Will the First-time Home Buyer Tax Credit Really Disappear?

The Obama administration’s $8,000 first-time home buyer tax credit is set to expire December 1, but some legislators and real estate officials are fighting to extend it until the housing market fully recovers. Under its current form, first-time home buyers with an annual income of $75,000 or less ($150,000 for married couples) who are buying a primary residence can qualify for the credit.

Here’s what people have said about the effect of the current tax credit:

Federal Housing Administration Commissioner David Stevens – “That small amount of tax credit has been a significant motivational tool in getting first-time home buyers into the market.”

National Association of Realtors chief economist Lawrence Yun – “It is having an impact in lifting sales and reducing inventory, which will help stabilize home prices. Stabilizing home prices is key to economic recovery, because that means bank balance sheets will not bleed and consumer confidence will improve.” (Yun also said that the tax credit contributed to roughly 350,000 home sales through August).

On Sept. 16, five senators including Senator Johnny Isakson, R-GA. and Senator Harry Reid, D-NV announced proposed legislation to extend the current credit for another six months.

“As we approach the winter months when the real estate market traditionally slows down, extending the current homebuyer tax credit is essential to continuing our nation’s economic recovery,” Senator Isakson said. “I also will continue to push Congress to increase the amount of the tax credit and to expand it to all buyers – a move that I believe would result in significant improvement in the housing market and in turn our economy.”

The problem that these Senators face is growing concern about the national debt. Some estimate that the six-month extension could cost the government as much as $17 billion, and as legislators face mounting pressure to control spending, it could be a tougher sell now.

Still, Isakson is predicting the extension will pass. “I don’t believe either this administration or the current leadership would look November 30 in the eye and let this thing die.”

One Response to “Will the First-time Home Buyer Tax Credit Really Disappear?”

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   May 15, 2012 at 5:16 am

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