Friday, September 25, 2009

Federal Tax Credit: Extension? Expansion? Extinction?

Recently we wrote that the $8,000 first-time home-buyer tax credit is set to expire November 30th. It still is, but there are at least 21 separate bills sitting in various Congressional committees that would extend the deadline, and then some. Industry professionals have expressed concerns that recent gains (or mitigated losses) have been largely bolstered by the tax credit, without which the market may again falter.

All the bills all have the shared goal of extending the current tax credit, before it expires, some aim to expand it. Several bills seek merely to extend the life of the credit (at the $8,000 mark) for another six months or a year. In addition to the extension, other bills propose an increase in the value of the credit to 10% of the purchase price, up to $15,000, and make the credit available to any home purchaser, as long as the property is a "primary residence" within 24 months of purchase.

Craig Sacks, Title Attorney for National Capital Title and Escrow opined the $8,000 tax credit did not have much effect on the DC market because of the lack of first-time home buyers and the price point for real estate in the DC area. To have a significant effect in DC, a bill would need to extend the timeline, expand the credit to $15,000 and include all home-buyers. It would be a "boon to real estate agents and the rest of the industry," said Sacks.

No bills are scheduled for votes in either the Senate or the House, and Congressional sources say that the health care reform debate is sucking the energy out of other legislation. The most likely way we'll see some sort of extension or expansion is as an amendment to another bill already scheduled for a vote.


Colin on Sep 25, 2009, 5:23:00 PM said...

Let's hope for extinction. There is no reason to promote ownership over renting. Federal involvement in the housing sector to this point has brought us nothing but grief.

Anonymous said...

You have to kidding ... I agree the Federal Govt is very good at making life more difficult for individuals, ... but a tax credit is different, especially an expanded one. This is the right move for housing because individual purchase decisions, in addition to being properely incentivized, will be insulated from the bureaucrats. In other words, a tax credit will spark the market place much more efficiently than government controls.

Anonymous said...

I am philoshopically opposed to such a large giveaway, but since the govt spends billions on housing foor people, I suppose its time they give the rest of us a break. Before this administrations bankrupts us, anyway.

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