Ask an Expert: Can You Still Get a Mortgage?
Senate Stimulus Bill’s Home Buyer Tax Credit
Sacramento, Feb. 16, 2009
Amarveer Dhillon
Readers are posing lots of different questions about
the proposed $15,000 home buyer tax credit that’s in the Senate
version of the economic stimulus bill. It’s important to remember
that the proposed credit is far from a done deal. The bill still
has a couple of big hurdles, including tomorrow’s scheduled
vote in the Senate. (Read the Senate version.)
If it passes, it will have to be reconciled with the House version
of the stimulus bill, which modifies an existing $7,500 home buyer
credit, repealing a provision that requires buyers to pay it back.
There are some big differences between those two
versions. The Senate version is nonrefundable, meaning you can only
receive the credit if you owe federal income taxes. The existing
credit is refundable, meaning you get a check from the government
even if you don’t owe income tax. And the current credit applies
to first-time home buyers, defined as anyone who hasn’t bought
a house in three years. The Senate version is open to existing homeowners.
Here are some more Frequently Asked Questions. Please
note that the answers may change as the Senate bill changes:
If I bought a home and used the $7,500 home buyer tax credit, can
I retroactively receive $15,000 credit if it becomes law? No.
Are there any income restrictions on the tax credit? The Senate
version currently has no income limits. The current $7,500 tax credit
phases out on buyers with incomes exceeding $75,000 for individuals
and $150,000 for married couples.
When will the new tax credit go into effect? The Senate version
would take effect when the bill is signed by the president into
law, and it would last for one year.
Can I take the tax credit this year? Yes. The Senate proposal
would allow buyers — even those who purchase in 2009 —
to claim the credit on their 2008 taxes.
The proposed tax credit is nonrefundable. What does that mean?
You can only receive the credit to the extent that you owe federal
income taxes. The Senate proposal would give home buyers two years
to claim the credit, so buyers could claim a $7,500 credit in 2009
and a $7,500 credit in 2010. A family of four that makes less than
$82,000, for example, could have a tax liability of less than $7,500
and they would not receive the full value of the credit.
Are there any repayment requirements on the tax credit? No. The
Senate proposal does not require the credit to be paid back. The
House proposal eliminates a 15-year repayment provision on the existing
$7,500 tax credit.
If I am eligible for the current $7,500 credit, am I also eligible
for the $15,000 credit? While the $15,000 credit has fewer restrictions
than the existing credit, there is one big difference: because the
credit is nonrefundable, if you have a low federal income tax liability,
you could end up receiving more money with the current credit than
the larger, proposed credit.
Are there any increased down payment requirements on the proposed
tax credit? No. A separate measure has been introduced in the House
that would expand the tax credit to $15,000 but would require a
5% down payment on mortgages. The Federal Housing Administration
currently requires a minimum 3.5% down payment.
Can I use the tax credit to buy a second home? No.
How long do I have to live in my home after I purchase it with
the tax credit? The Senate version requires buyers to pay back the
credit if they sell the house less than two years after they buy
it.
source: Wall Street Journal
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