Housing Bill: Senate Amendments Create Buying Incentives
April 4, 2008 by Katie Wethman · Leave a Comment
The senate started piling on amendments to a proposed housing bill that, if passed, would add some interesting incentives to buy. Of particular note is a proposed $7000 tax credit (not a deduction–a credit!) to anyone buying a foreclosed home (see my post: “I want to buy a foreclosure.”) A credit that size would indeed compensate for some of the risks involved in buying a bank owned property (see beginning of series here.)
For people in a 30ish% marginal percent tax bracket, a $7000 credit is equivalent to about $23,000 of income tax-free–that is 23,333* 30% tax rate = $7000 in your pocket!
Not interested in a foreclosure? That’s okay–Senator Ben Cardin wants to give a temporary $7000 credit to all first time home buyers--similar to the measure that has spurred a lot of first time buyers in DC for years–as well. (TBD on whether first time buyers who purchase a foreclosure get $14,000.)
We’ll have to keep an eye on this to see if it passes through as-is, but if I were on the fence about buying, $7000 is a nice chunk of change for the government to chip in.
Update 04/08/08: The House plan is proposing an $8000 first time buyer credit, and is good for the next 12 months. The credit would need to be repaid after 15 years. Stay tuned — this is destined for committee before being passed. So far, this is just a bill, not a law...remember the classic ditty: I’m just a bill…
Read more: Figure out your marginal tax rate, that is, the tax paid on the last dollar earned.
Read more: Risk of buying a foreclosure series starts here.
Read more: Tax Tips for Homebuyers
Read more: Local Classes for First Time Homebuyers
Ready to start your search? Contact me and we'll meet for coffee to see if it makes sense to work together. Not in the DC area but need a recommendation for a good real estate agent? I have a nationwide network -- just ask me!
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