George S. May Business Blog

New home buyer tax credit – $15,000 rebate

The United States Senate just upped the ante on the first time home buyer tax credit from $7,500 to $15,000. The $15,000 rebate known as the new home buyer tax credit, is being offered to those who buy a newly built- or already existing – home.

Yes, there are caveats. There always are.

The tax break will apply to anyone who purchases a new home between 1/1/2009 and 12/31/2009, or basically at any point during the 2009 calendar year. Additionally, it states that the economic stimulus tax credit would go into effect as a credit on the following year’s tax return. That means that for someone buying a house in 2009, they would receive the credit on their 2010 tax returns. The final caveat to the tax break, is that it applies up to 10% of the value of the home, with the maximum amount being $15,000 total. That means that a $150,000 house would get the full credit. Houses costing less get a sliding scale of the tax credit.

It looks to be a pretty good plan by the U.S. Senate. I expect it to definitely promote the purchase of houses, as they have intended it to do so. I believe it will absolutely aid in convincing those people who have been holding back on buying that now is a very advantageous time to make a home purchase. Dangling a tax credit of up to $15,000 for next year’s tax season should prove to be a very tempting offer. Especially because, from what I read, that credit does not have to be paid back!

As more details emerge I will provide updates. In the meantime, feel free to comment with other provisions within the new home buyer credit that you think are pertinent, as well as your predicted effectiveness of the measure.

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