We have a little bit more news about the efforts to revise and extend the Homebuyer tax credit. Let’s take a look at the Bill as it stands now and translate it into English. My notes will appear after each section and is indicated as NOTE:
You can track the progress of this BILL at GovTrack
To amend the Internal Revenue Code of 1986 to expand and extend the first-time homebuyer credit.
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘Home Ownership Moves the Economy (HOME) Act of 2009’.
SEC. 2. MODIFICATION OF FIRST-TIME HOMEBUYER CREDIT.
(a) Expansion of Credit to All Homebuyers- Subsection (a) of section 36 of the Internal Revenue Code of 1986 is amended by striking ‘who is a first-time homebuyer of a principal residence’ and inserting ‘who purchases a principal residence’.
NOTE (a): This confirms the rumors that the “first time” home buyer restriction is being removed. The definition of a first time home buyer under the current program states that you cannot have owned a primary residence in the past 3 years. This credit still only applies to those buying a primary residence.
(b) Extension of Credit- Subsection (h) of section 36 of such Code is amended by striking ‘December 1, 2009’ and inserting ‘January 1, 2011’.
NOTE (b): Extends the expiration of the homebuyer credit until December 31st, 2010
(c) Repeal of Limitation Based on Modified Adjusted Gross Income-
(1) IN GENERAL- Subsection (b) of section 36 of such Code is amended by striking paragraph (2).
(2) CONFORMING AMENDMENTS- Subsection (b) of such Code, as amended by paragraph (1), is amended–
(A) by redesignating paragraph (1) as subsection (b),
(B) in subsection (b), as so redesignated, by redesignating subparagraphs (A), (B), and (C) as paragraphs (1), (2), and (3), respectively, and
(C) in paragraph (2), as redesignated by subparagraph (B) of this paragraph, by striking ‘subparagraph (A)’ and inserting ‘paragraph (1)’.
NOTE (c): Removes the income restrictions for home buyers. The current guidelines read that as a single tax payer, your income cannot exceed $75,000 to receive the full tax credit. A reduced credit may be claimed up to the phase out income limit of $95,000. For married filing joint, the income guidelines are $150,000 phasing out at $195,000.
(d) Extension of Waiver of Recapture- Subparagraph (D) of section 36(f)(4) of such Code is amended–
(1) by striking ‘before December 1, 2009’ and inserting ‘before January 1, 2011’, and
(2) in the heading by striking ‘FOR PURCHASES IN 2009’.
NOTE (d): This Act proposes that the Recapture of the credit be waived as it was with the $8,000. Plain English: You don’t have to pay it back.
(e) Conforming Amendments-
(1) Subsection (c) of section 36 of such Code is amended by striking paragraph (1) and by redesignating paragraphs (2), (3), (4), and (5) as paragraphs (1), (2), (3), and (4), respectively.
(2) Section 36 of such Code is amended by striking ‘first-time homebuyer credit’ in the heading and inserting ‘home purchase credit’.
(3) The table of sections for subpart C of part IV of subchapter A of chapter 1 of such Code is amended by striking the item relating to section 36 and inserting the following new item:
‘Sec. 36. Home purchase credit.’.
(4) Subparagraph (W) of section 26(b)(2) of such Code is amended by striking ‘homebuyer credit’ and inserting ‘home purchase credit’.
(f) Effective Date- The amendments made by this section shall take effect on the date of the enactment of this Act.
NOTE: Finally, although I am having trouble documenting or sourcing anything concrete to support the rumors, I am hearing that the credit is going to be increased to $15,000 and possibly paid out over two consecutive years at $7,500 a year.
As the expiration of the current First Time Homebuyer Tax Credit creeps up, we’ll keep an eye on this and pass along any news we find.