It looks as if our legislators in Washington are finally making positive steps toward fixing the house mess by including housing legislation in the Economic Stimulus Bill.

Last week, the Lieberman/Isakson Amendment was included in the senate version of the Economic Stimulus Bill by a unanimous voice vote. This amendment would provide a Tax Credit to all home buyers at the rate of 10% of the sales price up to a limit of $15,000. The credit would be available for a one year period to all purchasers of primary residences.

Now, the senate expects to debate Amendment 353, a proposal by Senator John Ensign (R-NV) that would provide 30 year fixed financing at a rate of about 4%, for anyone purchasing a primary residence.

If these two provisions are included in the final passage of a stimulus bill they could have a positive impact on  real estate.

How the homebuyer tax credit would work:

The current version of the tax credit – which still must be approved by the House and signed by the president – would work under the following rules in the bill passed by the Senate:

• Up to a $15,000 tax credit (claimed as part of federal income tax) for any principle residence by any homebuyer
• Actual amount of credit would be based on 10 percent of the purchase price of a home or $15,000, whichever is less
• The tax credit does not have to be paid back, unless the buyer sells the home within two years or less
• Purchases must take place within one year of the legislation’s enactment
• The credit may be claimed on 2008 income tax form
• If enacted, this new tax credit would immediately negate the $7,500 first-time homebuyer tax credit currently available.

I urge each of you to contact your senators and representatives to let them know that you believe these provisions are essential components of any stimulus bill. You can go to the official Senate http://www.senate.gov and House http://www.house.gov web sites to locate the email and phone number of your legislators.”

This has passed the Senate, but the entire bill does need to go back to the House, and be signed by the President. There could be many changes before this happens, or not pass at all.