Home Buyer Tax Credit Update
We’ve posted a couple of times on Senator (R-Ga.) Johnny Isakson’s latest proposal to bump up a home buyer tax credit from $8,000 to $15,000, change it to include all home buyers, remove income caps, and extend the timeline on it through at least the middle part of next year.
It’s far from being a sure bet, and isn’t expected to get real traction publicly until closer to the November sunset of the current Federal first-time buyer $8,000 tax credit. Any hope for the measure at all lies in convincing opponents in the House of Representatives that a big buyer incentive is not simply a home builder bailout. Clearly, two votes this past Winter showed that’s exactly how many Congressmen and women view the Isakson measure.
CNBC’s Diana Olick noted in her blog an informed estimate on the taxpayers’ price tag to fund the program, intended to jolt the economy by spurring a flood of demand for housing, setting off multiplier effect economic activity and hiring. Here’s her source on the cost of an expanded tax credit program.
A letter to Sen. Isakson from the Joint Committee on Taxation provides a revenue estimate for Isakson’s bill, S.1230, the “Home Buyer Tax Credit Act of 2009.” Assuming an enactment date of July 1, 2009, we estimate that your proposal would have the following effect on Federal fiscal year budget receipts:
2009 2010 2011 2012 2013 2014 2009-14 2009-19 -0.3 -23.5 -13.3 -1.6 0.1 — -38.5 -38.5
Existing Home Sales/Prices, New Home Sales/Prices, Housing Starts/Permits, HMI
Isakson is busy working the Senate for support to his big jolt plan, which back in February got a yea from Senators before being nixed into oblivion during the reconciliation process that led to the actual $790 billion Stimulus bill that became law.
Here, from his own press statement, is who’s lined up with him so far:
Isakson immediately picked up a bipartisan group of co-sponsors for his legislation, including Senators Lamar Alexander, R-Tenn., Jim Bunning, R-Ky., Saxby Chambliss, R-Ga., Chris Dodd, D-Conn., John Ensign, R-Nev., Joe Lieberman, ID-Conn., Lisa Murkowski, R-Alaska, James Risch, R-Idaho, and David Vitter, R-La.
In addition, the National Association of Realtors and the Housing Working Group of Business Roundtable today endorsed Isakson’s efforts to expand the current home buyer tax credit as part of recommendations to help return stability and growth to the U.S. housing market.
As with many of the initiatives under consideration to help set the nation back on course toward recovery, a bigger, bolder tax credit for home buyers sparks vehement debate. It’s the free-marketeers vs. the Keynesians who believe that the private markets won’t work efficiently without a little public sector TLC.
Hence, the recurrence of a proposal to kickstart the broader economy by firing up its engine: housing.
Here’s a story that sums up various tax-credit initiatives kicking around committee in Congress.
After a latent period, the NAHB-backed Fix Housing First Coalition is kicking back into action in support of the Isakson proposal, according to the coalition executive director Ken Gear.
“We’re certainly going to work for an extension, and hopefully, even an expansion of the $8,000 program,” said Gear. There’s delicacy in the timing, however.
“We don’t want to disincentivize people from going for the tax credit that’s in place now by making too much noise about something that may not even happen,” Gear said. Right now, the high priority focus is on extending the time-line to beyond November 30th into next year.
“When you look at the May 29 HUD announcement that buyers would be able to apply the tax credit to their down payment, the November 30th expiration doesn’t really allow that to take full effect,” Gear said. “The State Housing Finance Agencies have a lot of work to do on their part to get up and running with the programs to monetize that tax credit, so for that effort to be worthwhile, they’re going to need more time.”
Gear says that indications that Federal and selected state tax credit programs have been working to stimulate demand among buyers should strengthen the lobby to legislators for more.
Meanwhile, Gear updated us on another initiative near and dear to many of the larger home builders, the net operating loss extension. Per analyst Ivy Zelman quoted in the Wall Street Journal over the weekend, home builders have availed of about $2.55 billion in tax rebates from Uncle Sam, and if rules change to allow companies to reach back to taxes on profits dating as far back as 2004, there’s a whole other mountain of cash they can put in their coffers.
This has been a divisive issue among home builders. The largest ones–including the publicly traded ones–have been rabidly supportive of extending the NOL carryback period. The NAHB, which needs to represent the interests of the broader rank-and-file builder, has not been so.
But lately, the big builders and the NAHB have agreed to work together in support of NOL, and a big-and-little builder coalition, the Homes For America Alliance, has united behind extension appeals that should surface on the autumn Congressional docket for vote.
Stay tuned to see if strange bedfellows continue to make it through the long dark night of this downturn.
Comments
6 Responses to “Home Buyer Tax Credit Update”
Leave a Reply
[...] Excerpt from: Home Buyer Tax Credit Update | Housing Crisis [...]
[...] Go here to read the rest: Home Buyer Tax Credit Update | Housing Crisis [...]
[...] View post: Home Buyer Tax Credit Update | Housing Crisis [...]
NAHB Calls on Congress [on Recess] for Action…
As always, interesting timing for the National Association of Home Builders. Both Houses of Congress…
This article was very informative. I will be graduating college next May and wanted to buy a house this year. However, it is going to be difficult to close on a rural development loan in less than 60 days, so I will more than likely miss the deadline this year. If the tax credit is extended for 2010 also, that would be wonderful especially for people like me!
I would love to see this bill pass even if it stays at $8,000. I am not a first time home buyer but I am buying a bigger house for my growing family and would like to see some help for us also