Housing tax credit little benefit for the middle class or poor

[Ichingcarpenter]

The Senate's proposed $15,000 tax credit for homebuyers would boost the ailing housing market but do little to help low-income people who need it most, experts say.

The measure, which is part of the $827-billion economic stimulus plan that the Senate will vote on Tuesday, would offer the credit to anyone who buys a primary residence. But to take full advantage of the credit, buyers would have to earn enough to use it and spend at least $150,000 on a home.

As many as 1 million home sales could result from the tax credit, according to Mary Trupo of the National Assn. of Realtors.

"By increasing demand and decreasing inventory, it'll help to stabilize home values and result in fewer foreclosures," she said.

But low-income people will not benefit, said Linda Couch, deputy director of the National Low Income Housing Coalition. "The bill is focusing a lot more of its resources on higher income households and home ownership than it is on the lowest income people and people really teetering on the edge of homelessness."

Since the money comes as a deductible tax credit spread over two years, homebuyers must earn enough to have $7,500 in income taxes - $81,900 per year for a family of four to get the full benefit, according to the housing coalition.

See the story on the housing tax credit in Tribune newspapers and here in the Swamp.

Additionally, when the home costs less than $150,000 the deduction is only worth 10% of the house's value, meaning that those buying the cheapest homes wouldn't receive the full benefit.

Alma Jill Dizon, a Realtor from Riverside, Calif., agreed that there wasn't much in the measure for low-income Americans.

"From what I can tell, it's really going to benefit people who already have enough salary" to buy a house, said Dizon, who said she sells homes from $150,000 to more than $1 million.

Dizon said her market is dominated by older, three-bedroom, one-bath homes in need of repair. Those houses sell for about $150,000 to first-time buyers who don't have the savings to make a deposit on something larger.

"You have to owe enough in taxes in the first place" to take advantage of the rebate, said Dizon, "That's why it benefits people who earn more money and earn more on taxes."


http://www.swamppolitics.com/news/politics/blog/2009/02/housing_tax_credit_little_bene.html

[mainegreen]

1. I'm middle class. It's going to benefit me.

We're closing march 3rd. If we get the 15,000, we're going to turn around and spend 10,000 of that on contractors, and greatly improve the heating and insulation of the place. Maybe get solar hot water, and save cash long term. That 15,000 is going to be a huge help to us.

They just better get it passed before march 3rd, dammit!

[sandnsea]

3. You owe more than $15,000 in income taxes?

Really?? Wow, you are rolling in it, congratulations!!

[mainegreen]

12. Rolling in it? With a family to support and state income taxes?

With some of the highest health insurance rates in the country?

Rolling in it?

No, merely scraping by.

[Avalux]

2. That tax credit was cut today so it won't benefit anyone now.

They got rid of it to pare down the total amount of the bill.

[sandnsea]

4. To add more education and health spending

It was well worth the trade.

[Avalux]

5. Yes it was.

I am happy spending was increased from the Senate bill.

[Ichingcarpenter]

6. It would cost 39.2 billion and was a Republican amendment.

Under the $838 billion Senate proposal, which squeaked through the upper chamber Tuesday, homebuyers of any income would be eligible for a tax credit of $15,000. Yet only those wealthy enough to pay $15,000 worth of taxes over two years would receive the full benefit — and only if the purchased home costs more than $150,000. Otherwise the credit is 10 percent of the home price.



The Senate measure — sponsored by Sen. Johnny Isakson (R-Ga.), who voted against the final stimulus bill — is far more generous than the House-passed $7,500 tax credit for first-time homebuyers earning less than $150,000. The Joint Committee on Taxation estimates the Isakson provision will cost $39.2 billion over ten years. The House measure, by contrast, is projected to cost $2.6 billion. In addition, the Senate bill provides $4.7 billion less for Housing and Urban Development programs than the House version.


More on the amendment here:


http://washingtonindependent.com/29886/senate-stimulus-bill-cuts-low-income-housing-funds

[sandnsea]

7. The $7500 is refundable

It's a current program, I hope they didn't eliminate it altogether. However, you currently have to pay it back. It's to help with a down payment. What the House plan did was waive the repayment for a few years. That's why the House version cost less. It was more helpful to working families because it is refundable, but it only waives repayment until the economy gets going again.

[Ichingcarpenter]

8. The Congressional Rebate helped the middle class and below

I hope they kept it too. The other sounded good but when you looked
at it, it only helped the wealthy.

[sandnsea]

9. Exactly

But waive a big figure under someone's nose, and well, you can insert your own metaphore.

[sandnsea]

10. There is a waiver

"$3.7 billion to repeal a requirement that a $8,000 first-time home buyer tax credit be paid back over time for homes purchased from Jan. 1 to August 31, unless the home is sold within three years."

Hopefully this means they kept the refundability part and maybe increased it.

[TexasObserver]

11. It's more WELFARE for the WELL-FED.

Hell, forget that approach. Let's just make the law that any real estate purchased this year for investment and rental/leasing can be fully depreciated in ONE year! And make the holding period for capital gains ONE minute!! And have no recapture of depreciation upon sale!!!

[mmonk]

13. The National Association of Realtors supports tax credits for all,

including low income and supports foreclosure mitigation to stop the foreclosures. The association is currently lobbying hard for this approach.