Congress pressured to extend tax credit for homebuyers
Today Congressional Quarterly reported that Congress is feeling pressure to extend the tax credit for homebuyers that was included in the stimulus bill in February. The $8,000 tax break, which applies to first time homebuyers, is designed to revive the housing market. The credit ends November 30 and construction and real estate groups are lobbying politicians to extend it.
Johnny Isakson, R-Ga., plans to introduce legislation that would extend and increase the tax break. Under his proposal the credit would last through June 30 and increase eligibility to include individuals making up to $150,000 and families making up to $300,000.
While there is some support for the credit among economists, several others have questioned its effectiveness. Many homebuyers who would have bought homes anyway receive the credit. Also, homebuyers already receive tax incentives in the form of deductions for mortgage payments and state and local property taxes.
CRFB has warned several times in the past that stimulus funds should be temporary. Any permanent spending plans should be decided on in the normal legislative process. Tax and spending offsets should accompany any extension of stimulus programs such as the tax credit for first time homebuyers.