Home Buyer Tax Credit - Issue Summary
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| What is the fundamental issue? |
In July 2008, Congress enacted a $7500 refundable tax credit for first-time homebuyers (those who had no ownership interest in a principal residence in the previous 3 years). That credit applies to purchases between April 8, 2008 and June 30, 2009. An unusual provision in the credit requires that it be paid back to the Treasury in $500 increments, beginning in 2011. Prospective homebuyers have objected to the repayment feature.
The tax credit was increased to $8000 as part of a large stimulus bill (H.R. 1) enacted during the in February, 2009, first month of the Obama Administration. The repayment feature has been eliminated for 2009 purchases, so long as the purchaser remains in the house for more than 3 years. The repayment feature remains in place for 2008 purchases. The $8000 credit for 2009 is in place for purchases between January 1, 2009 and completed before December 1, 2009. It remains a first-time homebuyer tax credit. |
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| I'm a Realtor®. What does this mean to my business? |
| The credit was implemented in 2008 as a temporary tax incentive that could boost sales. The repayment provision had a chilling effect during 2008, so the credit was not widely embraced. Eliminating the repayment will provide a much stronger incentive and be a useful marketing feature. During several months of the first half of 2009, first-time homebuyers represented more than 50% of sales. Historically, first-time homebuyers have been about 35 - 40% of purchasers. |
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| NAR Policy: |
| NAR strongly supports the first-time homebuyer credit. NAR also believes it should be extended through 2010. |
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| Legislative/Regulatory Status/Outlook: |
| The credit has been enacted, effective through December 1, 2009. At the 2009 Midyear meeting, NAR talking points included advocacy for extending the credit through 2010 and permitting all purchasers to utilize it. |
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| Related Information: |
| www.realtor.org/2009housingtaxcredit |
 Link to Thomas
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