Congress Considers “Fix Housing First” Tax Credit
In an effort to stabilize the housing market, Georgia Senator Johnny Isakson introduced S. 253, which seeks to expand the homebuyer tax credit passed by Congress last year. Instead of offering a tax credit only for first time home buyers that must be repaid over a 15-year period, the expanded proposal includes tax credits for all purchasers that do not need to be repaid unless the home is sold within three years. Included in the proposal are the following:
- Extending the eligibility period for the credit to December 31, 2009.
- Increasing the credit amount to 10 percent of the home price capped at 3.5 percent of FHA loan limits.
- “Monetizing” the credit so it is available at time of closing
- Allowing the credit to be used in conjunction with mortgages financed by state or local bonds.
The National Association of Home Builders, along with hundreds of businesses and organizations, stands firmly behind adding the Fix Housing First provisions to the anticipated economic recovery package. An economic study espoused by the Fix Housing First coalition projects that, over a four year period, results of a housing stimulus will include an annual 1% GDP increase, the creation of 940,000 jobs, and an increase in average homeowner equity by $25,000, resulting in state and federal revenues that will exceed the cost of the program.
The housing industry has ground to a halt after the subprime mortgage fiasco and the resulting foreclosures left many markets flooded with new construction. Home values fell and credit dried up. The way to fix the problem, according to Senator Isakson, is to offer a non-repayable tax credit to home buyers, a measure that worked when a similar housing crisis left a three year supply of vacant homes in the mid 1979s.
Of couse we would like to see green building incentives added to a housing stimulus package, perhaps something involving energy efficiency guidelines or the new tax breaks for wind and solar, but green building can only continue to grow in a strong housing market.
I am still waiting to make my first home purchase and this type of plan is what I and others like me have been waiting for. I have been reluctant to jump into the market too soon knowing that the government is needing to take some sort of action to pull buyers back into the market. My money is here and waiting…
So much good legislation coming out now. I also like the (similar) new refundable tax credits (to get investment in renewable energy going again) proposal in the House.
The investment tax credit was not usable once the economy crashed. But the House suggests letting it reduce OLD tax liability from the previous year (before the crash), then it is a way to spur investment now. Wind projects are the most affected.
I am a 23 year old, and will definitely be purchasing a first-time home/condo this year if this legislation is passed. This monetized tax credit is very beneficial in helping me with a down payment. But I feel that you should be able to put some money down in order to take advantage of this tax credit… it should not be given to people that have a 0% down payment.
Brandon, you should be able to qualify for an FHA loan which I believe is at least a 3.5% down payment commitment on your behalf. I aggree with you, and I believe long are the days that someone will be able to purchase a home with 0% skin in the game.
This still burns me up.
I bought my house on 3/11/08 without waiting on “free money”.. but I am left out in the dark because it began in April. Who’s idea was THAT?? April? The tax year starts in January !!!!
This is exactly what I need to give me that little extra bit of confidence to buy a new home. I think it will do a great job of stimulating the economy by encouraging the purchase of new homes, not just refi’s at a lower interest rate. I hope it passes and I can do my part to stimulate!
Well, me and my wife did have 3-4% for a down payment but we learned of a “rural development loan” where there is no money down required, and there is also no PMI. This enabled us to get into a home that we wanted AND left us with money in our pocket.
Anyone know when this might pass?
This is a greeat idea. I work in the real estate industry. We have to fix housing first. Housing creates more jobs than any other sector. The $15,000 credit availabel at clsoing would help many people get into homes. I would like to see the 4% loan avaialble to those who want to purchase and to those who want to refinance. It coudl help many stay in their homes with a lower interest rates. Having homes go to foreclosure in a neighborhood hurts everyones home values. The American people should be behind this bill 100%.
As a prospective first time homebuyer I’d like to the the tax credit as well. The reality of the situation is that 4% probably won’t happen and a tax credit won’t be $15K. Also, I have no idea why the income limits for these tax credits aren’t regionalized. I’m in my late 20’s make slightly over $100K/year and live in Manhattan. The current $7.5K tax credit has a flat income cap of $75K. Someone making $65K in San Antonio, Tx can afford a 3-4 bedroom house. On my income I struggle to rent a 600 sf. apartment…
Also, I’m tired of hearing sob stories about some single mother with a $45K salary who’s gonna lose her how that she bought for $350K with 0 down. That dumbass deserves to lose it. Call me crazy, but I think seriously evaluating your finances prior to buying is sort of important. Personal responsibility people!