First-time buyers get $8,000 tax credit in stimulus bill

First-time home buyer tax credit details reported today in a Wall St. Journal article:

Home buyers who hoped for a $15,000 tax credit to buy a new home, as promised by the Senate, will be disappointed. A proposed $35 billion credit to support home sales was jettisoned in favor of a more modest $2 billion to $3 billion provision.

The proposal would eliminate the repayment requirement in an existing tax credit for first-time home buyers, and raise the credit to $8,000 from $7,500. Congressional aides cautioned Wednesday that the credit's size was still subject to negotiation.

-- Lauren Beale

Thoughts? Comments?

Photo: President Barack Obama. Ron Sachs / EPA

Comments

[Nick]

"Don't worry, it's not a blatant handout, it's a loan which needs to be repaid. Yes, it's a 0% loan, but people need assistance so they can catch the falling knives, and the taxpayer won't suffer too much, because it's a loan, not a corrupt payout..."

... haha, fooled ya. How dumb are you voters? Jeeze, that's almost as dumb as buying Obama's line about stripping all the non-stimulus pork out of our gigantic pork bill. You really need to be less gullible, stupid peons; or not, that works for us...

[Jason in Oregon]

The $15,000 tax credit being cut is an absolute travesty. Those of you that are happy about it have no clue what drives the American housing market. It's basic supply and demand people! We have way too many homes for sale and not enough buyers. This credit would have DRAMATICALLY stimulated the housing market by diminishing supply and stabilizing prices. As the US housing market goes... so does the rest of the US Economy... Americans are an active participant in the housing market and the industries surrounding home ownership drive the economy in so many ways.

It makes no sense that the US government is so eager and willing to bail out the lending institutions that provided bad loans, yet the average family that is suffering the consequences isn't even thrown a bone. It's Horse-s*!t !!!!!

I personally lost 26K selling my house to avoid foreclosure because of an ARM loan. With this credit I would have the ability to purchase a home once again. Thanks for nothing... I'll be looking forward to that sweet 500.00 working tax credit. Now I'm only down 25.5K.

[joe]

give the 15,000 to all first time home buyers!

[RZ]

Does the $8,000 need to be paid back over time, like the $7,500 "credit"?

[zach from Portland]

Though the tax credit will help, I do not think it will make a "dramatic" difference. There are a ton a great deals out there right now, but despite that people are not buying because they are afraid, as they should be. The tax credit will encourage people to buy a new home, and because of that it is a good idea, but it will in most cases not enable them to. It will also not free up credit, a major issue now with most very large purchases (e.g. cars).

And lastly, with regard to any comments about "pork", while I am a democrat, I do not agree with the majority of this spending. And I have also heard very little in the way of root-cause solutions from across the aisle. Most of congress is trying to help, but they are also doing what is politically advantageous.

[DiggySRQ]

LETS GET THIS STRAIGHT PEOPLE:

The devil is in the details..

First off, this housing "credit" isn't stimulus at all. Don't be upset. You thought you were going to get 15K right off the bat? Think again.

Assuming you qualify (buyers in 08 will get the shaft),

1) The sum of WHATEVER the housing credit is (they seem to change it everyday) will BE SPLIT into two tax returns. Hence, two years.

2) The biggest catch of em all is, YOU MAY NOT BE ELIGIBLE for that full credit!! IT depends on your TAX LIABILITY. So the higher your income, the closer you will be to getting the full credit.

3) You can claim this credit in the 2008 tax return (even though you've purchased in 09)

4) You do not have to repay this credit.

5) You do not have to be a first time home buyer for this credit.

[Evelyn]

This is a travesty. How many first time home buyers are out there? Would their purchase make a dent? The $7500 tax credit was already in place and did notspur purchase. So what would an extra 500 do? I would have preferred the 8000 extended to all instead of just first time. Buyers looking for 15K will demand further price cuts at seller expense.
An increase in home sale would have helped home sales and perhaps created more jobs as well. Now that is history. This will be a disaster in months to come.

[KB]

Jason in Oregon, you are one of the reasons that the economy, housing market and banks have gotten where they are.

You went into a foolish ARM, because you didn't think that the rollercoaster ride to the top was going to end. Now your house is worth 26k less, because it was OVERPRICED to begin with (when you bought it), and now the market is adjusting back down to where it should be and homes are falling to reasonable and appropriate prices.

You got an ARM because you either couldn't really afford the house you bought and the ARM allowed you pay a lower initial price for something beyond your means to begin with, OR you bought the house as an investment, thinking you could sell it at a profit before your rate changed or the higher payments kicked in.

If you lost your source of income due to a layoff, then I can understand and sympathize with your situation, but if you're just in over your head because you made a poor choice and bought more than you could afford, then I have no sympathy for you, and I place the blame for this country's economic strife squarely on you and those like you.

[Jim]

Why only "first time" buyers? If you want to get the housing market moving, you need to give credit to anybody that will buy!!

[JB]

As of right now there is a repayment for the $7500 tax credit. From what this article says it is getting bumped up to 8k and doesn't have to be paid back.

I agree with you completely on the fact that washington blew it when they didn't offer the 15k tax credit. This would have helped move the sitting inventory of houses in this country. This would have been the fastest acting stimulus in this bill because of the fact that 95% of this bill will not affect you until next year. Americans need help now not later. Lets hope that our gov't wakes up and realizes what needs to be done!

[lalandjunkie]

Jason In Oregon,

I'm sorry to hear that you lost your home. Really I am..

but these tax credits for first time buyers are weak band-aid solutions that will not put a dent into fixing the bigger problem.

I'm not sure what the housing environment is like in Oregon, but here in LA home prices are not close to being affordable based on median income levels. You said you had an ARM loan? Well my man, I don't know how much your lending institution misled you vs your own personal carelessness, but you ended up spending way beyond your means hoping that folks would still have access to that easy money to keep home prices inflated. And those of us on the other side saw that this was a bubble waiting to crash. You know that lesson you can't get something for nothing? Well its true. Where did you think all that money came from, did you think it would never run out?

You want people to start buying houses again? They will once those prices come back to reality and in line with what people can afford.

You want the economy to get better? First face the facts and realize that many spent beyond their means and that's just a really stupid thing to do and its going to take a long time to fix.

As bad as I feel for you I also have to say that many Americans country were living recklessly and this country reaped what the irresponsible sowed.

If you think a measly 15k or 7.5k tax credit is going to solve this mess, i ask you how that's going to happen with especially another trillion dollar round of option + alt-a loan resets on the way?

I'm sorry you lost your home and I hope you and your family have a roof over your heads right now, but be real about how we got here and how we're going to get out of it.

[Joe]

This credit phases out for individuals making over $75,000 and couples making over $150,000. Obviously, making this credit WORHTLESS to those of us first time home buyers trying to break into the L.A. housing market. PLEASE CALL OUR SENATORS AND YOUR CONGRESS REP AND ENCOURAGE THEM TO HAVE THE INCOME CAP ON THIS CREDIT REMOVED!!!!

[Cal]

I love the people bitching because they aren't getting enough of a handout. Pathetic. How do they even live with themselves?

[Jonah1979]

Joe,

The vast majority of couples in California make under 150k/year. If you are making over 150k/year there should be no problem buying a home. Granted, prices are still way too high...

[Brian]

I am a (prospective) first time homebuyer who has been waiting for the repayment clause to drop out. As soon as it is dropped, I will be looking for a home.

[FreedomCM]

Why would we want to remove the income caps?

First, why should I subsidize a house purchase of people that make more than I do, through my taxes?

Second, hopefully fewer people will use it, and so there will be less artificial propping up of the house prices, a bad idea all around!

[Richard L]

I understand the bill right now (02/12) is for first time homebuyers only with a no-recapture $8,000 tax credit for a couple and $4,000 for a single person. I am close to both the mortgage and real estate market, and I think the way it stands now won't be much of a stimulus. At a minimum they should make it for non-first time homebuyers as well and raise it to $10,000. If they truly want to stimulate homebuying they need to do this, otherwise it was be a half-hearted measure at best.

[Still Waiting]

Jim, the only way to "get the housing market moving", as you say, is to the reduce the inventory of houses. For NON-first-time buyers, they usually have to sell their house to buy another one, which leaves inventory unchanged. This provides no stimulus whatsoever, except of course, for the commission dollars going into an RE agent's pocket. That's why the credit should be limited to first-time buyers.

IMO, all homebuyer credits should be eliminated, as the only true way RE can recover is for prices to fall to affordable levels. We are a long way off in SoCal.

[JayC]

Anybody ever see the "30-day price change" feature in Zillow? $8K is less than a lot of homes are losing in value EVERY MONTH in equity. An $8K handout might make a home more attractive in Alabama, but in Los Angeles you can save $8K just by waiting another month.

[Kristin]

I am a first time home buyer and I was already shopping for a home when I first heard of this potential 15K tax credit. I just put my first bid in and am hoping to wait it out a bit, take advantage of my grace period and next year eat a piece of this totally unnecessesary pie. So its been decided that its 8K and we don't have to repay it, right? And whats with the getting it in 2 increments - is that right?

[Cal]

FreedomCM: "First, why should I subsidize a house purchase of people that make more than I do, through my taxes?"

Why should I subsidize a house purchase for people who make less than I do through my taxes?

[jag]

8K in tax credit will not stimulate home buying specially in L.A. Those 8K will evaporate in the first month. It's a joke for our government to think that 8K will be an incentive for homebuyers.

[jtk]

Listen... I know there are lots of disappointed people out there... but look on the bright side... Senate and House have graced us all with an extra $13.00 per week. My response... What exactly are those boys in Senate boiling in a spoon and smoking? 116 BILLION to give us an extra $1.86 per day. HUH?????? I'm SO happy that we all can super-size that happy meal now! As a captain says in a crashing airplane... BRACE BRACE BRACE! With this type of hideous decision making, this country is being plowed into the ground. Prepare for the next depression.

[Emery]

I agree with Joe/Cal - I'm single making above the $75K cap. But given LA housing prices, I haven't been able to move from rent to own in my past 6 years of trying.

The income cap REALLY affects those of us trying for home ownership on 1 salary. I really don't wanna wait till marriage to afford a home outside the ghetto... Cause it's gonna be a while before I propose. Though I guess Valentines Day is coming up...

Agreed with everyone else though on the only way to fix the situation is for home prices to come down to reasonable, sane people prices.

[Marie]

My husband and I would love to buy our first house, but considering most housings are still overpriced by multiples of $100k around here... well, $8k isn't going to get us off the bench.

Really, hasn't housing been subsidized enough in this country?