WASHINGTON - Senators agreed Wednesday to extend a popular tax credit for first-time homebuyers and to offer a reduced credit to some repeat buyers. The tax credit provides up to $8,000 to first-time homebuyers but is set to expire at the end of November. Senators agreed to extend the existing tax credit for first-time homebuyers while offering a reduced credit of up to $6,500 to repeat buyers who have owned their current homes for at least five years, said Regan Lachapelle, a spokeswoman for Senate Majority Leader Harry Reid, D-Nev. The tax credits would be available to homebuyers who sign sales agreements by the end of April. They would have until the end of June to close on their new homes, said a congressional aide, who spoke on condition of anonymity because he was not authorized to publicly discuss the deal. Senators were still negotiating the expansion of a separate tax credit that lets money-losing businesses get refunds for taxes paid in previous years, providing them with an immediate source of cash. Senators in both political parties were hoping to add both tax provisions to a bill that would give people running out of unemployment insurance benefits up to 20 more weeks of federal aid. The Senate could vote on the overall bill as early as Thursday, but lawmakers were still haggling over several unrelated amendments Wednesday evening. http://www.msnbc.msn.com/id/33522046/ns/business-real_estate/
separate tax credit that lets money-losing businesses get refunds for taxes paid in previous years, ------------------------------------------------- The plot thickens. Everyone gets a trophy, everyone is a loser, where do we send the check. This is getting very complicated.
These policies of subsidizing various weak sectors with tax revenues are worrisome, because they may only put off the inevitable necessary adjustments in the sectors. In those cases little of lasting value will be gained at great expense. I would point to subsidy of corn farmers via motor fuel content regulation as an example of a subsidy that on balance is proving to be unwise. This subsidy has resulted in a false prosperity on mid-west farms which could not last once politicians were forced to recognize what they had been told all along: namely, that ethanol from corn was not competitive with gasoline from petroleum. In the meantime farm equipment was purchased on credit, new ethanol plants were constructed, and whole new companies financed with IPOs sprang up. The unintended consequences were high feed costs that damaged pork producers and a now struggling spath of new ethanol companies on the verge of bankruptcy unless this ridiculous subsidy is to be continued ad infinitum. If a subsidy makes good economic sense in the long run, i don't see a problem with it, but when the main impetus is political the result may be damaging overall rather than helpful.
Its All political. - - When you hold back most of the 'stimulus' money so that its not getting to main street (wanna bet more of it just happens to show up around time of the mid-term elections next year ?) - - well that sounds a bit self serving to me. The public and the media cheerleaders will likely gush - - - when people get a little bit of their own money back, after the house skims off their take. - Its coming out of your hide in future increased taxes & inflation, and a lower standard for everyone. Subsidies are by definition political. They force people to give money to favored interests that will benefit politicians. - - -
The housing credit is a joke. The only purpose is to save the over-leveraged banks who have foreclosed homes on the books. Just another ploy to take money away from the taxpayer and transfer it to financial companies that should already be bankrupt.
Everything they are doing to prop the system up is a joke. Of course they were going to extend it, the problem is going to be what happens when the stimulus money stops, housing is going to take years and years and years before it ever starts to find its way back .
All I know is that I've owned my main home from Dec04-Present and bought a rental property on Sep09. Where's my tax credit? Unless they reduce it to 3-4 years minimum and make it retroactive, murphy's law stays invoked. ;(