Stimulus Act offers provisions for real estate industry
By Dale Carlton
After fixing a cup of coffee and settling into my most comfortable chair, I mentally prepared for my reading of the 1000+ page Stimulus Act. I was excited to be searching for real estate-related proponents of the new Act, and with so many pages I had no doubt there was plenty to discover. Here is what I uncovered:
First-time homebuyer tax credit: Much discussion and a written attempt by the Senate to install a $15,000 no income limit tax credit failed to make it to the final version. However, there is much to be realized from the revisions of the 2007 version of the tax credit. The changes include: an increase in the credit from $7,500 to $8,000; an extension of the availability timeline to Dec. 1, 2009; no repayment required if the property is kept for at least three years; and, the “no repayment” provision is retroactive to Jan. 1, 2009. Provisions that remain the same: income limits of $75,000/$150,000 Modified Adjusted Gross Income (MAGI) remain in place with a $20,000 phase-out over the limits; any unused amount of the credit is refundable; credit may be taken on unfiled 2008 tax returns for properties purchased in 2009; buyer or spouse cannot have owned a property within three years of the purchase; and it may apply to principle residence only.
Tax credits and grants for energy efficient housing: The Act contains multiple provisions to promote green energy and energy savings including: A provision allowing $6 billion in energy efficiency and conservation grants to local and state governments; $5 billion for low income households to receive weatherization assistance; $5 billion to update the nation’s electric grid and install energy saving smart meters on homes; $2 billion for efficiency efforts toward Section 8 federally assisted housing; and an increase from 10 percent to 30 percent for purchases of energy efficient new furnaces, insulation and windows.
Loan limits for FHA, Fannie Mae and Freddie Mac: The Act reinstates the 2008 loan limits which are equal to the greater of 125 percent of the median home of the local area or $271,050 for FHA and $417,000 for Fannie Mae and Freddie Mac. There is also an overall maximum cap of $729,750.
Tax-exempt housing bonds: Financial institutions will be given a greater opportunity to purchase both local and state bonds which will have tax exempt interest during 2009 and 2010. Also, the Alternative Minimum Tax will not apply to these bonds.
Low income housing grants: A provision of the Act will allow states to exchange 2009 low-income tax credits for Treasury grants for the purpose of building, financing, or rehabilitating low-income housing.
USDA rural housing: $500 million in the Act will provide additional funding to existing rural housing programs. This could provide funding for as many as 192,000 homeowners.
Neighborhood Stabilization Program (NSP): $2 billion will be provided as additional funding for the purchasing, managing, repairing and reselling of foreclosed and abandoned properties. The fund is intended to stabilize neighborhoods that have been highly affected by numerous foreclosures. The use of the funds mandates certain requirements of who can qualify for the purchase of these homes.
Many other provisions of the Act will lead to stimulus in the real estate profession. I have listed only a small portion of the $787,000,000,000 (I had to write it out just one time to see how it really looks) in funds available in the new Act. Now for the easy part: go tell the general public what is available to them. Most people will never be stimulated unless you educate them of the possibilities.
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