This past week, the United States Senate passed a bi-partisan amendment to the Economic Stimulus Bill, proposing up to a $15,000 tax credit to individuals who purchase a principal residence. This amendment would sunset the $7500 housing tax credit originally proposed. It would also extend the eligibility period from June 30, 2009 to within one year from the date of the Bill's passage.
The tax credit would be $15,000 or 10% of the purchase price, which ever is less. The tax credit would not have to be repaid. Tax payers could claim the credit on their 2008 tax return, providing an immediate benefit. This would go a long way towards helping first time homebuyers, stabilitzing the real estate market and stimulating buying of home related products and services. Just what the doctor ordered. This makes a lot more sense than spending on projects that may take years to implement. We need to stimulate this economy now.
To prevent misuse of the tax credit, the credit would have to be repaid if the homeowner sells the residence within two years. This removes speculators from the mix, who often destabilize neighborhoods, rather than build them. Home ownership has so many positive attributes for our economy and society. Finally, our law makers are thinking along the right lines. As I have written many times, housing got us into this economic mess, and housing will get us out.
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