Friday, October 24, 2008

Rumored New Tax Credit for Homebuyers?

On October 25, 2008, the Washington Post reported that congressional leaders are considering a possible new tax credit for homebuyers as a way to head off a more severe housing crisis.  Here is an excerpt from the article:

Though House and Senate leaders have not agreed on whether to hold a session immediately after the election, national housing industry trade groups are pressing hard for a second round of emergency economic stimulus legislation, ideally before the end of December.

The rationale: The housing debacle was the trigger for the current economic mess, and until the housing market is put back on track -- and the huge backlog of unsold new and existing homes is reduced -- a serious recession may be unavoidable.

The National Association of Home Builders is working on a plan for a new, more generous tax credit for home buyers, possibly as high as $10,000 to $12,000. According to Jerry M. Howard, president and chief executive, the association also wants to create a mechanism to "monetize" the new tax credit -- turn it into immediately spendable cash for a down payment. This might be achieved through credit-anticipation loans from private lenders that would be repaid by buyers following receipt of the credit on their next federal income tax return.

For the entire article, see "Trying for a Bigger Tax Credit" in the October 25, 2008, issue of the Washington Post.


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