Senate Stimulus Bill’s Home Buyer Tax Credit

February 9, 2009, 1:05 pm

FAQ: Senate Stimulus Bill’s Home Buyer Tax Credit

Nick Timiraos reports:

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.

Barack Obama becomes 44th President

CHICAGO, Illinois (CNN) -- Barack Obama did more than thump John McCain in the Electoral College tally; he also handily won the popular vote and redrew the great divide between red states and blue states.

Riding a Democratic tide that bolstered the party's presence in both houses of Congress, Obama snared about 63 million votes to McCain's 55.8 million, according to totals early Wednesday.
According to exit polls, Obama crushed McCain among women voters (56 percent to 43 percent); voters under 30 (66 percent to 32 percent); African-American voters (95 percent to 4 percent); Latino voters (66 percent to 32 percent); first-time voters (68 percent to 31 percent); and voters making less than $100,000 a year (55 percent to 43 percent).
"I think this is the passing of an old order," CNN senior political analyst David Gergen said as the results rolled in Tuesday night and the outcome became increasingly evident.
"I think what we see ... is a new coalition, a new order emerging. It isn't quite there, but with Barack Obama, for the first time, it's won. It is the Latino vote we just heard about. It is the bigger black vote that came out. Very importantly, it's the youth vote, the 18-to-29-year-old," said the Harvard University professor and former presidential adviser.

Early voting totals in the East suggested things would go traditionally, with McCain taking most of the Southeast, Obama most of the Northeast.
But then things quickly changed, as the senator from Illinois struck -- first in Pennsylvania and then in the Midwest state of Ohio, states McCain had to win in his bid for the Oval Office. Obama then delivered an uppercut in Virginia, a state that had not voted for a Democratic president since 1964.

As polls closed from East to West, Obama kept hammering McCain, as he snatched away Iowa, Colorado, New Mexico and Nevada -- states that had been in President Bush's column in 2004.
And Wednesday morning, Obama added Indiana to the list of states he'd turned from red to blue. Indiana hadn't voted for a Democrat since Lyndon Johnson in 1964.
(Missouri and North Carolina were still counting votes Wednesday, but it appeared one or two of them could become blue-state converts as well.)

With McCain on the ropes, an Obama victory in Florida sounded the death knell.
When Indiana fell into Obama's column Wednesday morning, he had a 349-163 lead over his rival in electoral votes, with only 26 undecided.

As he claimed victory Tuesday night, Obama told supporters, "change has come to America."
"The road ahead will be long. Our climb will be steep. We may not get there in one year or even one term, but America -- I have never been more hopeful than I am tonight that we will get there. I promise you -- we as a people will get there," Obama said in Chicago before an estimated crowd of up to 240,000 people.

With Obama's win, he becomes the first African-American to win the White House.
McCain pledged Tuesday night to help Obama lead. "Today, I was a candidate for the highest office in the country I love so much, and tonight, I remain her servant," McCain said.
The senator from Arizona called Obama to congratulate him, and Obama told him that he was eager to sit down and talk about how the two of them can work together.
Obama will also be working with a heavily Democratic Congress. Democrats picked up Senate seats in New Hampshire, New Jersey, North Carolina and Virginia, among others.

But Obama pledged to work across party lines and listen to the 46 percent of voters who chose McCain."While the Democratic Party has won a great victory tonight, we do so with a measure of humility and determination to heal the divides that have held back our progress," Obama said.

"To those Americans whose support I have yet to earn -- I may not have won your vote, but I hear your voices, I need your help, and I will be your president, too," he said.

And he recited the words of Abraham Lincoln, the first Republican in White House, to call for unity."As Lincoln said to a nation far more divided than ours, 'We are not enemies, but friends ... though passion may have strained it must not break our bonds of affection,'" Obama said. Supporters in Chicago cheering, "Yes, we can," were met with cries of "Yes, we did."
Bush also called Obama to offer his congratulations.
The president told Obama he was about to begin one of the great journeys of his life, and invited him to the White House as soon as it could be arranged, according to White House spokeswoman Dana Perino.

More than 1,000 people gathered outside the White House, chanting "Obama, Obama!"
Sen. Hillary Clinton, Obama's former rival for the Democratic nomination, said in a statement that "we are celebrating an historic victory for the American people."

"This was a long and hard fought campaign, but the result was well worth the wait. Together, under the leadership of President Barack Obama, Vice President Joe Biden and a Democratic Congress, we will chart a better course to build a new economy and rebuild our leadership in the world."

Sen. Edward Kennedy said Americans "spoke loud and clear" in electing Obama.
"They understood his vision of a fairer and more just America and embraced it. They heard his call for a new generation of Americans to participate in government and were inspired. They believed that change is possible and voted to be part of America's future," the Massachusetts Democrat said in a statement.

Voters expressed excitement and pride in their country after casting their ballots in the historic election. Poll workers reported high turnout across many parts of the country, and some voters waited hours to cast their ballots.