The ongoing debate in the Congress regarding the housing stimulus bill has been settled. The bill has been watered down from its original tax break of $15000. According to this bill, a tax credit of $8,000 is being offered to a couple and $4000 to singles interested in buying their first home. However, there are certain conditions attached to the bill.
Conditions:
One of them may likely be that the home should be purchased between April 9, 2008 and April 1, 2009. The bill is said to provide a good push towards home ownership which is currently at one of its ebb. Experts suggest that homes are at their most affordable prices since 1970. Moreover, the appeal generated by the lower mortgage rates is also attracting first time home buyers.
Is this bill useful
An average home owner is far better off than an average home renter. After getting a house for yourself, you get to have a property that will be an important part of your investment portfolio. This will also allow you to purchase some equity, if you and the market are willing in addition to securing more tax benefits. Now is the best time to buy a home, since the effect of downturn has lowered all the rates. After the bill passes, if you decide to become one of the $8000 tax credit home owners you are in for a fair deal. Well for starters, you will have a home to call your own. Secondly, you will not have an actual tax credit. It is more like a zero percent interest loan that has a payback period of 15 years unlike the earlier tax credits which acted more as a burden for your financial sources.
Opposition to the bill
Earlier the tax credit plan was of $15000 but due to lack of support from the republicans it was curtailed down to $8000. The credit is said to provide the buyers with a 10% off up until $15000 on any house’s purchase price. Hypothetically, if 5% of the population bought houses after this bill then around 17.5 million homes would be sold. Multiplying the figure with the tax break the resultant amount involved would be huge. This would take the economy a step further to get out of the recession. It has been reported that the actual population eager to benefit from $8000 would be more than 5% of the first time home owners.
Criticism of the bill
However, the effects of the credit may not turn out to be as ideal as expected. Critics have pointed out that the credit lacks geographic targeting. Here the buyers may use the credit as they please which will lead to more investment in healthier markets instead of the markets where a purchase incentive is desperately needed. Moreover, it is said that the savings generated for the buyer after the credit would be sufficient for him to have an extra cup of coffee at his favorite restaurant, which is not exactly what the congress has in mind.
Leaving the criticisms aside, the entire buzz on the bill surely indicates that the average American is looking forward to becoming a first time home owner.
Second in series of articles covering the 8000 Tax credit for home buyers who are buying their first home.
Not all the information is accurate. You do not have to pay the 8000 back.
Yes you do. You are required to stay in the home fo 36 months. If you move from the property, or sell the property before that time, you have to pay it back.
Grizlb, thanks for your feedback. Could you be more specific. If you can point out, I will update the article.
Thanks
how long does it take to get the money after you refilled?