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Biden's $15,000 First Time Homebuyer Tax Credit - YouTube
Channel: Win The House You Love
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Hey, Kyle here with
winthehouseyoulove.com.
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Today we're talking about the $15,000 tax
credit for first time home buyers that
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the Biden administration is proposing.
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So, currently, it looks like Biden is the
projected winner of the 2020 election.
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So they've, put their administration
has put out a tax plan,
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actually an entire housing plan.
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I'm going to walk through that with
you and what we know about it so far.
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So the Biden administration is
proposing a $640 billion fund for
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housing over the next 10 years.
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Okay.
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So what this fund is aiming to do
is take care of four main things.
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Number one is red lining.
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So they're, they're looking to,
put money in to remove a lot of the
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predatory practices that are still
going on in the real estate industry.
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Okay.
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They also want to increase supply
so 300 billion of the 640 billion is
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going just towards increasing supply
which is huge because we have super
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limited supply right now, which is
causing home prices to skyrocket.
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So hopefully having this housing
bill will actually help increase
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supply and lower the cost of homes.
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Also increasing energy efficiency
and affordable housing.
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And part of that affordable housing
is increasing the supply as well.
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They've also talked about
increasing low income housing
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and subsidies like that as well.
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Now, some of the details are a little bit
hazy as, since these are just kind of a
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general proposals that the administration
has put out, but an interesting approach
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at least to see what's the potential
for the next four years, if Biden
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is confirmed as the 2020 president.
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Okay.
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So here's what we know so far.
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What the Biden administration
has said is that they'll give
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a $15,000 up to a $15,000, tax
credit for first time home buyers.
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All right.
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And the details are a little bit hazy.
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This is just because it's a proposal
of a transitioning administration.
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But, the keyword here is they said
"up to", so we're not entirely sure
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it's going to be $15,000 or what
kind of limit is going to happen.
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After the housing crash in the
Bush administration, there was a
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$7,500 tax credit that was given.
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Okay.
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and it was actually 10% of the
purchase price up to $7,500, the Obama
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administration bumped that up to $8,000.
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Okay.
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So now we're seeing the Biden
administration coming in and saying
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$15,000, I accidentally added
an extra zero there, $15,000.
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Okay.
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Now again, there's no clear
details on who's eligible.
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If it's only for first time home
buyers, if there's a percentage
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included with this, it's really hazy
and they haven't ironed that out yet.
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But a key detail here that has
been explained is that in the Bush
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administration, this tax credit
was only given at tax filing.
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So for instance, if you purchased
a home in April, you wouldn't see
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that tax credit until you filed
your taxes at the end of the year.
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Okay.
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So you would've had to get that money up
front and then receive the credit later.
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But in the Biden administration,
They have projected, that
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they'll actually make those funds
available at the time of purchase.
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So you'd have those funds available
when you actually purchase the home.
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And with this, this is huge because
you're not fronting the money because
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it almost doesn't make sense if
you're giving somebody a credit.
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Because they, they need money for a
down payment and closing costs, but
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you're expecting them to front it
and then you're going to give them
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that money back later, most people
don't have that money available.
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So this money could be really
helpful in stimulating the economy.
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Now, the difficult part here is this would
not do very well in our current market.
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See, the huge problem with this is it
could cause home prices to skyrocket.
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And the reason why is because this is an
incentive for more buyers to come to the
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market home prices are already crazy high.
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And the market's really competitive.
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We're in a sellers market
because we have low inventory.
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So very few homes and a lot of buyers.
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So attracting more buyers with a
tax credit is not the smartest move.
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So here's my anticipation is I
anticipate the Biden administration
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is expecting a correction, a market
correction in the next four years.
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Okay.
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And we've talked about
this on the channel before.
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But we can see this blue line is
a average rent affordability, and
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this red is home affordability.
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So we're currently up here.
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There's this huge spread.
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This 31% spread between
affordabilities here.
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Over the next four years, we
anticipate a correction, right?
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Housing markets and all markets in general
go up and go down and go up and go down.
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So since we're at the height here, we
expect somewhere over the next four
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years for this to trail back down.
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And my anticipation is that the Biden
administration probably has this
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$15,000 tax credit, not to put out in
the beginning, but possibly to put out
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maybe year three or year four, when we
see buyer demand to start slow down.
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Then they can put the tax credit out,
to stimulate demand a little bit more.
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That's my assumption.
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I'm not an economist, but that's what
I'm guessing they're using or wanting to
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propose this $15,000 for, but it's all
wrapped up into this, this package that
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they have, that's $640 billion going
to all different aspects of housing.
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Okay.
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So we'll see if this pans out,
if this is something that's
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going to come to fruition.
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Right now it's just talk.
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It's just the proposal by
the Biden administration.
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Okay.
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So if you want to learn more about
closing costs, this video over here,
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it's going to help you understand
a little bit more of the costs that
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are going in, and also I have a free
download as a calculator for you so
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you can estimate what those will be.
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