Now that "Stimulus" has become an everyday word we, the good tax paying, corporate rescuing, stimulus funding Americans find ourselves preoccupied wondering.... "what's in it ?" Even more important ..."what's in it for me ?" Relatively very little is the answer. But than as long as they throw us a bone here and there, we should be humbled and awe inspired at the abilities these great and powerful decision makers have in figuring all this complicated stuff out.
First let me say that they haven't even begun to figure anything out. I have lots of issues with the handling of the Economic Tsunami fiasco being called the "American Recovery & Reinvestment Act of 2009"
Providing banks with billions of dollars in (taxpayers) bailout money with no requirement as to how that money could be used should never have happened. But it did. Not addressing the core or root of the problem, which is housing is still another short sighted, arrogant, ignorant message that our fearless politicos unashamedly send. The message is simple, when it comes to housing banks are more important than individual homeowners.
I tend to look at economic problems in business as if they were a barrel of water with a hole in the bottom. Unless you plug the hole you'll never refill the barrel. In order to plug the hole we need to address housing which requires addressing property values as they relate to mortgages. Unless lenders agree to modify each and every mortgage to current market value the barrel bottom will remain unplugged. Marking down mortgages to market value could quickly stabilize housing. People could confidently sell a property at market without "permission" to reduce the amount owed from a bank allowing sellers to sell with their heads above water. Banks and lenders could concentrate on loaning money to borrowers rather than foreclosing on properties. Many buyers who have gone back to the sidelines after a horrific experience with a short sale attempt would come back into the market and begin buying again. This time directly from sellers. Buyers and sellers today are not market makers. In what there is of a housing market banks and lenders are today's market makers. In order for any free market to thrive and survive it must be comprised of buyers and sellers. When you take them out of the equation (one or the other) there is no market. Stabilizing mortgage values in housing will stimulate spending even further. Any homeowner having or anticipating problems going forward would feel much more confident spending if they weren't so preoccupied with the unknowns. Sellers of homes would again become buyers and stimulate new construction. Buyers of homes buy furniture, TV's, appliances, equipment. Corporations hire when consumers spend, consumers spend when they are confident in the future, housing has always been the key and from my perspective it remains the key. Plug the hole in the barrel before you throw more water into it or it will just drain out of the barrel as it has since the first stimulus attempt in 2008 under the previous administration. And the subsequent $700 billion failed corporate bailout last year. You can't fill a leaky barrel. Fix housing, reset mortgages to today's market value and we can restore the economy.
First Time Homebuyer Tax Credit
One of the items in the "new" Stimulus revisits a failed attempt from the previous plan. Last years legislation approved a First Time Homebuyer Tax Credit up to $7500 with certain restrictions. This shortsighted piece of legislative work required that the credit be paid back to the government, albeit interest free, over a prorated period to the IRS and in full if you sold before it was fully paid back.
One of the items in the "new" Stimulus revisits a failed attempt from the previous plan. Last years legislation approved a First Time Homebuyer Tax Credit up to $7500 with certain restrictions. This shortsighted piece of legislative work required that the credit be paid back to the government, albeit interest free, over a prorated period to the IRS and in full if you sold before it was fully paid back.
The "new revised edition" of First Time Homebuyer Tax Credit allows up to an $8,000. tax credit or 10% of the value with no requirement to repay. Provisions come with income levels that begin to phase out for individuals earning over $75,000 and married couples filing jointly earning more than $150,000. It is available to First Time Homebuyers (anyone who has not owned a home in the past 3 years) buying a home between Jan. 1, 2009 and Dec. 1, 2009 . The credit is forfeited if the property is sold within the first 3 years of ownership.
"Hooray" they got it right this time but my goodness why do they have to fail before the light goes on. Is this going to help? The last measure was an absolute failure and this one is doomed as well until the correlation between home values and outstanding mortgages are seriously attacked.
I'd be remiss if I failed to mention a couple of other "perks" from the stimulus, unrelated to housing that you may benefit from.
- In 2009 you are eligible to receive a tax credit up to $400 per individual and up to $800 per married couple based on 6.2% of your earned income. This fades once incomes of $75K for individuals or $150K for couples are reached. You are eligible whether or not you have a Federal tax liability. This according to a summary of the stimulus bill that the Senate Finance and House Ways and Means committees released.
- If you're fortunate enough to be able to buy a "new" car this year the taxes both State and Federal are deductible. Stipulations are on income limitations.
- Unemployment benefits are not taxed up to the first $2400 of benefits you receive.
- Health Insurance. If you get fired, your company is required to allow you to pay to keep your health insurance, generally for up to 18 months. Now, the federal government will subsidize 65 percent of the premium for up to nine months. You need to have been forced out of your job between Sept. 1, 2008, and Dec. 31, 2009. There are also income limitations in the year you receive the subsidy.
Here's a link to the text of the Legislation which at this writing had not been signed into law by the President.
I've attempted to list some of the items that you and I may directly benefit from as the hundreds of billion of dollars are dispersed in yet another attempt by a clueless Congress, Senate & Administration to "get our economy back on track."
Please call me directly with any questions relating to mortgages, home values, loan modification, refinancing, or buying or selling a property.
George Sinacori
561-306-6736
877-566-2430
No comments:
Post a Comment