The Stimulus Bill 101 and What’s it Mean for YOU?
On February 13th, President Obama signed the Stimulus Bill into law. Is this what we’ve all been waiting for? Well, as a real estate agent, if falls a little short of what I was hoping for, but there are some clear benefits to you in the new plan, and I felt like it would be helpful to share. Thanks to Michael Pemberton, a Certified Financial Planner, who helped us navigate the bill. Here’s what he thinks is important to note:
• AMT: There is a $70 billion provision to keep the alternative minimum tax from slamming about 24 million taxpayers.
• Car Buyers: Anyone who buys a new car in 2009 gets to deduct the sales tax. To qualify, buyer must make less than $125,000 individually or $250,000 jointly.
• Home Buyer Tax Credit: First-time homebuyers who purchase this calendar year get an $8,000 tax credit which does not have to be repaid like a similar measure last year. This phases out for people making more than $75,000 individually or $150,000 jointly. “First-time homebuyer” is defined as someone who has not owned a home for the past three years.
• Income Tax Credit: Anyone making $75,000 individually or $150,000 as a family will get refundable tax credit up to $400 per person or $800 per family.
• Paying for College Tax Credits: Individuals making less than $80,000 or families making less than $160,000 can get up to $2,500 in tax credits for college tuition. 40 percent ($1,000) of the credit is refundable. Cost: $13.9 billion over 10 years.
Michael Pemberton is with Russell and Associates. 1050 Crown Pointe Parkway, Suite 1000, Atlanta, GA 30338, mcpemberton2000@yahoo.com, Click the link below to check out our reviews on Kudzu.com! http://www.kudzu.com/merchant/reviews/17586067.html.
The emails have been racing in with everyone wanting to contribute content. Here’s a great Q&A session provided by Scott Meldrum at Countrywide Home Loans which is a great resource for all your real estate questions:
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I’m hearing about an $8,000 first-time home buyer credit that doesn’t need to be repaid – is it too good to be true? |
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A: |
It’s true. For eligible first-time home buyers who purchased a home after Jan. 1, 2009 and before Dec. 1, 2009, the stimulus bill provides for a refundable credit equal to 10% of the purchase price of the home, up to $8,000. And, yes, unlike the credit provided last year, this first-time home buyer credit does NOT have to be repaid, unless you sell the home or it no longer is your principal residence within 36 months of purchase. The Tax Institute has asked the IRS for guidance on how the credit should be claimed on a 2008 tax return until the IRS can update Form 5405 to reflect the increased credit. |
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Are there income phaseouts with this first-time home buyer credit? |
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Yes. The new $8,000 credit begins to phase out for individuals with incomes over $75,000 or married couples with incomes over $150,000 filing jointly. |
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Q: |
But what about those of us who purchased a home in early 2009 and took advantage of the $7,500 credit when we filed on our 2008 federal tax return = are we just out of luck? |
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A: |
No, you can still take advantage of the $8,000 credit if you purchased your home in 2009, but you will have to file an amended return to claim the additional credit, up to $500, to which you’re entitled. You must have purchased your home in 2009, however, to be eligible for the up to $8,000 credit. Homes purchased in 2008 do not qualify. |
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Q: |
I purchased my home in 2008 and was eligible for the $7,500 first-time home buyers’ credit, will I still have to repay it? |
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A: |
Unfortunately, yes. Those who purchased homes in 2008 and received the first-time home buyers’ credit are still required to repay the credit over a 15-year period, or sooner if they do not continue to live in the home as their principal residence for the full 15 years. |
March 6th, 2009 at 6:11 pm
[...] was passed and signed into law last month by President Obama. If you have been cave dwelling, click here. We here at The Peters Company were most concerned with the First Time Homebuyer’s Tax [...]