Congress recently signed the 2009 Stimulus Plan, but what does it really mean and how does it affect you and the real estate market? After some reading and research, I found out that there are four primary sections of the Stimulus Plan that affect real estate.
For first-time home buyers, who purchase a home this year (between January 1, 2009 and December 1, 2009), it means that you'll receive more of a tax credit than the first-time home buyers in 2008. You'll receive a tax credit of $8,000 versus the $7,500 in 2008. Most of the qualification requirements are still the same, like the income limitations [$75,000 for single tax payers and $150,000 for married tax payers (see further notes below)].
The credit is still "refundable," which just means that if you owe the IRS less than $8,000 you'll receive the difference between the amount you owe and the credit. A difference between this year's credit and the previous year is that you wouldn't have to repay the credit back.
In 2008, a first-time home buyer would have had to pay the credit back over a 15 year period. This year's Stimulus Plan allows the buyer to not have to repay that credit as long as the property remains he primary residence for at least 3 years.
The homeowners who have made energy efficient home improvements this year, will receive 30% of the total cost of the improvements not exceeding $1,500. Energy efficient improvements include energy efficient exterior doors and windows, insulation, heat pumps, furnaces, central A/C and water heaters.FHA-insured reverse mortgage limits have also increased.
$417,000 was the loan limit for FHA-insured reverse mortgages across the country, but that was changed due to the Stimulus Plan. The loan limit was increased to $625,500 country-wide.
In 2008 FHA and Conforming Loan Limits were reduced to $625,500 from a limit of $729,750. The Stimulus Plan restores that limit to $729,750, making higher cost homes more affordable.