Home buyer tax credit extended, expandedSan Francisco Business Times – by Kent Hoover
The House of Representatives passed legislation Thursday that would extend and expand the tax credit for first-time home buyers.
The provision was included in a bill that also extends unemployment benefits by an additional 14 to 20 weeks and lets all companies, not just small businesses, carry back current losses to offset profits made as long as five years ago. The bill passed the House on a 403-12 vote. The Senate passed the legislation 98-0 Wednesday, and President Barack Obama is expected to sign it into law Friday.
The $8,000 first-time home buyer tax credit, which helped home sales rebound this year, was scheduled to expire Nov. 30. The legislation extends it to homes that are under contract by April 30, 2010, and creates a new $6,500 tax credit for owners of existing homes who buy a new principal residence. To take advantage of this credit, buyers must have lived in their old house for at least five of the past eight years.
The legislation also increases the income eligibility limits for the tax credit from $75,000 to $125,000 for individuals, and from $150,000 to $225,000 for joint filers. The cost of the home cannot exceed $800,000.
More than 1.4 million households have benefited from the current tax credit, “the majority of whom have incomes below $50,000,” said Rep. John Lewis, D-Ga.
“This legislation would help even more moderate-income families fulfill the American dream,” he said.
Sen. Johnny Isakson, R-Ga., pushed the Senate to expand the tax credit to “move-up” home buyers. He said this is the last time the tax credit will be extended.
“I urge all Americans, whether they’re first-time buyers who’ve always dreamed of buying a home of their own or someone who’s been gridlocked in the failure of our move-up market, to take advantage of this opportunity,” said Isakson, a former Realtor.
The National Association of Home Builders predicts the extended and expanded tax credit will generate 180,000 additional home sales.
“Today’s action by Congress will further stabilize housing and the economy by creating new jobs, stimulating home sales, reducing foreclosures, cutting excess inventories and stabilizing home prices,” said NAHB Chairman Joe Robson, a home builder from Tulsa, Okla.
The National Association of Manufacturers praised Congress for expanding the net operating loss (NOL) carry-back provision to all businesses. Businesses normally can use current losses to offset taxes paid in the previous two years, enabling them to get a tax refund. The economic stimulus bill enacted in February allowed businesses with annual revenue of under $15 million to carry back losses for five years. The new law allows larger businesses to get this break as well.
“This provision is urgently needed,” said Monica McGuire, NAM’s senior policy director for taxation. “More than 20 percent of small and medium-sized NAM members reported NOLs in 2008, and we expect that number to double for 2009. This relief will give manufacturers the ability to transform a future tax benefit to cash today and stem the flow of mounting job losses.”
Washington Business Journal