Help for those buying a car or home 

On February 13, 2009 I voted for the American Recovery and Reinvestment Act (also known as the Economic Stimulus Bill). President Obama signed this bill into law on February 17, 2009.

First-Time Home Buyer Credit

The Economic Stimulus Bill provides a refundable tax credit to taxpayers purchasing a home for the first time before December 1st of this year. The credit is equal to 10 percent of the purchase price of the home up to $8,000. For purposes of this credit, you are considered a first-time home buyer if you (and your spouse, if applicable) have not owned a home in the three years before the date of the home purchase.

If you sell the house within three years of its purchase, you would have to repay the government for the tax credit over the course of 15 years in equal installments. If you keep the home for three years, you keep the tax credit.

In the case of a couple filing jointly, the credit begins to phase out at an adjusted gross income (AGI) over $150,000 and is no longer available once the taxpayer's AGI reaches over $170,000. The credit begins to phase out for single taxpayers with an AGI in excess of $75,000, and it disappears completely for single taxpayers with an AGI over $95,000.

If you buy a home now, you would ordinarily benefit from the credit on your 2009 taxes. However, if you want to receive your credit this year and you purchase your home before July 1, 2009, you may elect to treat your home purchase as having been made on December 31, 2008 and amend your 2008 tax returns accordingly. This should trigger a federal tax refund check of $8,000. Alternatively, you can fill out a W-4 with your employer to reduce appropriately your withholdings during 2009.

Qualifying taxpayers claim the credit on IRS Form 5405.

Help With Home Financing: Conforming Loan Increase

The Economic Stimulus Bill extends for all of 2009 the increased "conforming loan limits". The conforming loan limit determines the maximum size of a mortgage that Fannie Mae and Freddie Mac can buy or guarantee, and therefore, these loans carry lower interest rates. For all single-family mortgages originated this year, the conforming loan limit for the Los Angeles area will remain at $729,750. (The $729,750 single-family loan limit had gone down to $625,500 on January 1, 2009.)

For years, I have championed the idea of increasing the conforming loan limits in high cost areas to improve the affordability of housing. This is particularly important to me because the high housing prices for my constituents in the Valley and throughout the rest of California have caused fewer and fewer mortgages to be made that did not exceed the national single-family conforming loan limit of $417,000. I will continue to work with my colleagues in Congress for a permanent increase to the conforming loan limit.

New Car Purchase Credit

The Economic Stimulus Bill provides a tax deduction for state and local sales taxes paid on the purchase of new cars, light trucks, recreational vehicles, and motorcycles. You do not have to itemize your deductions to receive this deduction. This deduction is particularly helpful to Californians because of our state's high sales tax rates.

The deduction is for the sales taxes on purchases of automobiles priced up to $49,500. If you buy a more expensive vehicle, you can still claim the deduction, but only as to the tax that applies to the first $49,500 of the price.

The deduction phases out for taxpayers earning an AGI of over $250,000 for couples filing joint returns and an AGI of over $125,000 for single filers.

The deduction only applies for tax year 2009.