Home Buyer Tax Credit Proposed

August 11, 2008

A proposed temporary home buyer tax credit is being supported by a growing number of real estate organizations. It could provide a meaningful boost to the housing market and the nation’s economy.

"House prices and inventories obviously are central to the outlook for the economy and financial markets," said Joe Robson, vice president of the National Association of Home Builders. "Policies that stimulate home purchases in the immediate future can pay huge dividends, and a temporary home buyer tax credit provides the most bang for the buck."

The recent revival of interest among prospective home buyers suggests that temporary credits could stimulate a wave of home buying that could quickly reduce excess supply in housing markets and halt the dangerous erosion of home prices and mortgage credit quality, Robson noted. The American Housing Rescue and Foreclosure Prevention Act of 2008 (H.R. 3221) contains a provision that would provide a temporary, first-time home buyer tax credit of $7,500 for the purchase of any home used as a principal residence. The transaction would have to be closed before April 1, 2009, to qualify.

The NAHB and other housing groups generally support this legislation, but some feel it doesn’t go far enough. They recommend additional provisions to help achieve a viable solution to problems in the housing market.

Posted in Real Estate, Taxes