Housing & Economic Recovery Act Passes Congress

HR 3221 has passed both houses and Pres. Bush says he will sign it.

Text is at:

formatting link
JCT explanation of Division C tax provisions is at:
formatting link
Senate Summary of other provisions is at:
formatting link

Reply to
Alan
Loading thread data ...

formatting link
>

The JCT explanation describes a version of the bill that differs slightly from the final relating to the First-Time Homebuyer Credit.

The amount of the credit identified by the JCT is the lesser of

10% of purchase price or $7500 ($3750 if MFS). The final bill changed $7500 to $8000 and $3750 to $4000.

JCT refers to a provision to allow 1Q09 purchases to be treated as if purchased in 2008 to allow a 2008 tax credit. This provision was removed from the final version.

Reply to
Alan

"Alan" wrote

Did the 15 year payback survive? If so, does anyone believe that in 2012 a new client will tell you that they owe an extra $500 because in 08 or 09 they bought a house and took the credit?

I suspect this is another "economic stimulus" for the guy who sells paper and envelopes to the IRS.

Reply to
Paul Thomas

You add 6.667% of the credit to your tax bill in each year for 15 years starting in the second taxable year after the credit is taken. There is also recapture if the home is disposed of or ceases to be your principal residence. There are also rules for divorces, involuntary conversions and situations where recapture exceeds gain on sale. And naturally, the credit phases out when your income gets too high.

As for IRS tracking recapture... I see no reason why their computers can't look for the 6.667% add back in future years for each taxpayer that claims the credit in 2008 and 2009.

Reply to
Alan

Likewise they can, upon divorce of a joint return filer, track each ex spouse for 3.3335%?

ChEAr$, Harlan Lunsford, EA n LA

Reply to
Harlan Lunsford

Ask me again in 2011.

Reply to
Alan

formatting link
>>

I lost track of the concurrences to the amendments to the amendments of the amendments (Resolving differences -- Senate actions: Senate agreed to the motion to concur in House amendment to Senate amendment to House amendments to Senate amendment to the bill by Yea-Nay Vote. 72 - 13.).

When all was said and done, the final version conforms to the JCT explanation. $3750/$7500 and the election to treat 2009 purchases as a 2008 purchase for purposes of the credit.

Reply to
Alan

Except a 2009 purchase must still be treated as a 2009 purchase for the purpose of calculaing if this is a first home purchase.

A "first home" for this credit (more like a loan, since it has to be paid back) generaly follows the first home exception for a section 72 exclusion from IRA early distribution tax, except three years is used for this new credit instead of two years.

Reply to
Arthur Kamlet

Did you mean 1H09?

Reply to
Arthur Kamlet

A first home requires no present ownership interest in a principal residence during the 3-year period ending on the date of the purchase of the new principal residence.

Reply to
Alan

formatting link
>>>>

The first time homebuyer credit is available for a principal residence purchased on or after April 9, 2008, and before July 1,

2009.

Any home purchased in 2009, but no later then June 30, 2009 that meets the definition of a first time home, can be treated at the election of the taxpayer as if it was bought on 12/31/08 ONLY for purposes of calculating and applying the credit in 2008.

Reply to
Alan

BeanSmart website is not affiliated with any of the manufacturers or service providers discussed here. All logos and trade names are the property of their respective owners.