Banks Collapsing… Government Enticing More Risky Mortgages…

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by on September 23, 2008 at 7:42 pm

Looking for logic

I’m all for tax incentives and credits. But aren’t we on the verge of some really rough times? Banks looking for government assistance… All because they never thought about what would happen if the housing market stopped climbing. Solution??? Let’s print some more money and use it as an incentive to anyone who is thinking buying a house might not be a financial possibility. Brilliant!

Not a free lunch

The way it’s written, you have 15 years to pay the money back… Great, an interest free loan. My concern would be that there are some serious compliance issues. I can picture folks e-filing claiming a home credit and running to the bank laughing. How many returns will be filed stating they purchased “1600 Penn Ave, Washington DC”? This is not easily regulated. Refundable credits usually require social security numbers for verification. I thought they learned their lesson with this under Reagan.

I’ll bet this ends up being a free lunch down the line when it isn’t causing the necessary stimulation.

First-time homebuyers should begin planning now to take advantage of a new tax credit included in the recently enacted Housing and Economic Recovery Act of 2008.

Washington, D.C. – infoZine – Available for a limited time only, the credit:

* Applies to home purchases after April 8, 2008, and before July 1, 2009.

* Reduces a taxpayer’s tax bill or increases his or her refund, dollar for dollar.

* Is fully refundable, meaning that the credit will be paid out to eligible taxpayers, even if they owe no tax or the credit is more than the tax that they owe.

However, the credit operates much like an interest-free loan, because it must be repaid over a 15-year period. So, for example, an eligible taxpayer who buys a home today and properly claims the maximum available credit of $7,500 on his or her 2008 federal income tax return must begin repaying the credit by including one-fifteenth of this amount, or $500, as an additional tax on his or her 2010 return.

via Tax Credit to Aid First-time Homebuyers; Must be Repaid Over 15 Years – Kansas City infoZine News.

in IRS Updates

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