2009 Stimulus Package Details Emerging

President Obama is scheduled to sign the American Recovery and Reinvestment Act of 2009 tomorrow in Colorado. Details of the $787 billion dollar plan are slow to surface but here are the top real estate related tidbits as currently being reported.

Homebuyer Tax Credit – The bill provides for an up to $8,000 tax credit (capped at 10 percent of the home price or $8,000) that would be available to first-time home buyers for the purchase of a principal residence on or after January 1, 2009 and before December 1, 2009. The tax credit phases out for individuals earning more than $75,000 and couples earning more than $150,000.

The credit does not require repayment. Most of the mechanics of the credit will be the same as under the 2008 rules: the credit will be claimed on a tax return to reduce the purchaser's income tax liability. If any credit amount remains unused, then the unused amount will be refunded as a check to the purchaser.

FHA, Fannie Mae and Freddie Mac Loan Limits -The bill reinstates last year's 2008 loan limits for FHA, Freddie Mac, and Fannie Mae loans. These limits were equal to the greater of 125% of the 2008 local area median home price or $271,050 for FHA and $417,000 for Fannie and Freddie, with an overall maximum cap of $729,750. For the few areas where the 2009 limits were higher, the higher limits will apply. In addition, the bill includes language providing the HUD Secretary with the discretion, if warranted, to increase the loan limit for any “sub-area”, i.e. an area smaller than a county. The Secretary's discretion is again limited by the $729,750 cap. These 2009 limits will expire December 31, 2009.

The inclusion of these loan limit provisions in the final bill is a victory for homeowners, buyers and Realtors. While these new limits were included in version of the original stimulus bill approved by the House, the bill first approved by the Senate did not.

Energy Efficient Housing Tax Credits & Grants - Through 2010, homeowners will be able to claim a 30% tax credit up to $1,500 (up from 10%) for purchases of new furnaces, windows and insulation. There is also $5 billion for weatherization assistance for low income households and $2 billion for federally assisted housing (section 8) efficiency efforts.