I believe our economic problems started with the housing market and that we must restore the housing market if we are going to restore our economy. We need to further restore the housing market and energize housing demand by expanding the first-time home buyer tax credit passed by Congress earlier this year.
I worked with Senate leadership to craft a compromise to extend and expand the current first-time home buyer tax credit, which was set to expire on November 30, 2009. This compromise was included in legislation to extend unemployment benefits, which passed the Senate by a vote of 98 to 0 on Nov. 4. The House passed the bill by a vote of 403 to 12 on Nov. 5, and President Obama signed it into law on Nov. 6.
This compromise will extend the current $8,000 first-time homebuyer tax credit, as well as establish a new $6,500 tax credit for “move-up” buyers so long as the home they are leaving has been used as a principal residence for five years or more. Both the $8,000 first-time home buyer credit as well as the $6,500 credit for “move-up” buyers will sunset on April 30, 2010. However, individuals who have contracts to buy a home as of April 30, 2010, will still qualify for the credit so long as they complete the transaction within 60 days.
The income limits to be eligible for both the first-time tax credit or the move-up tax credit are $125,000 for an individual or $225,000 for a couple. The cost of the home being purchased may not exceed $800,000 in order to be eligible for the credit. For purchases made in 2010, taxpayers will be able to claim the credit on their 2009 income tax return. Home buyers will not have to repay the credit, provided the home remains their principal residence for 36 months after the purchase date. However, the recapture provision will not apply in the case of a member of the Armed Forces, military intelligence or Foreign Service who is on qualified official extended duty. In addition, members of the military who have been deployed overseas for 90 days or more in 2008 or 2009 will have until April 30, 2011, to claim the home buyer tax credit.
The compromise also includes anti-fraud language that provides math authority to the IRS to do greater oversight during the processing of the return rather than waiting for an audit situation. It requires the taxpayer claiming the credit to be 18 or older as well as requiring a HUD-1 settlement statement to be attached when claiming the credit.
I have pushed hard for a non-repayable tax credit for homebuyers because I know that it will work. In the mid-1970s, America faced a similar housing crisis when a period of easy credit and loose underwriting flooded the market with new construction. Interest rates rose, the economy slowed and America was left with a three-year supply of vacant homes. Congress responded by passing a $2,000 tax credit for anyone purchasing a new home for their principal residence. I was in the real estate industry in Atlanta at the time, and the results were clear and swift as home values stabilized, housing inventory dropped and the market recovered.
One of the biggest problems facing the American people today is an illiquid housing market, a decline in their equity, a decline in their net worth and a depression in the housing market that we are obligated to correct if we possibly can. Today, in the United States, one in two sales made every day is a short sale or a foreclosure. That is an unhealthy market, and it is continuing to precipitate a downward spiral in values, loss of equity by the American people and a protracted, difficult economic time for our country.
Our economic crisis started with housing, and our economy will continue to suffer unless we do something now to immediately fix the housing problem.
Visit http://re-elect-johnny-isakson-ga20.blogspot.com/
