Frequently Asked Questions: $15,000 home buyer tax credit

Key points about the proposed tax credit:

1) never has to be paid back (unlike the prev. $7,500 credit)
2) limited to primary residences
3) does not come with an income restriction
4) must live at property at least two years
5) applies to condos, houses, foreclosures, new, previously owned
6) credit could be applied to the 2008 tax year?

Here's some good information about the about the Senate version of the economic stimulus package offered by Luke Mullins at the U.S. News & World Report Home Front blog:

Q: I recently bought a home and qualified for the $7,500 new home buyer tax credit. Should this provision become law, would I qualify for it [as] well?

A: The short answer is no, says Rob Dietz, an economist for the National Association of Home Builders. "The effective date of the ... amendment is the date of enactment," Dietz says. "So if you've already completed a purchase, you would not be qualified for the new program."

Q: Isakson's press release reads: "The amendment would sunset the current $7,500 housing tax credit on the date of enactment." What does the term "sunset" mean there?

A: In this context, the term "sunset" means that the $7,500 new home buyer tax credit would be supplanted by the proposed $15,000 credit, which applies to all home purchases -- not just new homes. "If you are operating under the $7,500 [credit], that's the one you [have]," says Joan Kirchner, Sen. Isakson's Deputy Chief of Staff. "Then, from the date of enactment forward, the new one takes over and nobody else gets the old $7,500 [credit]."

Q: What are the odds of this provision becoming law?

A: The $15,000 home-buying provision is a component of the massive -- and increasingly controversial -- economic stimulus package. The House of Representatives has already passed its version of the stimulus bill, and the White House is putting pressure on the Senate to do the same. However, the size of the package -- which now totals more than $900 billion -- has prompted some Republican senators to try and slash provisions to lower the tab. Still, Kirchner argues that the $15,000 tax credit enjoys strong support from the National Association of Realtors and the National Association of Home Builders and will remain in the stimulus bill that is signed into law. "Because of the way that it was adopted -- unanimously, they didn't call a roll call vote because both sides agreed to accept it -- this provision is in," Kirchner says. Scott Talbott, senior vice president of government affairs at the Financial Services Roundtable, also predicted that the amendment would make it into the final package. "It’s a targeted solution that will address housing as well as taxpayers -- both of which need help," he said.

Q: Does this tax credit need to be paid back?

A: Nope. That's a key distinction from the $7,500 first-time home buyer credit, which was "actually a 17-year repayment, which translates into a no-interest loan," Dietz says.

Q: Is there an income limit or any other restrictions on participation?

A: The tax credit would be limited to primary residences and does not come with an income restriction, Kirchner says. "You must occupy [the property] for at least two years as your primary residence," she says. It applies to "any home, meaning a condo, a house, foreclosed, new, [or] previously owned."

Q: Can I take the credit during tax year 2008?

A: Yes, says Chris Cook, a legislative assistant to Sen. Isakson. Even if you buy a home in 2009, the provision would enable you "to file your taxes as if you purchased your home on Dec. 31 of 2008," he says.

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