Tax Break for Homebuyers = $15K

by Alex Stenback on February 5, 2009

The Senate has added tax break for homebuyers to the stimulus bill, according to the New York Times.

 The high points:

  • Tax break is for 10% of the price of the home, up to a maximum of $15,000
  • Expected to put $18.5 billion in the hands of homebuyers
  • All home buyers are eligible
  • Good for new or existing homes

Presumably, there’s still some horse trading to be done before this is real, so the particulars may change, but either way, housing will get a tax-credit based shot in the arm out of the stimulus bill.

Personally, I don’t see this tax credit as a game changer.  Granted, it will help soak up some inventory, but the other fundamentals (tighter credit, awful jobs/economic picture) will not be washed away by a $15K tax credit.   

Those that have already made the decision to buy (and a few fence sitters that will be lured in early) stand to benefit the most. If you are one of those, this is great news. Manna from heaven.

{ 4 comments… read them below or add one }

SteveP February 5, 2009 at 1:45 pm

Do you think that this would also include people that are buying now before the bill is passed? So lets say you bought a house and are closing by March 1st, would you get the credit? Thanks.

Aaron Dickinson - Edina Realty February 5, 2009 at 9:57 pm

Personally I think this is a stupid idea. We don’t need artificial price reductions like this, we need the market to find a bottom on its own. Foreclosures and short sales are already good deals price-wise… it’s the traditional seller that still needs to drop their prices. This just prevents the correction from really bottoming out and leads us to a potential double-bottom once the credit is no longer available. Besides, that’s just way too much money for the government to throw at every home buyer… there’s far better things they could do with that money in my opinion… like make jobs for example.

Alex Stenback February 6, 2009 at 9:07 am

I tend to agree with you. Lets keep the fundamental elements of the real estate commerce functional and accessible. Beyond that, this thing needs to work itself out.

Lets not replace the distorted incentives that caused the bubble with a whole new set of government driven incentives. Only bad things can result.

Alex Stenback February 6, 2009 at 9:18 am

Steve, to answer your question. Hard to say, even the details of the version announced yesterday may change materially. By my reading, if the senate version goes unchanged, it looks like it will only benefit those who buy with the 12 months AFTER.

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