Erate says Interest rates boosted tax-credit use
A measure to extend and expand the first-time home buyer tax credit won unanimous Senate approval Wednesday on a 98-0 vote, and House passage would send it to President Barack Obama for his signature into law.
House Majority Leader Steny Hoyer, a Maryland Democrat, said the chamber may act on it Thursday.
If passed into law, the new tax credit would extend the existing credit for first-time homebuyers, worth up to $8,000, and offer a new credit of up to $6,500 for some existing homeowners.
The reduced credit would be available to all homebuyers who have been in their current residence for a consecutive five-year period in the past eight years.
The new rule also raises the qualifying income limits to $125,000 for single taxpayers and $225,000 for joint taxpayers, from the current $75,000 and $150,000.
The maximum allowed home purchase price would be $800,000.
A home buyer must have a sale agreement in hand by April 30 and close escrow by June 30, 2010.
Military personnel, deployed overseas for a minimum of 90 days in 2008 or 2009, would have until April 30, 2011 to claim the tax credit.
That's all good news for the housing market.
The National Association of Realtors says as many as 400,000 resale transactions (1.2 million for both new and resale homes) were completed specifically because of the first-time home buyer tax credit, since it began, and that put a dent in the housing inventory.
Home sales also add property and sales tax revenues to the coffers of local governments as reduced inventory helps boost prices and home values.
Fortunately, the first-time home buyer tax credit's availability has coincided with mortgage rates often hanging below 5 percent, according to Jeff Howard, CEO of Erate.com.
As the Nov. 30 tax credit deadline neared, reports from the Commerce Department, revealed new home sales slipped 3.6 percent in September and were down 7.8 percent from September 2008.
Tax credit history
As part of the Housing and Economic Recovery Act of 2008, Congress first created a $7,500 first-time home buyer tax credit for those who purchased a home between April 8, 2008, and July 1, 2009.
Later, under the American Recovery and Reinvestment Act of 2009, Congress extended the credit and raised it to an$8,000 tax credit for those who purchased homes by the current Nov. 30, 2009 expiration date.
By October 9, 2009, more than 1.2 million tax returns had claimed about $8.5 billion in the refundable tax credit, for both new and resale homes - according to the Treasury Inspector General for Tax Administration (TIGTA).
A TIGTA audit also revealed last month that nearly 90,000 taxpayers -- including nearly 600 children -- may have fraudulently enjoyed the credit, hoodwinking the government out of more than $600 million.
The new legislation includes provisions to stifle fraud after the Internal Revenue Service identified 167 suspected criminal schemes and opened nearly 107,000 examinations of potential civil violations of the first-time homebuyer tax credit.
Cheating the IRS is a federal felony that comes with a fine of up to $250,000 and three years in a federal pen, or both.
To combat fraud, a HUD-1 Settlement Statement will have to be attached to the tax return to secure the credit.
Perkins is the National
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Comments
This is nothing short of welfare. If you give a single mom who's unemployed $600 a month, it's "dirty" welfare and the lady should go get a job. Clinton cut welfare to single moms because "we couldn't afford it" - the federal government would go bankrupt paying out $20 billion a year in welfare to single moms. But today, you have the media and pundits celebrating welfare to people making $125,000 a year and couples making $250,000 a year.
This is pure welfare. It's a payment of taxpayer money to an individual person. What's worse, all it does is allow developers and home sellers to price their homes exactly $8,000 higher or $6,500 higher than they would have otherwise. Because 50% of home sellers are banks in most states, this is simply a way of giving $8,00 or $6,500 to banks for each home sale. It's like if I'm trying to sell my car and it's worth $10,000 and I'm trying to sell it for $15,000 and it won't sell. Then the government passes a $5,000 used car tax credit.
Why should the group defined as "home buyers" get welfare? Why are they more deserving of welfare and taxpayer payouts than the 22% of children in the United States living in poverty? Why do we want home prices higher than wages? Why doesn't the government, for example, have a car buyer's tax credit to try to drive up the price of cars. Oh! Wait. They did have that.
The point is that for most people wages haven't risen meaningfully in the past eight years. That means ordinary people benefit from lower prices for cars and homes. When prices are higher, people have to borrow more money to buy things. That's a scaam that the banks love. It's why college tuition is now $80,000 for a bachelor's degree at a mediocre university. It's not because of the cost of providing the education, it's because banks loan people the money to pay for it. This is very bad. America's only industry now is debt and trading houses.
I'm wondering when self-employed workers are going to get some welfare.
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