Inside Congress's housing repair kit
The Boston Globe - July 31, 2008
The sweeping housing legislation signed yesterday by President Bush provides a tax credit for first-time home buyers, higher mortgage allowances for expensive markets such as Boston, property tax breaks, and a variety of other benefits.
Although the main thrust of the legislation was to shore up the nation's primary mortgage providers, Freddie Mac and Fannie Mae, and stem the onslaught of foreclosures, the new law has numerous tax breaks and incentives for homeowners and buyers aimed at repairing the damaged housing market.
"There's enough for some, but not for everybody," said Representative Barney Frank, the Newton Democrat who sponsored the legislation. "If we had more money, we could do more."
Tax relief
First-time buyers can receive a $7,500 tax credit for buying a home by next July 1, a provision aimed at recharging sales in slumping markets. Eligibility requirements include that a buyer has not owned a home within the past three years. The credit is effectively a no-interest loan since the taxpayer must pay it back at a rate of $500 a year over 15 years. The credit begins to be phased out for single taxpayers earning $75,000 and ends at $95,000, and for couples earning $150,000 to $170,000, said Linda Goold, lawyer for the National Association of Realtors.
Homeowners who elect to claim the standard deduction on their tax forms can receive a property tax break of $500, or $1,000 for couples filing jointly.
Taxpayers subject to the alternative minimum tax will no longer have to pay taxes on the interest they earn from housing-related bonds sold by state and municipal governments. Lawmakers said this will lower the cost of building affordable housing by making the bonds more attractive to investors.
Owners of vacation homes, however, will be limited in the amount of capital gains tax deductions they get when selling the second property, if they've used it as a primary residence during a certain period prior to selling it.
New disclosure requirements
Lenders will have to provide copies of mortgage documents to borrowers at least seven days prior to the loan closing.
Mortgage documents must completely disclose the full costs of the loan over its lifetime, including future increases in payments, for subprime or other types of adjustable-rate mortgages.
Read more of this article...
Professional Financial Advisors: Find out what a financial advisor can do for you at NewRetirement.com.
Annuity Advice for Retirement: Evaluate and compare annuities at NewRetirement.com
About Reverse Mortgages: Learn all about reverse mortgages at NewRetirement.com
NewRetirement Retirement Calculator: Assess your retirement plan with the NewRetirement Retirement Calculator