The Isakson/Lieberman Amendment
News out of our nation’s capital is providing perspective buyers with reason to celebrate and look ahead in the housing market. We have all heard of the “American Recovery and Reinvestment Act” that President Obama wants enacted immediately. An amendment to benefit buyers of primary residences was introduced by Senator Isakson (R-GA) and Senator Lieberman (ID-CT).
Comments from Senator Lieberman, “The rapid decline in housing prices lies at the heart of the economic crisis.” “Real economic growth will not resume until housing values stabilize and American families once again have faith and confidence that the most valuable asset they own – their home – is safe and secure. This kind of credit could repay dividends many times over by increasing housing values, creating construction jobs, and generating state and federal tax revenue.”
The amendment was met with bipartisan support and was approved. The important provision in the amendment was the establishment of up to a $15,000 tax credit for buyer’s purchasing their primary residence.
How Does It Work?
The calculation for how to determine how much your tax credit would be is performed in this manner. Your will get a tax credit for 10% of the purchase price of the residence up to a maximum of $15,000. One of the nice provisions of the amendment is that the tax payer may choose to take the credit all in the first year or it can be split between two (2) years. One very positive feature, as opposed to the First Time Buyer Tax Credit of last year, is that this tax credit does not have to be repaid.
What Is The Timeframe?
Upon enactment of the legislation a buyer will have one year in which to complete their purchase. This sounds like a long time but in reality now is the time to start looking. The housing inventory is at a peak and your best selection for that home that meets your exact requirements may be right now.
What Are The Drawbacks?
The only drawback or downside to this amendment is that if the residence is sold or is not utilized as the primary residence in the first two years, the tax credit must be repaid. There are of course circumstances where this repayment would not apply.