Tax Credit Would Get Buyers Off Fence
A temporary tax credit would be the best incentive to move hesitant home buyers into the market, the NATIONAL ASSOCIATION OF REALTORS® told Congress on Thursday.
NAR said the tactic has been successful before; A 1975 temporary tax credit helped to "clear an over-supply of newly constructed homes during an economic downturn."
"We urge Congress to move quickly to conference and final passage of this tax incentive," said Jim Helsel, NAR treasurer and a partner in RSR, REALTORS®, in Lemoyne, Penn. "Failure to act quickly could further stall the housing market, hurting many of our members, who are predominantly small businesses owners and self-employed individuals."
Testifying for NAR before the House Committee on Small Business, Helsel said there are "three critical features for an optimal home buyer tax credit."
- The credit should apply to all residential real estate - not solely foreclosed properties.
- It should be temporary and only apply for a short period of time.
- It should provide higher income limits than those the House has imposed, particularly for single individuals.
"If these measures are put in place, many individuals who are sitting on the fence will take steps to buy a home. This would not only help homeowners, buyers and sellers, but also it could expand activity as individuals furnish, paint and improve their homes. This would help boost the nation's economy," Helsel said.
NAR also discussed the importance of updating the "passive loss" rules that were enacted in 1986 to bring small investors back to real estate. The passive loss rules were not indexed for inflation, making the tax incentive irrelevant in most cases, Helsel said.