provision is in," Kirchner says. Scott Talbott, senior vice president of government affairs at the Financial Services Roundtable, also predicted that the amendment would make it into the final package. "It's a targeted solution that will address housing as well as taxpayers–both of which need help," he said.

I was not personally in favor of the original stimulus package, it was too vague and contained proposals I totally disagreed with.  Certainly the way that money has been spent is wrong, and this does not lend credibility to another package, does it.

But this one seems to include some provisions that are going to encourage spending by tax payers, not by the government.  This is at least encouraging.

No matter if you are for or against this, either way, let your elected officials know!