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REALTOR®: Economic Stimulus Package Could Strengthen Housing Market and Help Businesses

Monday, February 18, 2008

President George W. Bush has signed the two-year, $168 billion economic stimulus package into law, following an agreement by the Senate and House of Representatives. The stimulus package includes several important housing provisions, as well as incentives for businesses.

The San Mateo County Association of REALTORS® praised the President and Congress for their swift action. “We believe the economic stimulus package signed by President Bush will strengthen the housing market, which is a key to improving the national economy,” said SAMCAR President Sue Walsh.

SAMCAR is a professional trade association representing over 3,800 REALTORS® and affiliate members engaged in the real estate business on the Peninsula. SAMCAR serves as an advocate for homeownership and homeowners in San Mateo County. The economic stimulus package includes increases in the loan limits for Fannie Mae and Freddie Mac, and also FHA.

• The GSE limit will be increased up to $729,750 for loans originated after July 1, 2007 to December 31, 2008. Currently Fannie Mae and Freddie Mac are capped at $417,000. It appears the formula mirror that used by FHA, with GSE loan limits increasing to 125 percent of the local median home price, but not to exceed $729,750.

• The FHA limit will increase to as much as $729,750 in high cost areas (to 125 percent of local median home prices) for loans approved on or before December 31, 2008. In addition, the measure gives the Secretary of HUD the discretion to raise any individual area loan limit by an amount not to exceed $100,000.

Realtors anticipate the loan limits in San Mateo County for GSEs and FHA will likely reach the $729,750 cap.

The tax centerpiece of the stimulus package is a tax rebate provision. The rebate will be $600 ($1,200 for those who file a joint return). In addition, individuals with children (generally minor children or some older dependents) will receive rebates of $300 per child, with no limit on the number of eligible children. The rebate will phase out for those with adjusted gross income above $75,000 ($150,000 on a joint return). The IRS will likely begin sending the rebate checks in late May, following the 2007 income tax filing season.

In addition to the rebate, two business tax provisions will provide benefits to small business. The first would permit a business to deduct as much as $250,000 of the cost of otherwise depreciable property. This expensing provision applies to property acquired and placed in service during 2008.
A second provision would provide a "bonus" depreciation deduction for the cost of leasehold improvements and certain other equipment. The bonus will be 50 percent of the cost of the improvement. The provision is effective for improvements placed in service during 2008. Improvements placed in service during 2009 will be eligible for the bonus deduction, but only if they are made pursuant to a contract entered into 2008.

The San Mateo County Association of REALTORS® (SAMCAR) is a professional trade organization representing over 3,800 REALTORS® and Affiliate members engaged in the real estate business on the Peninsula. SAMCAR promotes the highest ethical standards of real estate practice, serves as an advocate for homeownership and homeowners, and represents the interests of property owners in San Mateo County.

The term "REALTOR®" is a registered collective membership mark which identifies a real estate professional who is a member of the National Association of REALTORS® and who subscribes to its strict Code of Ethics.

Variations of this article have appeared in local area newspapers.

For further information, please contact Julie Ziemelis, Director of Public Affairs, e-mail , or phone (650) 696-8214.

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