The Government’s New Economic Stimulus Plan
The new economic stimulus package allocates $787 billion to boost our multi-trillion dollar economy. Here are some provisions individuals can take advantage of now.
1. Housing help. First time homebuyers can get up to an $8,000 tax credit if they close by November 30, 2009. This credit does NOT have to be paid back if you own the home three years. It phases out for single taxpayers making over $75,000 and for married couples filing jointly making over $150,000 (adjusted gross income). Communities receive $2.0 billion to redevelop abandoned and foreclosed homes. In 20 high-cost areas, the bill restores the $729,750 upper conforming loan limit for Fannie Mae, Freddie Mac and FHA loan guarantee programs.
2. Home improvement tax credits. For money spent to make homes more energy efficient, a 30% tax credit through 2010, up to $1,500.
3. Residential renewable energy tax credits. Dollar caps have been removed on the 30% residential credit for solar thermal, geothermal and small wind upgrades.
4. Income tax credit. This will be up to $400 for individuals earning up to $75,000 and up to $800 for married couples filing jointly with up to $150,000 in income.
5. Alternative Minimum Tax reduction. Exempts from the AMT up to $46,700 of an individual's and $70,950 of a couple's income in 2009.
6. Earned Income Tax Credit. For 2009 and 2010, goes from 40% to 45% of the first $12,570 earned by families with more than three children.
7. Higher education tax credits. For 2009 and 2010, a $2,500 per year tuition tax credit for all four years of college. It's now 40% refundable and covers textbook costs. The credit phases out for individuals making $80,000–$90,000 and couples earning $160,000–$180,000.
8. Hybrid vehicle tax credit. Increased to $7,500 for purchasing a plug-in hybrid vehicle.
9. Help for car buyers. In 2009, anyone purchasing a new vehicle for up to $49,500 can deduct state, local and excise taxes, as well as car loan interes t. This is an above-the-line deduction that can be taken even if you don't itemize. It begins to phase out for single taxpayers making over $125,000 and couples over $250,000.
There are many more programs for individuals, businesses and states, as well as a future foreclosure relief program – let's hope they all work.
… Have a great month! This post information was provided by: Greg Brooks southwest area manager San Diego Mortgage Network (800) 287-8292 x 225 San Diego homes for sale
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Given the ratio to income to sales price in California the foreclosure crisis will be a California problem for many years. Until the recent bubble lending 3 times income was a good yardstick but now it ranges from 6 to 10 times income and this has become the norm. A good example would be the city of Santa Rosa BMR problem that has a cap of 50K income for houses costing 304K using the FHA 3% down program. Low income cannot afford a 300K home; only in California is this type of thinking keep alive by local and state government. In fact the State yesterday wants to give low income families 100% financing for foreclosure homes in the most impacted parts of the state. These homes require extensive rehab which low income citizens do not have and will again provide a new wave of foreclosures in the coming years.
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If you are going to buy a home that you are planning on living in, buy one that you can afford, taxes and insurance and maintenance included. The “asking” price does not tell the whole story, nor does the “adjustable” loan. People paid too much thinking they could flip the house, found no buyer and the adjustable loan was “adjusting”, just like they’d been warned. Of course, no one fore saw the gas prices, the electricity prices, the food prices going through the roof, and all the unemployment.
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Homes will always be unaffordable to the average person in high priced CA as long as government subsidize home owners in the form of mortgage tax deductions, and Fannie Mae bailouts. Remove the interest tax deduction and watch the prices correct 50%. This place a bottom on home prices and increase home ownership than further government meddling. The issue is affordability, not unemployment. Prices are still too high due to government tax policies and bad lending practices.
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