Tax Credit for Home Purchase Could Rise

dollar signLawmakers and businesses are calling for expansion of a tax credit for first-time homebuyers that has helped spark home sales in an otherwise dismal real estate market. With the tax credit scheduled to expire in the fall, some business groups say the amount of the credit, now capped at $8,000, should be raised to $15,000 and applied to anyone who buys a home.

The credit, introduced in July 2008, was expanded in February as part of the economic stimulus package. The proposals may face headwinds amid growing public criticism of government spending to rescue the economy and the widening budget deficit. Some economists say a tax benefit is vital to spur home buying and help stabilize prices.

It is time for Federal and State governments to realize that should they want to stimulate the economy, firing up the housing market is the place to start and that the remedies this far put in place are not sufficient to do so.

Current proposals:

·A Senate bill to expand the tax credit to $15,000 for any homebuyer regardless of income was introduced this month by Sen. Johnny Isakson, R-GA. It is co-sponsored by Senate Banking Committee Chairman Chris Dodd, D-Conn. (Isakson was formerly the president of one of the nation’s largest real estate brokerage firms and would likely know more about what it will take to put a floor under the housing market)

·A House bill to keep the $8,000 credit in place until June 2010 and expand it to all homebuyers was introduced last month by Rep. Kenny Marchant, R-TX. It also would provide a $3,000 credit to homeowners who refinance.

·Another bill in the House, introduced by Rep. Eddie Bernice Johnson, D-TX, would extend the credit to all homebuyers through 2010.

The Business Roundtable, a consortium of CEOs from large companies, urged Congress this month to expand the tax credit to $15,000 and make all homebuyers eligible.