Congress Extends Home Buyer Tax Credit
Congress passed legislation today that will extend and expand the $8,000 first-time home buyer tax credit. The bill is expected to be signed into law by President Obama on Friday.
The vote is attracting praise from the National Association of Home Builders, the Window & Door Manufacturers Association and many other groups that see the new legislation providing a much-needed boost to the fragile housing market and economy.
“We commend lawmakers for acting in a bipartisan manner to extend the first-time home buyer tax credit beyond its Nov. 30 deadline and expand it to a wider group of home buyers,” says NAHB Chairman Joe Robson, a home builder from Tulsa, Okla. “The tax credit has proven to be a powerful economic incentive. Today’s action by Congress will further stabilize housing and the economy by creating new jobs, stimulating home sales, reducing foreclosures, cutting excess inventories and stabilizing home prices.”
"The current homebuyer tax credit has been key to helping the struggling housing market this year," adds Michael O'Brien, WDMA executive vice president. "The expanded tax credit will help reduce the inventory of foreclosures, stabilize prices and restore consumer confidence in the housing market, which will help lift all businesses in the building supply chain."
The new law will extend the $8,000 credit for first-time home buyers for sales contracts entered into by April 30, 2010 and closed by June 30. Further, it has been expanded to include a new $6,500 credit for owners of existing homes who are purchasing a new principal residence. An existing home owner can claim the $6,500 tax credit if they have been residing in their principal residence for five consecutive years out of the last eight. Additionally, the income eligibility limits to claim the full credit amount for both groups of home buyers have been raised to $125,000 for individuals and $225,000 for married couples.
NAHB estimates that the extended and expanded home buyer tax credit will create 211,000 jobs and generate 180,000 additional home sales in the coming year. It is also expected to generate $9.6 billion in wage income and $6.9 billion in federal, state and local taxes.
The legislation also extends unemployment insurance benefits and offers relief to cash-strapped firms by providing broader tax benefits for businesses with net operating losses (NOLs). “The new NOL rules will throw a lifeline to struggling businesses, allowing them to continue making payrolls, paying business loans and otherwise keep their doors open until the economic recovery takes hold,” says Robson.
Previously, the NOL rules had been limited to companies with revenues under $15 million. "The NOL carryback expansion will help many companies in the window, door and skylight industry that have struggled during this recession," WDMA's O'Brien states. "This will free up capital and help save industry jobs across the country,"