More Tax Credits Coming for Homebuyers?
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Glass House Yesterday I read a news item that stated the House and Senate are considering another tax benefit for homebuyers and homebuilders. The idea the House is considering is basically giving a tax credit of $7500 to people who have not owned a home in three years. In the Senate, the version of the bill gives buyers up to $7000 for purchasing a foreclosed home. It sounds like free money, right?
The funny thing is, if this bill were passed, it would benefit mostly the homebuilders. In markets like the San Francisco Bay Area, $7000 to $7500 is barely a drop in the bucket for a median priced home. Meanwhile, the other side of the bill is that the homebuilders can use their current losses against the gains they received during the boom years and get millions in tax rebates. So whatever will be credited to homebuyers will be pale in comparison to what the homebuilders gain.
Another fishy thing is that all of these tax credits will be funded by the government, which means that they essentially want to use tax payer money to prop up ailing homebuilders. I think this move will probably prop prices up because homebuilders will have less incentive to slash prices and move their inventory. No wonder the mouthpiece in the article who is promoting this bill is with Toll Brothers, a luxury homebuilder.
Once again, I wish the government will just leave the housing market alone and let the prices fall to an affordable level. There are enough tax benefits for homebuyers already. For example, homeowners get a tax deduction on their mortgage interest while renters do not get a deduction on their rent. Single homeowners also do not need to pay taxes on up to $250,000 on the gains of a home sale. Just recently, the government made short sales more appealing by eliminating the taxes on forgiven loans. All of these tax breaks are enticing enough to a would be home buyer, and there is no need to prod people any further into a falling market.
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I agree with you that our government should stop messing with the housing market. They have enough to worry about and should let the free market take care of itself. If the federal government would stop wasteful spending on pork and downsize the workforce we could balance the budget and give more money to every American by less taxation.
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I clicked the "Button", that's pretty funny :) If only it were that easy.
This is a considerable pile of corporate welfare. It will be exploited just like the SUV & Truck tax credit was.
If the government actually wanted to do something to facilitate home ownership they could expand HUD programs that help get people into guaranteed fixed rate loans.
I heard that the Democrats were going to reject and PAC or Lobbyist money during the rest of the election. I hope that becomes a trend.
Agree 100%
Thanks for the heads up on the proposal for new tax credits for homebuyers/home builders. I agree with your position and have forwarded your article to my Congressman and U.S. Senators.
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In Florida housing tax credits could be as high as $12,000 for buyers. That's quite an incentive.
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I certainly do hope that it is not passed because the housing market seems to be doing fine how it is and changing something like this may ruin it.
Tax Credits for homebuyers? I think I'll punt this one off to Gordon Brown. We could do with some help like this in the UK!
Everything the government touches turns to Garbage. Everything. It's the reverse Midas touch.
Anyone disagree? And one of the main premises the U.S. was create on was a general distrust of government.
100 years ago, people didn't even think about the Federal government unless it was about the Post Office. Today, government, and thinking about government, is so interwoven in daily life, it's impossible to get away from it.
When will people learn?
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This is a great article. I didn't know that this was happening. I'll have to look into it further. If the government does take advantage of this I wonder if there will be any regulations for people that receive a higher income or purchase $800,000 + houses.