On January 15th of this year, the U.S. House Democratic leadership outlined its $825 billion economic stimulus package, loaded with $275 billion in tax cuts and $550 billion in new spending. Within this package was a significant improvement to last summer's congressional effort to stimulate home sales, which offered a credit of up to $7,500 to purchasers who had never bought a house or hadn't owned one during the previous three years. To qualify, taxpayers would need to close on a house between April 8, 2008, and this coming July 1.
There was just one problem: unlike virtually all other federal tax credits, this one had to be repaid in full over a 15-year period. That made the tax cut more of a $7,500 interest-free installment loan. Though final details on a revised credit are still subject to change, there's a good chance that home buyer
s seeking the tax credit either for the 2008 or 2009 tax years will not have to repay it.
According to industry estimates, removing the repayment stipulation could lead to an additional 202,000 purchases this year. The National Association of Realtors is pushing for the July 1 deadline for closing on a house to be extended to December 31.
Read about the $7,500 home buyer tax credit passed in 2008.