Homebuyer Tax Credit Extended and Expanded

After weeks of uncertainty, the Senate and House of Representatives have both passed legislation to extend and expand the homebuyers credit. In addition to extending the deadline through April 30, 2010, it will also include a $6,500 credit to homebuyers who have lived in their current residence more than 5 years. According to the Associated Press, the White House even announced that Obama would promptly sign the bill into law.

Examiner.com publish an article with more details of the new credit. They also raise several valid questions as to whether this extension and expansion will actually help or hurt the ailing economy. You can read a segment of their post below, or find the full text here.

The National Association of Realtors had been pushing hard to extend the credit, as well as include non-first-time home buyers, saying the legislation has helped stabilize the housing market and increased home sales, projected at 5.1 million for the year.

Supporters of the tax credit say that it has helped to boost existing home sales in recent months and that the housing market, and broader economy, would suffer if it is allowed to expire. They contend that extending the credit would help further support sales, stabilize housing prices and generate jobs in the face of an expected increase in foreclosures next year, which is expected to put ongoing downward pressure on prices.

"Tax credits like this only work by creating the sense of urgency to take advantage of them," Sen. Johnny Isakson (R-GA), the measure's main sponsor, said in a statement. "This is the last extension of the home buyer tax credit, and I urge all Americans whether they're first-time buyers who've always dreamed of having a home of their own or someone who's been gridlocked in the failure of our move-up market to take advantage of this opportunity."

Questions for the Tax Lady: November 2nd, 2009

Check out the following new Questions for the Tax Lady answers and feel free to ask me questions through one of the links below. You can send me an email, direct message or @ reply, and I will do my best to get an answer for you!

Question #1: If the expiring homebuyers credit is extended, will it be modified to include non first-time homebuyers?

Answer: It is still a little too early to tell. Congress has not yet passed a bill to extend the credit, although there are several bills going around aimed at doing so. It will probably be a few more weeks before they take any action, but it is rumored that when they do pass the legislation it will include a $6,500 credit for non first-time homebuyers.

Question #2: How can I get a wage garnishment removed?

In order to get an IRS wage garnishment removed, you are going to need to resolve your account with the IRS. Typically, that involves filing all past due tax returns and paying all past due amounts and assessed penatlies and interest.

If you cannot afford to pay the full amount due to the IRS, then you typically can negotiate a tax debt resolution. This can be either a full settlement through an Offer in Compromise, a monthly payment plan through an Installment Agreement, or temporary protection against IRS collection through Currently Not Collectible status. Click here to learn more about the tax debt settlement services offered by my law firm.

Clean Power Grants Step In to Fill Tax Credit Gap, But Problems Remain

From Reuters.com:

If it seems like it’s been twice as hard to raise money for renewable projects this year compared with 2007, that’s because it has been. At the Renewable Energy Finance Forum in San Francisco on Tuesday, John Eber, managing director at investment bank JP Morgan, said tax-equity financing for renewable energy is expected to total $2.5-$2.6 billion this year, down from $3.6 billion last year and $6 billion in 2007. Tax-equity financing is based on the exchange of tax credits, so it’s no wonder it has plummeted in a market where profits — and therefore taxes high enough to make use of tax credits for renewable-energy projects — are harder to come by.

However, federal cash grants, which will enable renewable projects to get money in lieu of tax credits and were approved back in February, could definitely help fill the tax-equity gap. Eber said, “The vast majority of projects are going to [want to] use the grant.” However, there have been a variety of complications that have kept many clean power projects from being eligible for the grants.

Among the biggest problems, Keith Martner, a partner at law firm Chadbourne & Parke, explained, is that four types of investors are disqualified from owning part of a project eligible for the grants. “Projects backed by private-equity funds will not receive cash grants unless there is a corporation between the…fund and the project,” he said. Another issue has been a lack of clarity about some of the requirements. For example, construction must begin, or projects must be completed, in 2009 or 2010, but some confusion remains about when projects can be considered to have begun construction, Martner said.

Even if the program is tweaked so that investors aren’t disqualified, the clock is ticking as the grants are set to expire in 2010. Martner thinks there’s a “decent chance” the program will be extended, but added that any such extension would be unlikely to happen before late 2010 — at the earliest — “because the government likes the stimulative effect of a deadline.” The drawback to having a short deadline and an uncertain extension is that it makes it difficult to plan for larger, longer-term projects.

So far, the majority of the projects that have been approved for grants are already up and running, according to Martner. The Treasury received 240 applications for cash grants as of Sept. 18, of which 178 were for projects already in service and 62 were for projects already under construction. The Treasury has authorized $1.05 billion for 40 projects so far. Most of that grant money — $970 million — has been allocated for wind projects, with less than 1 percent going into solar projects so far.

Homebuyer Tax-Credit Extension Gains Lawmaker Support

Senators are working to make sure that lawmakers are aware of the November 30^th deadline for the first time homebuyers tax credit. Sen. John Isakson, a Republican from Georgia, along with a few other Senators, are pushing to extend the $8,000 credit, which they claim drastically increase homes sales over the past year.

“I’m working the floor now to make everyone aware that the $8,000 credit sunsets on Nov. 30,” Isakson said in an interview today. The former real estate executive says he is “talking to everybody and anybody.”

Realtors, bankers and homebuilders have joined in the push, starting a campaign that encourages Congress to extend the program for one year with the tag line: “Don’t Let America’s Real Estate Recovery Expire.” Executives including Fannie Mae’s Michael Williams and Hyperion Partners LP’s Lewis Ranieri have attributed improvements in home sales and prices to the credit, and Isakson said he is worried the market may suffer without it.

“If you take that kind of business out of what’s already a very weak housing market, you do nothing but protract and extend the recession,” Isakson said. December “marks the beginning of the historical worst time for home sales,” he said.

White House spokesman Robert Gibbs told reporters today that President Barack Obama’s economic team is looking at the tax credit and “evaluating the impact” on new home sales.

Continue reading at Bloomberg.com…