Can Congress Pass a $10,000 Home Buyer Tax Credit?
The $8,000 first-time home buyer tax credit will expire on November 30, 2009, unless Congress votes to extend the deadline. But with positive housing news coming out and with health care sucking the oxygen out of the room, is there the political will to extend and expand the $8,000 first time home buyer tax credit? Sen. Johnny Isakson (R-GA) thinks so, but instead of pushing his $15,000 home buyer tax credit for everyone, he is going to propose a $10,000 tax credit for everyone, including millionaires. He believes he can attach it to upcoming legislation as an amendment and get it passed.
I spoke with Sen. Isakson this morning about his efforts to get the tax credit legislation passed. Here are some edited excerpts from the conversation:
What happened to your $15,000 home buyer tax credit legislation?
There’s a lot going on. First, there is the uptick in housing prices of 3/10 of a percent. It’s a positive sign, but you’re coming up off of a 28 percent decrease in the value of homes, so nothing much has happened. We’ve stabilized on the bottom. In terms of housing starts, multi-family is up a little [1.5 percent], but not single-family. Single-family construction is dead as a doornail.
Sen. Ben Cardin (D-MD) and I introduced a bill on September 17th to extend the existing $8,000 tax credit, and take away the means testing including the income limits and first-time buyer requirement. We are hoping to raise the amoun to $10,000.
So there wouldn’t be a $15,000 home buyer tax credit, but you’re pushing for a $10,000 home buyer tax credit.
It’s the reality of what we can get. The question on the amount deals with how we’re going to pay for it. If it is $10,000, it is cost-neutral to the government. We can pay for it with TARP funds or stimulus that is already appropriated.
What will happen is the $8,000 tax credit isn’t extended or expanded by November 30, 2009, when it expires?
What little velocity we have in the housing market will go away at the worst time of year. December to February are the worst three months of the year for the housing market. If we don’t extend or expand the home buyer tax credit, we’ll go into the Spring market with no strength in the marketplace.
When do you plan to offer your $10,000 tax credit legislation?
We’ve introduced it, but the issue is getting it out of committee. Health care is taking all oxygen out of the room. But there are appropriations bills, tax extender bills, and enough other vehicles going through that we can offer it on the floor as an amendment. The timing will be the month of October – not later than the 20th.
Do you think you have a chance of passing it?
I’m the eternal optimist. We Realtors survive on that. Senators Dodd, (Kent) Conrad, and Cardin have all have been supportive when we’ve offered amendments on the floor. I have nine Democrats, and 38 Republicans who voted for me last time. That’s 4 shy of a 51 majority. As the media begins to focus enough attention on extending the tax credit, we’ll hopefully be able to remove means testing and bump up the amount.
Why do you think a $10,000 tax credit will work any better than what we have now?
I went through four recessions, 1968, 1974, 1981, and 1991. In whole or part, these recessions were the result of loose credit and shoddy underwriting. We just lost our bearing. Housing took us into those recessions and housing took us out. In a macro sense, when you’re looking to stimulate the economy, housing has proven time and again to do that.
Who would qualify for the $10,000 tax credit?
It’s for anyone who buys a personal residence. You have to live there for three years. There is no income limit, no means test. It’s not for investors.
So, your $10,000 tax credit would be available to anyone, regardless of income?
As I’ve said on the floor many times when people talk about means testing, we don’t have first-time home buyer crisis, we have move-up crisis. Move-up buyers are the ones that make the economy grow. Everyone taking transfers, renting houses. They’re not buying.