"Extension of the Tax Credit or a New Version"...

Saturday, October 17, 2009

by Team Thomas

The much-talked-over first time home buyer tax credit continuance looks a lot more likely. Those watching carefully will recall that the House recently passed a bill which extends the $8,000 homebuyer’s credit for a select class: military personnel, diplomats, and intelligence staff serving overseas. The news comes not just as a refreshing relief for these civil workers, but as a premonition of good times for the rest of the nation.

The first-time homebuyer tax credit will expire next month, and go down in the history books as a benefit to over a million taxpayers who were able to finally move into a home they can call their own. But it may not be the end of the chapter.

We take the easy passage of the bill as a presage of passing more and similar bills. Several congressional leaders have already drafted plans of bills that would extend the first-time homebuyer tax credit, increase the first-time homebuyer tax credit, or other variations on the same theme.

In a closed-door meeting in the Oval Office last week, President Obama, Speaker Pelosi, and Majority Leader Reid, et. al., reviewed, among other things, the impact that an extended housing bill could have on the economy at large. Clearly, advantages would abound, and the meeting seemed to affirm this, though no promises or official announcements were made.

What stands in the way of a first-time homebuyer tax credit extension? Or any homebuyer tax-credit extension for that matter? Couldn’t the stymied housing market use some more governmental CPR? After these events, the answer is beginning to sound more like “yes.”

But there may be obstacles.

Billion dollar line items no longer evoke coughing paroxysms, even among the most ferociously fiscal conservatives, but the price tag of the proposed tax-credit extension is a big one: $30B at least. And $30B may just be a show stopper. We should have the answer to this question soon.

We will keep you posted!