HOUSING AND ECONOMIC RECOVERY ACT APPROVED

Last week Congress and the President approved a landmark housing bill that will help stimulate the residential real estate markets in a number of ways.

GSE, FHA and VA loans limits have been increased. At the time of this writing, the actual amount of the new limits for these types of residential mortgages for Michigan is unknown. We will be reporting those new limits to you as soon as they are available.

One of the most important elements of the legislation is the Homebuyer Tax Credit. Although the program is complicated, here is an abbreviated description of the qualification requirements for the tax credit.

• First time buyers only. Defined as not having owned a home for the past three years.

• Income limits of $75,000 for singles, $150,000 for couples

• Homes or condos, principal residences only

• The credit is equal to 10% of the purchase price, capped at $7,500

• This is a tax credit, not a tax deduction, so the full amount is refunded against any income tax liability due. If the buyer owes no income tax, he will receive a check for the amount of the credit.

• Applies to homes purchased from April 8, 2008 until June 30, 2009.

The credit must be repaid over a fifteen year period beginning in 2010. If the home is sold prior to full repayment, the balance is taken from the gain. If no gain on sale, the balance is forgiven
It is expected that this program will stimulate housing demand and support falling home prices. For a more detailed description of the program, visit www.federalhousingtaxcredit.com.