$8,000 tax credit and other housing related stimulus provisions
Passed by both houses of Congress and expected to be signed by the president, The $787 billion American Recovery and Reinvestment Act of 2009 (aka stimulus bill) has several provisions aimed towards real estate and housing. Here’s a brief overview.
Tax Credit
The bill includes several modifications to the current $7,500 first-time homebuyers credit, which includes:
- Increases the credit to $8,000.
- Removes the pay back requirement, previously it was a 15 year zero interest loan.
- Has a recapture component if the home is resold within three years
- Is retroactive to January 1, 2009 and extends through November 30, 2009.
Tax payers who purchase a home this year can apply the credit to their 2008 tax return.
Comparison chart of the existing tax credit and the new $8,000 tax credit.
Higher Loan Limits
Another provision of the bill reinstates the higher loan limits that were available last year for FHA, Fannie Mae and Freddie Mac. For King, Pierce and Snohomish counties the loan limit is expected to increase to its 2008 level of $567,500.
Neighborhood stabilization
The bill provides for an additional $2 billion for the Neighborhood Stabilization Program. The funds can be used to purchase, manage, repair and resell foreclosed and abandoned properties. The homes are to be used to assist people earning less than 120% of the area median income.
Energy efficiency credits
- Through 2010, homeowners who make energy efficient improvements (purchase of a new furnace, windows and insulation) can claim a 30% tax credit (up from 10%) with a $1,500 cap.
- $5 billion weatherization assistance for low-income households.
- $2 billion for Section 8 efficiency efforts.
