Well, our illustrious politicians have done their dastardly deed but does anyone feel comfortable that Congress REALLY knows what they agreed to or whether it will “stimulate” the economy. Many said they weren’t able to read the stimulus package because they received it too late to read the thousands of pages. They’re mostly lawyers who always advise regular citizens to never sign something they haven’t read. Guess that advice doesn’t apply to them.
What took place this past week reminded me of dachshunds. Anyone that has ever owned a doxie knows that when “something un-normal” is happening, they dash around as fast as their little legs will carry them, barking-barking-barking. They know “something” needs to be done, but they’re not sure what. So they bark … and bark …and bark … hoping someone else takes care of the problem.
With doxies, it’s funny. It’s not funny when it’s the politicians.
The two major problems in the economy are the housing industry and the auto industry because they provide so many jobs for a whole host of other businesses. Both sectors need something that acts immediately. Neither industry will or can be fixed until people can stop worrying about whether they’ll lose their jobs. People aren’t going to buy houses or cars if they don’t feel secure about their income. Foreclosures will continue to be a problem if people continue to lose jobs.
Maintaining or creating jobs NOW should have been Congress’ focus.
I heard people say that the best stimulus would have been to divvy up all that money and send it directly BACK to the taxpayers. I don’t know how much money that would give all of us – my little calculator doesn’t do billions/trillions. After all, it’s OUR money. I think Congress forgets that. Imagine what could happen if we each received a check worth several thousands. People could pay their bills, their credit cards, buy cars, buy houses and basically just get some welcome relief. All that spending would actually put money into circulation and build consumer confidence.
Is that premise too simple?
My broker’s, Real Living HER, CEO is Harley Rouda who is also a lawyer. He has sent us several emails this week to keep us informed on the stimulus package and what it will mean for our industry and our clients. Thank goodness as a lawyer he understands all this legalese – we rely on him a lot! His last email included a summary chart of the 1st Time Homebuyer Tax Credit.
- The credit is effective for purchases on or after Jan 1, 2009 and before Dec 1, 2009.
- The amount of the credit is the lesser of 10% of the cost of the home or $8000.
- Any single-family residence (including condos, co-ops, townhouses) that will be used as a principal residence, is eligible.
- Reduces (or can eliminate) income tax liability for the year of purchase. Any unused amount of tax credit refunded to purchaser when tax return is filed.
- Full amount of credit available for individuals with adjusted gross income of no more than $75,000 ($150,000 on joint return). Phases out above those caps ($95,000 and $170,000).
- Available for first-time purchasers only. May not have owned a principal residence in 3 years previous to purchase.
- Purchasers who utilize revenue bond financing can use the credit.
- There is no repayment for purchases on or after Jan 1, 2009 and before Dec 1, 2009.
- If home is sold within 3 years of purchase, the entire amount of credit is recaptured on sale. This applies only to homes purchased in 2009.
Since this tax credit only benefits 1st time buyers, we’re not sure how much effect it will have. Of course, the banks will need to free up the TARP money that was given to them and actually use it to grant mortgages to these 1st time buyers. (Shame on Congress for not making the banks accountable for the money they were given.)
If you have questions on how this tax credit may impact your taxes, you should speak with a tax accountant or CPA.
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