I'm Gonna Buy Me A Foreclosed House

[BPSCG]

The Senate on Thursday passed a bipartisan package of tax breaks and other steps designed to help businesses and homeowners weather the housing crisis.

The measure passed by an impressive 84-12 vote, but even its supporters acknowledge it's tilted too much in favor of businesses such as home builders and does little to help borrowers at risk of losing their homes.

The plan combines large tax breaks for homebuilders and a $7,000 tax credit for people who buy foreclosed properties, as well as $4 billion in grants for communities to buy and fix up abandoned homes.

Link

Dang - the IRS is going to cut my taxes if I buy a house that the bank is looking to unload for whatever it can get, in a market where house prices are already a lot lower than they were a year ago?

Buy a house, rent it out, get a tax break. Might as well do it, 'cuz the taxpayers are going to pay someone that $7,000 when he buys that house. Might as well be me.

Gee, imagine you live on the same block as that foreclosed house I'm gonna buy, and you're trying to sell your house that you've kept the payments up on. Then you find out even if you list your house at the same price as the foreclosed one, I'll be seven big ones ahead by buying the foreclosed one.

Makes you just want to go out and strangle a senator, doesn't it?

ETA:

The bill also offers $150 billion for pre-foreclosure counseling and stronger loan disclosure requirements.

Here's BPSCG's pre-foreclosure counseling, free of charge: Live within your means!

 

[Suddenly]

Jeez. Given the property values here 7K is a huge % of the purchase price even without a fire sale... and I know the lawyers who handle the W.Va. business of a large firm that deals in foreclosures so I can probably get some inside dope....


I hope that credit is limited to human (as opposed to corporate) purchasers, one to a customer, and only if the new house is a primary residence. Else this is by far the dumbest thing I've heard this week...

 

[IMST]

And this comes out the day before I'm going to close on a short sale (preforclosure) home. Guess I shoulda waited, eh?
Oh well, Ima close on my first home tomorrow so I can't be bothered to care about this too much.

 

[ponderingturtle]

So as having vacant houses hurts whole neiborhoods, we must also damn those who live in the same area as those who choose to not live with in their means.

See this is what you get from letting just anyone move in.

 

[madurobob]

Gee, imagine you live on the same block as that foreclosed house I'm gonna buy, and you're trying to sell your house that you've kept the payments up on. Then you find out even if you list your house at the same price as the foreclosed one, I'll be seven big ones ahead by buying the foreclosed one.

Except the banks aren't that stupid. They know you're getting a $7K benefit so they're not going to sell for the same low price they would have before. The effect in markets with a high % of foreclosed properties may very well be that the average price is buoyed somewhat. This helps all sellers a little.. but the big winner by far is the banks.

Who woulda thunk the gov't would prefer to give a big benefit to big business and expect it to trickle down eventually to consumers? More supply-side vodoo?

Makes you just want to go out and strangle a senator, doesn't it?

Well, um, yeah. Like I needed another reason.

ETA: Here's BPSCG's pre-foreclosure counseling, free of charge: Live within your means!

Amen, brother!

FWIW, I'm setting up my self-direct IRA right now with every intention of buying another rental property with it. I'm pretty sure the returns on real estate will be better than anything I can get with indexed funds. Not many foreclosures in my market, but I'll be keeping my eyes open.

 

[Elind]

Buy a house, rent it out, get a tax break. Might as well do it, 'cuz the taxpayers are going to pay someone that $7,000 when he buys that house. Might as well be me.

I can't see that flying and if it gets included somehow it will have so many strings attached that no one will ever collect. However you may not have read on:

But the White House opposes tax credits for home buyers or grants to cities that would encourage the purchase of foreclosed properties, saying those provisions would place responsible homeowners trying to sell their homes at a disadvantage. House leaders have vowed to set different priorities for their housing legislation, saying they do not intend to help businesses more than individual families. On Wednesday, the House Ways and Means Committeeapproved an $11 billion tax package that rejects help for home builders and offers a $7,500 tax credit to first-time home buyers rather than buyers of foreclosed properties.


Maybe they are not all idiots, but what about second time home buyers who are the ones more likely to have decent credit?

 

[Elind]

Except the banks aren't that stupid. They know you're getting a $7K benefit so they're not going to sell for the same low price they would have before.

A tax credit is no guarantee of getting the full amount. You have to have paid at least that much in taxes before you get the full benefit. No?

 

[geni]

A tax credit is no guarantee of getting the full amount. You have to have paid at least that much in taxes before you get the full benefit. No?

The term has been somewhat abused in recent years.

 

[Suddenly]

A tax credit is no guarantee of getting the full amount. You have to have paid at least that much in taxes before you get the full benefit. No?

Maybe.

A tax deduction means you reduce the amount of income you are taxed. You subtract it, and then calculate tax owed. As such, the benefit increases according to tax rate, but in the end the economic benefit is a percentage of the deduction amount.

A tax credit affects the amount of tax paid. After you calculate the tax due, you then subtract the amount of the credit. This is a dollar for dollar benefit.

The issue you identify is whether the credit is refundable. If so, it can make the amount of tax to be paid negative and a benefit. The Earned Income Credit is refundable.

If not, then if your tax owed is less than the credit you simply owe no tax.

In either case you are refunded 100% of any withholdings as you turn out to owe no tax, but in the first case you could recieve even more than that.

In short, the question turns on whether the credit is refundable.

 

[BPSCG]

I can't see that flying and if it gets included somehow it will have so many strings attached that no one will ever collect. However you may not have read on:

Yeah, I saw that. It's certainly very much a piece of in progress work in progress, and if Congress is sane, they'll drop the credit.

Maybe they are not all idiots

Evidence?

but what about second time home buyers who are the ones more likely to have decent credit?

What about them? Why should they get a tax credit because they're buying a house at fire-sale prices? More to the point, why should you and I and all the other taxpayers not looking to buy a house subsidize someone else's house purchase? While we're at it, why don't we subsidize car purchases, as long as you buy an American car? Certainly the U.S. auto industry could use the help. Line starts to the left.

 

[bigred]

I hope to be in the market between now and about a year from now....let's not rush this too much......

 

[Elind]

Evidence? What about them? Why should they get a tax credit because they're buying a house at fire-sale prices?

I was simply saying that there are already programs for first time buyers, there is not much point in leaving out most buyers in this case, since the first timers probably won't make much difference to the market. Having said that, I tend to agree that it's overall a bad idea, just another flash in the pan handout for votes.

 

[Autolite]

Here's BPSCG's pre-foreclosure counseling, free of charge: Live within your means!

I intend to take full advantage of the recent downturn in housing. I am currently living at the WalMart in the back seat of an 1980 Pinto hatchback. I am just waiting for the guy across the parking lot to default on the payments of his 1992 Chevy Caprice station wagon and I am in there! I have no mercy I know...

 

[The Painter]

BPSCG You are a little behind. I've acquired 3 houses. Being that I'm a painting contractor, it is easy for me to fix them up and rent them out. Right place, right time. SWEET!!!

 

[BPSCG]

BPSCG You are a little behind. I've acquired 3 houses. Being that I'm a painting contractor, it is easy for me to fix them up and rent them out. Right place, right time. SWEET!!!

I saw a bumper sticker the other day whose owner probably hates you. "Houses: Nobody Gets Two Until Everybody Has One."

It may be the stupidest bumper sticker I ever saw.

 

[Elind]

Just the other day you saw it? I bet you believe in coincidences too

 

[Ranb]

Every foreclosed house I looked at in in 2001 that I could afford was in lousy condition. I could not afford the nicer houses whose owners had fallen on hard times. I think I was looking at the houses of people who did not care about upkeep or the mortgage.

Ranb

 

[bigred]

I think I was looking at the houses of people who did not care about upkeep

ugh, I'd rather pay more. I know it shouldn't matter, but the idea of moving into a house whose former owner was blatantly unkempt or even unclean would leave me grossed out, no matter how well I cleaned it after moving in.