Proposed Bill To Expand Tax Credit

 S. 1230,  The Homebuyer Tax Credit Act of 2009, a new bill just introduced by a bipartisan group would almost double the current homebuyers credit. The bill would surely help our Sacramento market, as it would not be limited to just first time buyers, but it does have some limitations…

From DSnews yesterday:

Bill Seeks To Expand Homebuyer Tax Credit
Carrie Bay | 06.16.09

Sen. Johnny Isakson (R-Georgia), along with nine bipartisan cosponsors, has introduced S. 1230, The Homebuyer Tax Credit Act of 2009. The bill would increase the federal tax credit for the purchase of a home from the current amount of $8,000 to $15,000. It would also extend the benefit to all homebuyers, not just first-time purchasers.

The expiration of the tax credit would be pushed out as well. Currently, the $8,000 first-time credit has a sunset date of December 1, 2009. The new credit would become available immediately on the date of enactment, and be in effect for one year after. The legislation also would eliminate the income caps of $75,000 for an individual and $150,000 for a couple under the current tax credit so that there is no income limit for eligibility.

Joe Robson, chairman of the National Association of Home Builders (NAHB), said his organization supported Congress’ consideration of tax measures as a means to restore housing health. “The current $8,000 first-time home buyer tax credit has proved to be an effective policy targeted toward a specific demographic group that is showing tangible results,” Robson said. “Enhancing this credit would help to stoke the economic engine at a key point in our recovery.”

However, unlike the existing tax credit, the new one would not be refundable, meaning that the credit can only be applied toward the homebuyer’s tax liability and will not be paid out in the form of a refund if the credit exceeds liability. As a result, the tax credit downpayment programs instituted by several state governments and HUD would be less available because the homebuyer’s tax liability must be known in order to calculate the actual credit amount.

David G. Kittle, CMB, chairman of the Mortgage Bankers Association (MBA), said, “As this bipartisan proposal moves forward, we hope that policy makers will make the tax credit refundable as a tax refund if the person’s tax liability is less than the amount of the credit, so borrowers can take full advantage of this benefit.”

Kittle added that lawmakers should also ensure the tax credit is made available at the closing table, since one of the greatest hurdles for many homebuyers is saving money for their downpayment.

The Business Roundtable, which is an association of CEOs from large corporations, has been aggressively lobbying lawmakers of late to increase the homebuyer tax credit to $15,000 and make it available to all consumers.

Richard A. Smith, president and CEO of Realogy Corporation and chair of Business Roundtable’s Housing Working Group, said, “If the housing market is not corrected or stabilized, the tide of the recession is not likely to reverse in the near term, and the slide in the economy overall will continue. We believe targeted, demand-side solutions … will provide a critical next step for a housing recovery that will help create jobs and boost the economy as a whole.”

In addition to the tax credit expansion, the CEOs have recommended the Federal Reserve push forward with its efforts to keep 30-year fixed mortgage interest rates low and do so for the next 12 months. The Roundtable is also calling on Congress to make permanent the temporary conforming loan limit of $729,750 for high-cost markets, and wants regulators to conduct a comprehensive review of servicers’ foreclosure mitigation and loan modification programs due to rising re-default rates.

Sen. Isakson has pushed hard for a non-repayable tax credit for homebuyers because he says he knows it will work. Isakson spent more than three decades in the real estate business, beginning his business career in 1967 when he opened the first Cobb County, Georgia, office of a small, family-owned real estate business, Northside Realty. Isakson later served as president of Northside for 20 years, growing the company into one of the largest independent residential real estate brokerage firm’s in the Southeast.

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