Obama's Tax Credit - Will It Really Help The Housing Market

$15000 Housing Tax Credit: Senate Adds Billions To Obama’s Economic Recovery Bill
Author: Rob K. Blake Filed In: Mortgage News Reader Comments: 15
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Yesterday the Senate added a housing tax credit to the President’s recovery bill that gives home buyers a 10% of purchase price tax credit up to a maximum of $15,000, ostensibly to support the housing and mortgage markets. I see this $19 Billion dollar addition to Obama’s Bill as more “quid pro quo” for the powerful lobbying interest of Realtors and home builders, the infamous NAR and NAHB, than stimulus.
Is this just another “subprime mortgage bubble” in the making? Instead of enticing folks to buy houses with offers of mortgage loans regardless of credit, we entice folks to buy homes with offers of tax breaks.
What’s the difference? Are we not simply mortgage the future of home owners again pinning our hopes of recovery on unsustainable, man-made pockets of demand?
$15000 Housing Tax Credit Qualifications
First lets discuss the proposal that passed the Senate, click this link to read it yourself.
2009 Home Purchase Tax Credit Basics:
1. The tax credit is the lesser of 10% of the home price or $15,000 and is spread equally over 2 tax years.
2. The housing tax credit can be used for purchases of primary residences only…no investment properties or second homes.
3. The home purchase can be an existing home, a newly constructed home, or a bank foreclosure home…but the purchase must be completed within 1 year of the passage of the American Recovery and Reinvestment Tax Act of 2009.
4. The home buyer does NOT have to be a “first time home buyer” to qualify for this housing tax credit unlike housing stimulus based tax credits from last year.
5. This 2009 housing tax credit does NOT have to be repaid to the government unlike the $7500 first time home buyer tax credits from last year UNLESS you cease to make it your primary residence within the first 24 months (ie. sell within 2 years).
NAR and NAHB Get Payback for Campaign Contributions
Is this tax credit anything other than payback for campaign contributions?
Smells pretty fishy to me.
First, the sponsor of the amendment, Senator Johnny Isakson, is a former real estate broker himself.
Second, the NAR (National Association of Realtors) and the NAHB (National Association of Home Builders) are the always in the top 10 PACs in dollars contributed to Federal elections going back decades. And both lobbying arms spread the money around not favoring one party over the other.
That could explain why this tax credit got wide support by both Democrats and Republicans in the Senate.