REPS. PASCRELL AND FOSSELLA UNVEIL BIPARTISAN HOMEBUYER TAX CREDIT BILL
Legislation Would Provide $10,000 Tax Credit to Boost Housing Market & Spur Economic Growth
U.S. Reps. Bill Pascrell, Jr.(D-NJ-08) and Vito Fossella (R-NY-13) today unveiled bipartisan legislation to provide a temporary homebuyers tax credit of $10,000 in an effort to boost the housing market and spur economic growth.
The lawmakers said their legislation would apply to principle residence purchases to protect against speculative purchases, "flipping" or abuse and could be claimed only once by taxpayers. The measure, which is targeted at modest home purchases but acknowledges high-cost areas, would apply only to houses that meet the new GSE conforming loan limits passed in the Economic Stimulus Package - or 125% of median home price, not to exceed $729,750. In addition, the bill includes an Alternative Minimum Tax (AMT) blocker to protect Americans who claim the credit. The tax credit would expire one year after enactment.
Fossella said, "The housing crisis is at the heart of the economic slowdown that confronts our nation today. A homebuyers tax credit would provide an immediate boost to restore the housing market while stabilizing prices and reducing foreclosures. In many communities, housing inventories continue to increase as home prices continue to decline - a recipe for long-term economic trouble unless we act to encourage homeownership. This bill represents a piece of the puzzle to solving the housing crisis. It will also help Americans protect the equity that they have worked so hard to build up over the years."
Pascrell, a member of the tax-writing House Ways and Means Committee said, "This legislation is an emergency first step that will help families purchase homes again and stimulate the economy. New home sales are at their lowest point in 13 years and tumbled an alarming 40.6 percent last month in the Northeast alone. There will be long-term consequences for our national economy and in our communities if Congress doesn't move forward aggressively to increase homeownership. I will push this new homebuyer tax credit with urgency until the housing economy recovers."
Nationwide, seasonally-adjusted home sales decreased from 6.6 million in February 2007 to 5 million in February 2008 -- a decline of nearly 24%. Home sales have dropped from nearly 7.1 million in 2005 to 6.48 million in 2006 (a decline of 8%).
The legislation is loosely modeled after the successful mid-1970s tax credit for home purchases, which is credited with reducing a record-high three-year supply of unsold houses, increasing production and boosting housing prices.