Should Congress Extend the $8,000 First-Time Buyer Tax Credit?
As part of the so-called “economic stimulus package” signed into law in February 2009, people who are a “first time home buyer,” as defined in the law, can receive up to $8,000.00 as a direct credit against any income tax they owe to the federal government for the tax year 2009.
The main qualifications to receive this tax credit include
1. Taxable gross income limits of not more than $75,000 for a single person, or not more than $150,000 for married couples filing a joint return;
2. A single person cannot have owned a home within the previous 3 years; and, for married couples, this disqualifier says, that neither spouse can have owned a home within the previous 3 years; and
3. The transaction must close during the 2009 calendar year.
The arguments of the equity of this tax credit, as it presently exists, are numerous.
For example, if one spouse owns a home outside of the marriage, the other spouse who does not have ownership of that home and has not owned any other real estate during the previous 3 year period is penalized if they buy a home as a single owner.
But, the most rational argument is, that if it is the true intent of the federal government to stimulate the real estate sector of the economy in hopes of avoiding further foreclosures and prevent the continued erosion of market value, why not remove all limitations on this income tax credit? By doing so, it would certainly encourage hundreds of thousands more people to participate, would substantially stem the tide of foreclosures, which would, in turn, significantly reduce the number and dollar value of the non-performing loans in the portfolios of numerous banks, which would then create a more healthy banking system, the life-blood of any economy.
In fact, it’s been estimated, that about 335,000 people actually took advantage of the current first-time buyer tax credit. Can you imagine how many more people would buy a home if there were no limitation on the number of homes a buyer could own and buy, and no limitation on the income level of the buyer?
One has to seriously wonder if the present administration is really interested in stimulating our economy, or just give the appearance of doing something? If they were genuinely serious about improving the real estate sector and the general economy, why would they place such restrictive limitations on this program? Remember the “Cash for Clunkers” bungle? It caused so much buying activity, they had to stop it. Wow! Our government at work. (Imagine going to a government doctor?)
The most interesting point to be made about eliminating all limitations on a home buying tax credit, is that it does not cost the taxpayer a single penny in additional tax dollars. On the contrary; by involving more people in the activity of home buying through a no-limitation tax credit, the government would reap a windfall of tax dollars that would be generated by putting more people to work who would, in turn, be paying income taxes, reducing their dependency on government for unemployment benefits, and would also be contributing to increased economic activity across the board.
It’s probably a good idea to contact your congressional representative and senators, and ask that they create, endorse and pass legislation that expands a home buyer federal income tax credit to anyone who wants to buy a home during the year 2010. It will be interesting to hear their response.
