The Senate yesterday approved an $838 billion economic stimulus bill that includes a $15,000 homebuyer tax credit. In addition, U.S. Treasury Secretary Timothy Geithner unveiled a multitrillion-dollar financial stability plan that includes $50 billion for foreclosure prevention programs.
Officials hope that the $15k tax credit - with no repayment required - will inject some much needed life back into the housing market. The Associated Press reports that the homebuyer tax credit offered by Sen. Johnny Isakson, R-GA., would apply to any home purchased as a main residence and would cost taxpayers $19 billion.
How the tax credit works
The proposal would allow a tax credit of 10 percent of the value of new or existing residences, up to a $15,000 limit. Current law provides for a $7,500 tax break but only for first-time home buyers. People could claim the credit on their 2008 tax returns and it would apply to any home purchased for one year after the recovery plan becomes law.
Proponents of the new tax credit proposal believe it will encourage more people who are standing on the sidelines to purchase a home and it will help put people back to work in the housing sector building homes.
Give the people what they want
According to a recent nationwide survey conducted by the National Association of Home Builders, two-thirds of Americans support the $15,000 home buyer tax credit. The survey of more than 1,200 registered voters found that one-third of all respondents and 61 percent of renters would be more likely to buy a home if the $15,000 home buyer tax credit were to be enacted into law. David Crowe, chief economist of the National Association of Home Builders (NAHB), had said in a press release last week that in order for the tax credit to be fully affective, "Congress must make sure that the full $15,000 tax credit remains in the final stimulus package."
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