$8,000 Tax Credit Details: Update

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  1

  DesireeP

  10/29/09 | Report as spam

  RE: $8,000 Tax Credit Details: Update

  Hi Ilyce,
  
  Thank you for the detailed information. It's interesting that the amendment now includes anti-fraud language. I suppose you can never be too sure that folks are going take advantage of the tax credit appropriately!
  
  

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  2

  Ilyce Glink

  10/29/09 | Report as spam

  RE: $8,000 Tax Credit Details: Update

  @DesireeP
  
  With the IRS claiming as many as 100,000 of these tax credit applications are fraudulent, Senators were sensitive to requests to make the legislation as fraud-proof as possible.
  
  But given the IRS's antique computer system, I'm sure plenty of fraudulent claims will slip through.
  
  Thanks for your comment.
  

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  3

  SemperFiLion

  10/29/09 | Report as spam

  RE: $8,000 Tax Credit Details: Update

  Concerning the income limitations, is it clear whether the increase will only apply to credits claimed for purchases between Dec 1 and April 30? Seems goofy if that is the case in that it would encourage certain buyers to wait. My parents purchased a home earlier this year and the only qualification they may not meet is the income limitation. They would certainly meet it if the effective date of the increase was retroactive to Jan 1, 09. Thanks for any information about that you can provide.

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  4

  Ilyce Glink

  10/29/09 | Report as spam

  RE: $8,000 Tax Credit Details: Update

  @semperfilion:
  
  All of the new terms and conditions for the extension and expansion of the tax credit begin as of December 1, 2009. It's as if the old tax credit sunsets and a new tax credit starts.
  
  This old/new thing is what made so many folks furious who stretched to close at the end of 2008 and then found out if they waited two more days (til Jan 2, 2009) to close, they could have had a tax credit of $8,000 that didn't need to be repaid versus the $7,500 that they got that must be repaid in $500 increments over 15 years.
  
  Hope this helps.

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  5

  Heather @...

  10/29/09 | Report as spam

  RE: $8,000 Tax Credit Details: Update

  Thanks for following this debate on The Hill Ilyce -- I'm personally disappointed that they didn't include a phase out of the credit. With the expansion of American's eligible and April 30 cliff, I worry that it may exacerbate home price instability as of May 1. I look forward to your continued coverage.

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  6

  Ilyce Glink

  10/29/09 | Report as spam

  RE: $8,000 Tax Credit Details: Update

  @heather:
  
  At some point, we're going to have to take the U.S. Housing Market off life support. May 1, 2009 is as good a day as any.
  
  Thanks for your comment. Stay tuned.

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  7

  bob13jr

  10/29/09 | Report as spam

  RE: $8,000 Tax Credit Details: Update

  It is unforunate for many like myself who fall into the move up category, but have somehow managed to squeek by without the credit after buying a new home this past summer. Its just too bad they waited until now to see that it would have been better to include everyone purchasing a home to really get things moving. The whole point of this is to get people the money to put back into the economy whether it be by buying new things needed for their house such as paint, washer and dryer, new carpet. All of which I and many people have had to try to do on our own. Great that they have finally done this, but too bad for many of us.

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  8

  Ilyce Glink

  10/30/09 | Report as spam

  RE: $8,000 Tax Credit Details: Update

  @bob13jr:
  
  I wrote a post about how most of the folks who used the tax credit would have bought anyway - they might have just purchased their home next year, in 2010, or 2011. In effect, the tax credit has pushed up a ton of home sales into 2009 that would have happened later.
  
  One estimate looked at how many buyers really needed the tax credit in order to close and after doing some calculations discovered that it might actually cost $43,000 per first-time buyer rather than $8,000.
  
  But the point is well made: You bought your home anyway - you didn't need the credit. And while that should feel like a point of pride, I agree that most buyers just wind up feeling cheated.
  
  Thanks for your comment.

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  9

  time111

  10/30/09 | Report as spam

  RE: $8,000 Tax Credit Details: Update

  Yes, the tax credit will help stabilize real estate prices, but
  at a high expense. It is worth though, because it impacts the
  stock market. It has become much more volatile recently.
  
  Long term, the stock market should move higher. But short
  term is likely going lower. But how can an investor figure out
  the trends and be able to profit from them? After all, the
  "buy and hold" easy strategy is dead.
  
  I believe the answer is through stock market timing signals.
  
  Consider http://invetrics.com
  
  Its daily DJIA index trading signal is up a respectable 65% for
  the year (as of October 29, 2009) and it is free of charge for
  individual investors.

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  chalucky

  10/31/09 | Report as spam

  RE: $8,000 Tax Credit Details: Update

  No silly, supply and demand as well as the availablity of fiancing to owner-occupants as well as investors will help stabilize RE prices. A non-targeted expensive, fraud ridden
  program that costs all of us is, frankly, incredibly wasteful.
  Borrows future buyers and bring them forward a few months,
  then you get an inevitable trough (see cash for clunkers debacle). Perhaps I could go for program that targets
  certain markets (Cleveland, Detroit), but I see no reason to pay taxeds to subsidize someones new condo in Boston or D.C.>>>Charles
  

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  Ilyce Glink

  11/01/09 | Report as spam

  RE: $8,000 Tax Credit Details: Update

  @Chalucky:
  
  Supply and demand. It always comes back to Econ 101.
  
  Thanks for your insight. Ilyce

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  12

  time111

  11/01/09 | Report as spam

  RE: $8,000 Tax Credit Details: Update

  But in the end, we'll all have to pay for it. If the government
  gives no subsidies to get the RE market to start stabilizing,
  then RE prices keep moving lower.
  
  This means more bank failures, more credit defaults, AND
  LOWER STOCK PRICES.
  
  The latter is very important, because many people's
  retirement money is still locked in to 401Ks and pension plans
  with investments in stocks.
  
  With their retirement nest egg going lower, they'll need to
  keep working into their 60s and 70s, rather than retiring.

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  Ilyce Glink

  11/02/09 | Report as spam

  RE: $8,000 Tax Credit Details: Update

  @Time111:
  
  There isn't enough money to keep propping up the real estate market and everything else forever. At some point in time, you have to just work through it.
  
  I suppose you could just keep printing money, as the government has been doing, but then you'll certainly end up with hyper-inflation, which would be bad for all of the financial categories you mentioned.
  
  Trust me - my 401k is down, too. I'm very sensitive to how long folks will have to work. But my feeling is that we're not done taking our medicine.
  
  Thanks for your comment.

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  Ilyce Glink

  11/10/09 | Report as spam

  RE: $8,000 Tax Credit Details: Update

  UPDATE:
  
  Just wanted everyone to know that the tax act allowed trade-up buyers to start making their purchases and collecting the tax credit as of November 6, 2009, when the bill was signed into law.
  
  This was a last-minute change I wanted you to be aware of when making your closing plans.