Carry Back Ache
For those who favor little or no intervention by government in the predicament home builders face, today must have brought a gust of triumph and relief.
For many home builders who were hoping Congress would favor them by funding a tax credit for home buyers of up to $15,000, and an extension of provisions for tax carry backs on prior year profitability from two to five years, today was downright brutal.
Here’s the Wall Street Journal on the tax carry back item.
Sen. Baucus (D., Mont.) said House and Senate negotiators have agreed to limit the tax break to small businesses only. That means large manufacturers, retailers and homebuilders that lobbied for the provision would be shut out under a deal reached earlier today.
And here’s how the status of tax credit for home buyers is being described:
Tax credits for home buyers will remain a part of the bill, according to senators and aides, but will be sharply reduced from levels included in a successful amendment to the bill by Rep. Johnny Isakson (R., Ga.).
Still, home builders and other housing industry organizations might hold out hope that Geithner’s $2.5 trillion financial system rescue effort will include mortgage rate buy downs and other elements that would jolt demand for residential real estate.
Calculated Risk, which evidently believes that an unadulterated housing price correction anchored firmly to rents and to household incomes is the only way to go, takes cheer from the failure of Fix Housing First’s coalition to have their day in the sunshine.
From Bloomberg: U.S. Lawmakers Agree on $789 Billion Stimulus Plan
Asked what a proposed $15,000 tax credit for homebuyers looks like in the compromise plan, Baucus laughed and said, “not much.” He said that proposal has largely been dropped, though he didn’t provide details.
We still need the details on what “not much” means, but this is a little bit of good news.
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I don’t know how much passing this will help. Economies go through cycles. I read this interesting article on
http://www.recessioninfocenter.com
on previous recessions. We just need to adjust I guess.