My Take On The $15,000 Tax Credit:

Imagine one relatively well off and secure married couple with a bought and paid for primary residence. The way I understand it they aren't eligible for this tax credit.

But say the wife buys a $150,000 house as HER primary residence. She gets the $15,000 tax credit, effectively cutting the price to $135,000. She (they) hold onto the house for a year of so, maybe even moving enough clothes etc into the house to legally "justify" this house as her primary residence, then sell it to someone else doing the same thing.

Just seems like a way to give a $15,000 tax break to the already comfortable to me.

We know food stamps stimulate the economy because they free up wages of people at the bottom, pay the wages of grocery store workers, stimulate production of groceries, pay for people who have to transport groceries from point A to B, people involved in the making of them, etc....It sets off a large chain of production (every dollar spent on food stamps injects $1.60 into the economy).

But with this, a house is bought. Will the previous owners have money in their pockets, or the banks? What further production is stimulated when an existing home is bought in a market with massive amounts of inventory (the market demand will not stimulate production of more homes). I see how this can be helpful to certain situations, but dollar for dollar, how much stimulus is this truly creating?

Unless,I suppose, it puts a few more realtors back to work...

Homes are selling in fine neighborhoods at such a price that the building of a new home is not justified by the profits.

It will take a long time, years, if buying picked up, for construction to pick up. The only construction right now, from people I know in the field, is government jobs.

What about people who sell curtains, lights, carpet, painters, masons, furnaces, etc.? What about their jobs? What about home inspectors, appraisers....

of earlier this decade. By stimulating housing and mortgages, they hid the fact that the manufacturing sector was completely decimated. Unfortunately, this exacerbated the problem when the credit dried up and the securities went bad.

However lots of jobs are dependent on normal home sales.

The banking collapse came because they orchestrated a "vibrant" economy at the hopes of covering up the mess in America. That new vibrant economy was built on building and selling homes, and the mortgages that financed them. Homeownership and debt skyrocketed as we pretended the American economy was not distressed. It was unnatural.

You can't really outsource painting and electrical work.

That is of course if it's their primary residence.

I don't know. Not everything is a scam by the rich. I think some people that would like to buy a home in the $100K range and are tired of paying rent to a landlord may find this helpful.

Like your plan though. I wonder if we can buy a duplex, with me getting 15k off of one side and my S.O. on the other, and quickly turn it into a rental! I need some good investments.

Most duplexes are sold as one - but it should apply.

Unless they allow it for all purchases. Why is it so hard to see that getting 10% off the purchase of a home up to $150,000 would benefit a lot of people?

You get 10% of the sales price of the home (up to $15,000) off your taxable income.

we bought our home three years ago and now is worth less, so we are upside down but paying a high mortgage. We have been paying it. Is this 15K for us home owners?

It applies to the purchase of a principal residence.

our mortage is reduced to the actual current value of the house...

Basically, a deduction is when you deduct it from your taxable income. A credit is one of those things you add in later on in the 1040, where you would claim that, if you bought a house in 2009, you paid $15,000 (on a $150,000 home). You would then likely get a much larger refund, which doesn't need to be paid back, as I understand it.

If you owe taxes, you take the credit and keep whts left over. If not - you get the rebate amount.

but the buyer must stay in the home for 24 months.

It does not benefit a lot of people. It benefits those below the median income almost not at all, and it provides larger benefits to those with larger incomes. Are we supposed to be idiots and think its okay for people making over $100,000 a year to get huge tax breaks, but it's okay as long as some people making $60,000 a year get some benefit, and it doesn't matter if those making less than $40,000 a year (40% of US households) receive NO benefit from this proposal. That's okay, eh, it's still a good proposal.

Not from where I sit.

Edit: Except I just calculated the income taxes for a family of four making $60,000 a year. It is $2,576. So their maximum benefit from this credit is $5,152 (since it can be spread over two years). You need to make more money to get a larger benefit. Even at $80,000 you only get 74.25% of the credit, assuming you don't itemize or make contributions to an IRA or 401K, in which case you would get less benefit from the credit.

for the past 3 years.

You did nothing more than manufacture a completely illogical and unlikely scenario in order to support your point of view, while completing ignoring the real and prevalent reasons for its existence.

I own my home. Always have. I have never been able to take advantage of ANY homeowner tax incentives because I don't carry a mortgage.

This $15K tax credit is meaningless to me.

What I really need is a job, not tax credits.

a month now and still looking. :eyes:

If it helped what ever industry you are in it wouldn't be meaningless. Hopefully there is something in the recovery program that will either directly or indirectly help you.

maybe 5. Otherwise, you get hit with capital gains tax if the property appreciates in value. :)

dg

Besides the secondary effect that a boost to the housing market will have on furniture and applicance manufacturers, and on carpenters, painters, etc that might be hired to do repairs on older homes before the new owners move in, I think that even a slight positive direction in the housing market will have an effect on people's attitudes... sort of a "finally, things are starting to change" thing, something to make people feel like they're not being ridiculous to hope that things will get better.

How long has it been since we've seen a single positive economic headline? Wouldn't it be fantastic to see "Home sales up last month" for a change?

There's a lot more people out there that can barely afford to buy a house than the people that can pull off the idiotic scam you proposed.

And wasn't that part of the problem to begin with?