Note: This article has been updated since its original publishing to reflect the bill’s passing.
How does the government stimulus package for 2021, known as the American Rescue Plan, impact homeowners? Here’s what to know.
President Joe Biden signed the $1.9 trillion economic stimulus package, called the American Rescue Plan, on Thursday afternoon. The plan’s goal is to “crush the coronavirus and deliver relief to the American people.” Here’s how it affects homeowners:
- $1,400 stimulus checks issued to qualified adults
- $10 billion sent to states for struggling homeowners who can’t pay their mortgages, utilities, and property taxes
It’s important to know how this next round will affect you as a homeowner, especially for your finances, new laws, and potential tax implications.
What homeowners need to know
For homeowners who haven’t been able to pay their mortgage due to financial hardship, the bill calls for funds to be set aside for legal assistance in a foreclosure. The bill proposed to extend the residential eviction ban, which is currently set to March 31, but that didn’t pass.
According to Biden’s team, 20% of renters are behind on payments, and more than 6 million homeowners failed to make mortgage payments in September of 2020.
Here are details that pertain to the allocation of funds from this stimulus bill:
- $10 billion to states for struggling homeowners who can’t pay their mortgages, utilities, and property taxes
- $20 billion to help low-income households cover overdue rent, provide rental assistance, and utility bills
- $30 billion in funds also will be allocated to emergency rentals, energy, and water assistance for those who need it
- $5 billion will go to emergency help for those who are homeless or are at risk for homelessness
The housing crisis has been amplified by the pandemic, with housing advocates warning that the previous stimulus packages weren’t enough. The problem of mass evictions still looms ahead.
Also, mom and pop property owners struggle with renters not being able to make payments. Housing experts believe a major investment in housing construction will be necessary to jumpstart and help struggling property owners.
Who qualifies for the third round of stimulus checks?
Similar to the previous two stimulus checks, single taxpayers who make less than $75,000 will receive the full $1,400. The stimulus check now phases out for single taxpayers making more than $80,000 of adjusted gross income, which was previously set at $100,000.
For those who file as head of household, the stimulus check won’t be given to those making over $120,000. For joint filers, it would phase out for couples earning more than $160,000.
Unlike the two stimulus payments, this third round will include eligible adult dependents and families with mixed-status citizenship. In order to qualify, one member within the mixed-status family needs to have a Social Security number.
When can people expect to receive new stimulus checks?
There are estimated timelines of when Americans could realistically receive their stimulus money. The potential delivery dates for the first direct deposit may be on March 13 or 14, with initial paper checks sent the week of March 22.
Non-housing details in Biden’s stimulus package
Biden’s plan includes sending out-of-work Americans an extra $300-per-week federal bonus on top of whatever jobless benefits they receive from their states.
Here are more stimulus details:
- The Child Tax Credit will increase to $3,000 per child and $3,600 for children under age 6. The credit will be allowed for children aged 17 as well.
- Increase the Earned Income Tax Credit from a max of $530 to $1,500. The income limit will also be raised from $16,000 to around $21,000 and allow workers over age 65 to claim the credit.
- Increase the Child and Dependent Care Tax Credit from a cap of 35% of qualifying child care expenses to 50% of qualifying expenses (up to $4,000 for one child and $8,000 for two or more).
- Extended unemployment benefit payments of $300 under the Pandemic Emergency Unemployment Compensation program through September.
- Student loan forgiveness is included, plus additional financial aid is available to certain students.
- Reopen schools during COVID-19.
What didn’t make the bill
- Raise the minimum wage to $15.
The future of our economy and the pandemic
This plan addresses the pandemic’s impact, which has devastated lives, the economy, and 10 million jobs.
This next round of stimulus checks and the impact it will make on the economy remains to be seen, but the first step is getting this much-needed money into the hands of the Americans who need it.