New Economic Stimulus Bill

The economic stimulus bill that was just signed by President Obama should be pretty sweet for many people.  Of course we saw in the paper earlier this week that it could help pay for *finally* widening Waldron Road.

To be eligible, projects must be what Obama calls “shovel-ready.” That means they must have plans in place and contracts ready to be signed. Most of the money would have to be spent within 18 months to get architects, engineers, plumbers, electricians and construction crews and others on the job quickly.

Erwin said the city is putting the finishing touches on engineering work and is about 75 percent complete with right-of-way acquisition. Eager to get a share of the stimulus money, the Board of Mayor and Aldermen will soon begin condemnation proceedings to wrap up the process.

I sincerely hope this happens – the sooner the better.

However, the part I’m watching carefully as someone in the real estate business is the $8000 first-time home-buyer tax credit.  As I understand it, if you’ve never owned a home – or haven’t owned one in the last three years – and you buy from January 1 – December 31, 2009, you will be eligible for an $8000 tax credit.  This means that if you owe $10,000 to the IRS, you’ll only have to pay $2000.  If you owe $0 to the IRS, you’ll GET BACK $8000.

What makes a good thing even better?  You don’t have to pay it back.  Hopefully!  Here’ s what CNN has to say about it.

To qualify for the credit, the purchase must be made between Jan. 1, 2009 and Nov. 30, 2009. Buyers may not have owned a home for the past three years to qualify as “first time” buyer. They must also live in the house for at least three years, or they will be obligated to pay back the credit.

Additionally, there are income restrictions: To qualify, buyers must make less than $75,000 for singles or $150,000 for couples. (Higher-income buyers may receive a partial credit.)

Be careful to read the fine print – a friend of mine recently bought the family home from his mother and thought he’d get the $7500 from last year’s offer.  When he filed his taxes, he learned buying from a family member invalidated his claim.

I am ready, willing, and able to serve you… buyers of LaVergne!  LOL…  (but seriously. call me!)  :)

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23 Responses

  1. In regards to Waldron, could that project truly be defined as “shovel-ready?” Last I heard, the city still has not completed the process or aquiring the neccessary right-of-ways. It is so embarrassing that it is taking so long.

    So the city has $5.5mil in the bank, and the project would have cost $4.3mil in 2003. Is it just me or does something seem fishy about this? The project could have been done and paid for with interest if they would have started in 03.

    As for the new home buyer credit, why would they limit the upper income limits from receiving the credit? Isn’t the purpose of the credit to stimulate the economy? Last time I checked expensive homes generated more tax revenues, why would the government attempt to DISCOURAGE higher tax revenues?

  2. Michael, let me ask you a very serious question. Do you believe in Jesus? Do you really, truly believe in the words that Jesus spoke and try to live like He did?

  3. Ivy, good question. The answer is yes, you probably knew that before you asked the question :)

    If we are going to have a comment of “biblical proportions” I hope you read Matthew 7:1-5 before responding.

  4. Michael: short answer, The rich can afford it on their own.

    Little bit longer answer: to get more lower income people to buy houses in communities that are faltering, and attempt to not fund a 1 million dollar house. Yes tax revenue is important, but you have to give people something to work with in order to keep the economy going. The people at the higher ends of the income spectrum are the ones that can generally afford to buy things without a huge amount of assistance. That means that assistance should be reserved for things that need it.

  5. […] This Is LaVergne However, the part I’m watching carefully as someone in the real estate business is the $8000 first-time home-buyer tax credit.  As I understand it, if you’ve never owned a home – or haven’t owned one in the last three years – and you buy from January 1 – December 31, 2009, you will be eligible for an $8000 tax credit.  This means that if you owe $10,000 to the IRS, you’ll only have to pay $2000.  If you owe $0 to the IRS, you’ll GET BACK $8000. […]

  6. Polerin, I can’t respond to your straw-man argument. My issue is if you want to “Stimulate” the economy, why not provide a tax break to everyone? Do you really think that our economy is not dependent on “rich” people spending their money? You say they can afford it, how do you know? If “rich” people buy Chevy’s instead of cadillacs, will that not hurt the mechanics, office administrators, and sales staff at Crest Cadillac who are not “rich?”

  7. Let me try this again getting back to the original issue. Is the bill intended to stimulate the economy? If so, why limit it based on a person’s income? I have not yet gotten an answer to that question.

    If someone buy a $1mil home and pays $10,000 in taxes, it cost the government a net of $2,000.

    If 10 people buy $100,000 homes and they each pay $1,000 in taxes, it cost the government a net of $70,000.

    HOWEVER, the 10 people would have the greater incentive because $8,000 = 8% of their home value, the 1 person’s $1million = 0.8% of their home value.

    I just don’t see why we wouldn’t offer this to everyone? It’s not as great of an inventive to someone with a large income, but it’s also not as great of an expense. It may be enough to help close some of these bigger sales.

  8. Once again I agree with Michael. If the stated goal is to inject money into the economy it seems like the best way to accomplish that would be to craft incentives that appeal to those with, you know, money? Instead the government is tempting those that are least able to afford a new home, and the loan that will accompany it. So the idea is get lower income folks to take out a mortgage in uncertain economic conditions. I mean what could possibly go wrong!? Say, how did this whole recession thing start again?

  9. where was this package when i needed it since i lost my home and there was nothing i could do to save it? oh well. i have lost my home, my car and my job but i am still breathing and that it all that matters. apparently god still has my back!!!!!

  10. Sorry to hear you lost your home, job and car. You are right that this stimulus will not help you. Unfortunately I fear as long as the government keeps trying to come to the rescue, this economy will not recover.

    “We’re from the government and we’re here to help!”

  11. Michael,

    As a “flaming independent”, I do support some things in the stimulus bill (namely the wind energy initiatives)

    But this 1st time homebuyer part is really ticking me off. I have been playing the game by all the rules (mortgage paid on time, etc), yet I get NO help. Even if I can re-fi at a lower rate, I STILL have to come up with a much larger downpayment now than before this all started, thus I cannot even take advantage of the so-called advantage.

    But you know what ticks me off even MORE?

    Why aren’t the Republicans being more vocal in their opposition to the stimulus bill?!!!!!!

    Please don’t say “the mainstream media won’t publicize the Republican viewpoint” because that won’t fly with me as long as Rush Limbaugh, Sean Hannity and FoxNews are around. They alone beat all the other “networks” BY FAR in listenership/viewership (with the possible exception of CNN) and because of that should be considered part of “the mainstream media”.

    I have been listening to Rush & Sean as well as FoxNews lately and all they seem to be saying is how bad the stimulus package will be for the economy, yet they are failing to bring anything to the table themselves as an alternative (other than more tax cuts).

    Even if they DO have a better alternative, the Republicans are doing a TERRIBLE job of selling it to the American people.

    The Republicans better find a better way to communicate and deliver their message or they will have a very long road back to power, if they don’t disappear altogether.

    Get your ____ together GOP!!!!!!

  12. thanks michael. i appreciate it.

  13. My interest rate is currently 6.8% and everyone that i talk to is telling me that I should re-fi my house, the interest rates are in the low 5’s. But, because the townhouses that are in my neighborhood are selling for 10-20% less than what I paid in 2006, I can’t

    Part of me says I can’t complain, I’m in a better situation than other people. And I am blessed that God is stretching my dollar to the max. But, it should would be nice to lower my mortgage.

  14. No judgments at all, Michael, I was trying to figure out which direction I needed to go in my prayers for you.

  15. Jennifer – I talked with the lender who refinanced my house several years ago (and the one I recommend) about your situation. He said given your interest rate of 6.8% and the year you purchased your home, there’s a very good chance you got an FHA loan. If this is the case, it is very possible to refinance with no appraisal required through a streamline loan. FHA is pretty fantastic in that if it’s a better deal for the borrower, FHA is on Board. You might want to call Scott Matuk at 896-4141… he’s with First Community Mortgage in Murfreesboro.

  16. Ivy, thanks for praying for me!

  17. The original plan called for a $15,000 tax break regardless of the buyers status (first time,forth time,etc).Also,this would be a rebate that would not be repaid.I would concur that amount is a bit steep.However,let us look at what this part of the stimulus package is trying to create.We are trying to get people off the sidelines and back into the housing market.Many are understandably nervous and confidence has been lost in all regions of the country.What use to be the most important purchase most people in this country would make in their lifetimes has become a real nail biting ritual.A prospective home buyer must worry about the possibility of buying a depreciating asset as opposed to an appreciating one.Sure,there are some people who are in a more advantageous position to buy a home and reap the awards of a nice rebate.This is exactly what must happen to get the real estate industry and construction industry out of the doldrums.When someone builds a new home,they are employing about fifty people at some point during the building process.I would have liked to see this part of the stimulus package capped at 10,000 per any home buyer.I do not believe we have seen the end of concessions,rebates,and interest rate adjustments for home buyers as an attempt to steer things back to prosperity.

  18. This has nothing to do with La Vergne, but goes back to the stimulus bill and the impact (or lack thereof) on the cause of the recession – Housing. An article on CNBC.com about how eliminating tax benefits to the “rich” will hurt us all:

    http://www.cnbc.com/id/29409581

    “You may think the increase in taxes doesn’t sound like much and that the wealthy can afford it. But the President has made it clear it doesn’t end there. This is just the beginning of his efforts to go after the wealthy. And those efforts likely won’t raise nearly as much money as he thinks.”

  19. […] this morning for an interview.  She read my post about the first-time home buyer tax credit on the This is LaVergne blog and wanted feature a story about […]

  20. […] our post from last week about the New Economic Stimulus Bill?  Ms. Lambert was doing a story on my favorite part – the first-time homebuyers’ $8000 […]

  21. […] our post from last week about the New Economic Stimulus Bill?  Ms. Lambert was doing a story on my favorite part – the first-time homebuyers’ $8000 […]

  22. I ORIGINALLY BOUGHT MY HOME NOV 07. I REFINANCED IN MAR 2009.

    AM I ELIGIBLE TO RECEIVE THE $8000.00 STIMULUS MONEY.

  23. Unfortunately, to get the $8000 tax credit, you can’t have owned a home for the last three years. To qualify for the $6500 tax credit, you must have owned a home for five consecutive in the last eight years. It doesn’t sound like you’re eligible.

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