On Tuesday, U.S. Senator Johnny Isakson of Georgia testified before the Senate Committee on Banking, Housing and Urban Affairs about the need to further restore the housing market and energize housing demand by expanding the first-time home buyer tax credit passed by Congress earlier this year.
Isakson shared with the committee my personal experience as the President of a real estate company during the mid-1970s when Congress in 1975 passed a $2,000 home buyer tax credit. The credit drove buyers back to the market and ended the housing recession within a year.
During his 33-year career in real estate, he weathered four housing recessions and experienced many challenges and difficult markets, but never anything like the current housing market in America. America’s families have lost trillions of dollars in home equity as home values have fallen, and in some markets, continue to fall today. The current home buyer tax credit is set to expire on November 30, right as we are approaching the worst three months of the year for the housing market. He believes it is imperative that we retain the momentum we have gained as a result of the current credit and go into the spring market with the increased consumer confidence necessary for establishing a viable market.
Isakson believes the current first-time home buyer tax credit has made a difference. However, the real housing recession is not with first-time home buyers, but in the “trade-in” or “move-up” market in which Americans are putting off purchasing their next home.
Isakson will offer an amendment to the legislation extending unemployment benefits that would extend and expand the current home buyer tax credit. The amendment would keep the amount of the credit at $8,000, but would remove the first-time home buyer requirement, extend the tax credit until June 30, 2010, and raise the income limits to $150,000 for an individual or $300,000 for a couple.
For purchases made in 2010, taxpayers would be able to claim the credit on their 2009 income tax return. Home buyers would not have to repay the credit, provided the home remains their principal residence for 36 months after the purchase date. However, this 36 month recapture provision would not apply in the case of a member of the Armed Forces on active duty who moves pursuant to a military order and incident to a permanent change of station.
To view Senator Isalson's testimony from Tuesday’s Senate Banking Committee hearing, click here.