Real Estate Tax Credit – Will it Happen?

President Barack Obama’s massive economic recovery plan passed the Senate today by a vote of 61-37, with only three Republicans voting for the bill. The measure is now on its way to difficult House-Senate negotiations where lawmakers will wrangle about what to cut and what to keep before it’s sent to the president.
The $15,000 home buyers tax credit is raising hopes in the real estate industry which believes it could be just the stimulus needed to stabilize the housing market and get buyers, who have until now been hesitant, to move forward.
A provision included in the Senate version of the bill would provide a tax credit for 10% of the purchase price of a home, up to $15,000.  The measure will still have to win backing from the House which just last week voted to repeal a provision that would require an existing $7,500 tax credit to be repaid over 15 years.  This credit, which has income limits, applied only to first-time home buyers.
The idea behind the broader Senate plan is to attract more home buyers who are currently sitting on the fence but are reluctant to buy because of falling home prices.  The tax credit would be nonrefundable which means that buyers can only claim the credit if they owe income taxes and will be able to claim the credit on two years of tax returns.  There would be no income limits and could be used for primary residences only