As outlined in Brent’s discussion below, the $8,000 federal tax credit for first-time home buyers is set to expire November 30, 2009. Since its inception earlier this year, the tax credit has brought 1.4 million new buyers into the market nationwide, according to NAR. In California, nearly 40 percent of first-time home buyers reported they would not have purchased a home without the tax credit, according to a C.A.R. survey.
We feel it is our job to keep you abreast of any and all changes happening in the financial and housing markets. The extension and expansion of the homebuyer tax credit is something that we feel deserves your attention. We support an extension and expansion of the federal tax credit through 2010 and to include all home buyers—not just first-timers. Historically, housing has led the nation out of economic downturns, and can do so again.
Most importantly we are asking you to get involved. If you could benefit from the homebuyer tax credit, have already done so, or know someone who has, then please take action by getting in touch with your Congressperson. Click here to visit the official website to take action! Copy and past this link into your web browser if you’re having trouble opening the link above: http://takeaction.realtoractioncenter.com/campaign/hbtc/w6nexgg42j3tbket?.
One of the key issues on the table is the proposed expansion of the tax credit submitted by Sen. Johnny Isakson, R-Georgia, as an amendment to the original bill earlier this year to be a part of the economic stimulus package for 2009. The proposal will change the original terms in a couple of very important ways: increase the amount to $15,000 (or 10% of the home’s price tag, whichever is less) and be available to anyone (not just first-time homebuyers) buying a primary residence during a one-year period beginning on the date of enactment.
Below is a recent update published by the Wall Street Journal about the out pouring of support and push for this new legislation:
UPDATE: Industry Makes Case For Home Buyer Tax-Credit Extension
A slate of representatives from sectors that thrive on the construction, sale and upkeep of homes made a strong pitch for extending the $8,000 first-time home buyer tax credit in a U.S. House hearing Wednesday.
The home builder, realtor, construction, title insurance and architecture industries argued that the credit has helped to stabilize the housing market and also boost the broader economy. Some of the groups are pushing to increase the size of the credit and expand it beyond first-timers.
“The economic stimulus created by established households moving into new homes and the added construction necessary to answer demand where there is no excess supply generates jobs, wages, salaries, business income and tax revenues,” Joe Robson, an Oklahoma home builder, said in prepared remarks to the House Small Business Committee.
Passed into law earlier this year as part of economic stimulus legislation, the credit is set to expire on Nov. 30.
Extending the credit enjoys scattered support from members of both parties in Congress. However, it could meet resistance from lawmakers looking to repair their fiscal bona fides after the costly bailouts of the financial and automobile sectors and legislation to prop up the economy.
The price tag for merely extending the credit will be high: It will cost nearly $1 billion per month, according to an estimate from Congress’ Joint Tax Committee. A Senate proposal to boost its size to $15,000 would cost much more.
House Democrats are also likely to demand measures to offset the cost of any extension, forcing proponents to compete for the limited “pay-fors” available to cover the cost of spending measures.
Industry groups contend that not extending the tax credit could jeopardize the fragile housing recovery, creating more costs for the government down the road. They point to an oversupply of homes on the market and the threat of another wave of foreclosures to argue that the credit is still needed to prop up demand.
“The threats of more foreclosed property coming to the market, combined with the mortgage rate resets and growing unemployment are simply too great to take a wait and see approach,” Joseph Canfora, a real-estate broker from East Islip, N.Y., said in prepared remarks on behalf of the National Association of Realtors.
The National Association of Home Builders is pushing to extend the credit through Dec. 1, 2010, and open it to all people buying a primary residence. It estimates that this would boost home sales by nearly 400,000 next year, creating nearly 350,000 jobs.
Pamela Volm, the president of a Maryland construction company, argued the credit is helping to keep construction workers employed.
“New buyers purchasing homes would mean millions upon millions of dollars injected into local businesses and the communities in which they are located,” Volm said in prepared remarks.
The Mortgage Bankers Association supports expanding eligibility for the tax credit and also wants to increase its size to $15,000. The trade group, in a statement submitted to the panel, argued its proposal will help to combat a glut of homes in certain parts of the country.
“In simple terms, demand is not keeping up with the current supply. MBA supports tax initiatives that would encourage home purchase activity,” the group said in the statement.
- Jessica Holzer, Dow Jones Newswires. Published October 7, 2009. Click here to see the original article.
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