Home tax credit action: Isakson strikes a deal in Senate; Lewis looks at fraud in House
After a fruitless year pressing to increase a tax-credit for home-buyers to $15,000, U.S. Sen. Johnny Isakson has reached a compromise with Chris Dodd, the Connecticut Democrat – in which the tax credit would remain at $8,000, but its reach would be expanded.
Isakson’s office said the Georgia Republican plans to introduce an amendment to legislation extending unemployment benefits that 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.
“The current home buyer tax credit is set to expire on November 30, and we are approaching the worst three months of the year for the housing market,” Isakson said in testimony before the Senate Committee on Banking, Housing and Urban Affairs on Tuesday. “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.”
The price tag was the primary reason for backing away from the $15,000 figure. The Joint Committee on Taxation has scored the amendment at $16.7 billion over five years.
“Expanding the tax credit has a cost, and it is a significant amount of money,” Isakson said. “However, it is less than 3 percent of the amount of the stimulus, and we know from what has happened in the last nine months that the home buyer tax credit works.”
Isakson isn’t the only Georgian with an interest in the home tax credit. This morning, U.S. Rep. John Lewis (D-Atlanta) announced his Ways and Means oversight subcommittee will examine accusations of unjustified uses of the tax credit.
“I am concerned about recent reports that there have been fraudulent schemes involving the credit. This hearing will allow the subcommittee to hear what, if any, additional steps should be taken to allow the IRS to strike a balance between issuing timely refunds of the homebuyer tax credit and protecting federal revenue,” Lewis said in a press release.
According to today’s Wall Street Journal:
More than a million claims for the credit have been received so far, and housing-industry experts estimated that the credit has helped generate about 350,000 home sales that wouldn’t otherwise have occurred. But some lawmakers and tax experts now say there is evidence that a significant number of the claims might prove to be unjustified, or even fraudulent….
The IRS said it was investigating 167 “criminal schemes” involving the credit, according to the subcommittee. IRS officials on Monday declined to describe the suspected schemes or provide additional details.
For instant updates, follow me on Twitter.
Tell us what you think about the site
Customer Care »
Vacation stops, manage subscriptions and more
AJC Services
Sections
Other Editions
Guides
Visitor Agreement | Privacy Statement
© 2011 The Atlanta Journal-Constitution
22 comments Add your comment
Base
October 20th, 2009
1:13 pm
Johnny looks for a handout. Ha!Ha!
Steve
October 20th, 2009
1:30 pm
I saw an opinion poll three days ago that shows that a bit over 70% of those responding favored extending the current tax credit. Over 26% favored expanding it to all home buyers. Only 3% favored ending the credit. For those who oppose extending the tax credit, looks like you are out of touch, and more than likely…out of luck. No politician can afford to oppose the extension of the tax credit because if they do, and the economy begins to tank again, they will be blamed for pulling stimulus too quickly. Passing the extension is the most safe decision the politicians can make, and in the end, that is exactly what this will come down to.
In my opinion, if they are going to spend the money…because it is the politically safe thing to do, then they should expand the credit to everyone who buys a home in 2010. If this is about stimulus, then let’s be honest, who stimulates the economy more; a person buying a $300k home, or a person buying a $500k home? I’m pretty sure that the majority of first time home buyers aren’t bying $500k homes. Let’s be practical; give the money to the people who will stimulate the most; and that’s not just first time homebuyers!
gtfan
October 20th, 2009
1:43 pm
Steve, I somewhat agree, but if you’re buying an $500K home, is it really dependent on a lousy $8K (1-2% of the full price), just wait another month and the price will go down 5-10K. I’m not saying don’t give them the credit, I just don’t see it as a deciding factor.
I think the real benefit is allowing the home owner to use it towards the down payment, and actually, I think it should be mandatory if you don’t have 20%.
I got the credit and it was nice, I’m 30, saved up 20% for my home and bought it for $50K less than the person who was foreclosed on, paid in 2005.
The $8K has been set aside as a reserve towards new purchases. Since June 30th, I’ve bought a new TV, lawn equipment, furniture, etc. knowing I can pay it all off at anytime with the reserve.
Jefferson
October 20th, 2009
1:45 pm
How about retroactive ?
Kids raising kids. When will people grow up and be independent.
Matt Still In Texas
October 20th, 2009
1:56 pm
If almost everybody can get the $8K credit, wouldn’t you expect all the homes to sell for about $8K more. It’s the same reason raising the minimum wage doesn’t work.
Tea 4 2
October 20th, 2009
2:15 pm
The current home credit cost the taxpayer over $1,000,000,000.00 per month, this expanded waste will probably add another $500,000,000.00. At the hunt club this weekend all they lawywrs were comparing notes on how to sell their slum properties and get the taxpayer to pick up the tab.
Sen. Johnny Isakson is working with Dodd & Lewis because he isn’t even a RINO anymore, he is a DEMOCRAT with a R behind his name. Time to clean house in Congress
Will the housing crisis ever end?
October 20th, 2009
2:39 pm
I know I’m being selfish but I’ve had a condo on the market for 11 months with just one lowball offer that I couldn’t afford to accept. It’s priced at 73% of what I paid, I’m underwater and will have to pay more at closing. If it would help sell this albatross I would really like to see the credit extended…so I can end this nightmare.
Obama Admin. needs Econ 101
October 20th, 2009
3:02 pm
Well Matt Still in Texas, that’s an interesting point. Raising the minimum wage really only raises employer costs, which raises employer prices of services, which in turn raises inflation.
But very few actual people work for minimum wage and few companies pay it, thus reducing the impact on inflation. Whereas with the new rules on the tax credit, several more will qualify in a specialized market (real estate.) Personally I believe this could cause an additional real estate bubble.
But that is just my two cents.
Mike
October 20th, 2009
3:04 pm
Last week I received a property tax bill for 3500 (an increased of $2K). 90% of my current pay is used to pay my mtg and with the new tax bill, I will no longer be able to stay current with my pymt. On one hand, the gov is giving 8K for people who are buying a home for the first time. Is it fair that people are being rewarded to buy a home at a discount while the rest of us are asked to pay a much higer tax bill when we don’t have the income to support it. They would need to come up with a bill to help the working poor.
AKALady
October 20th, 2009
3:16 pm
I would love for the tax credit to be extended. I’m trying to buy a house, but this market is scarce. Electric heating/cooling homes are scarce, the foreclosures are damaged too much for me as a single woman, & the short sales are really short. I submitted an offer over a month ago on a short sale & it’s been frozen due to something with the seller’s lender (Wells Fargo). To the guy selling the condo, I think the fact that the detached homes are marked down so low is the reason the condo isn’t selling. I personally wouldn’t pay $100k+ for a townhome/condo, when I could get a larger home & a little more privacy for the same price. Good luck to you. Have you thought about just renting it?
Victor
October 20th, 2009
3:27 pm
@Will the housing crisis ever end?
What you fail to understand is that today’s housing market is exactly where it needs to be. If you think about it, the market has fixed itself, meaning your condo which is worth around 150-200 today, is what it should have been 5 years ago. You just fell in a get rich quick scheme like everyone else.
Isakson And Dodd Reach Compromise on $8,000 Tax Credit « Housing 101
October 20th, 2009
3:38 pm
[...] A link to the blog appears below: http://blogs.ajc.com/political-insider-jim-galloway/2009/10/20/johnny-isakson-strikes-a-compromise-o… [...]
Nobody reads long posts
October 20th, 2009
4:02 pm
Rep. Lewis, the first returns that you should scrutinize are ACORN-prepared. That’s free advice from a CPA.
CDW
October 20th, 2009
4:07 pm
Mike – can’t imagine why you are getting a $2000 increase over a previous tax bill of $1500, but I suggest you get on the phone to your tax assessor immediately and file an appeal. In our current market I’d find it difficult to believe that the value of your property almost doubled.
And to everyone else: the $8000 tax credit has a “trickle up” effect. By bringing in the first timers, it allows move-up buyers to sell. This effect is concentrated on the lower end of the property spectrum. In some markets, that may be $300-500k – the credit applies for buyers in all markets, not just Atlanta.
Many of those trying to sell right now are already in a pinch due to job loss, so continuing to offer an incentive for those with the financial wherewithal to buy doesn’t just help the first-time buyers, but also sellers who DID purchase within their means, who bought responsibly, but have been dealt a financial blow and need to sell just to break even.
The Atlanta metro area still has a considerable amount of inventory to clear. Until we get back to healthy inventory levels (estimated at about a 4-6 month supply), all homeowners will face the reality of depressed values.
Tea 4 2
October 20th, 2009
4:58 pm
It would cost about $1 billion a month to extend the existing credit. The bill sponsored by Dodd and Isakson would cost $16.7 billion, according to congressional projections.
Hey Big Spender
October 21st, 2009
11:22 am
Exactly how will this credit actually stimulate any sales that would not have occured otherwise?
Are people who already own a home going to go through the hassle of selling it and moving to save $8K ?
No they are not unless they were already planning to buy a bigger house.
So this is just a handout to those who are fortunate enough to be buying a larger house at a time when many are losing their homes.
Shame.
Feeding the Short Sale Market
October 21st, 2009
12:20 pm
As a real estate assistant I see several first time homebuyers that have no money. This tax credit is helping the poor get houses, only for them to go into forclosure within a few years. We currently have a seller who is in this position, and we have a few buyers who cant even come up with $500 earnest money. Is this really who we want buying houses? We are temporarily placing a bandade on a open wound.
Base
October 21st, 2009
1:32 pm
Sorry Sonny could have used stem funds to make up for the property tax relief he cut instead of giving tax cuts for making movies. Jiffy Johnnny just does what Northside Realty tells him to do.
Georgia home tax credit – renewed action | JeffBarnwellHomesForSale
October 23rd, 2009
12:01 am
[...] more about Johnny Isakson in the AJC. To view recently sold properties around metro Atlanta please visit JSBSells.com [...]
Mark in Florida
October 23rd, 2009
3:51 pm
I’ve been looking to buy my first home for the past 6 months and I’m going to wait a little longer so I’m ready financially. It will be a big help if they extend the credit and I’m hoping they will. It’s appalling though to read about the people, who seem to be numerous, that buy into homes they really can’t afford. Living beyond one’s means seems to be the American way and now those who have overextended themselves are crying out for someone to pick up the tab.
Personally the tax credit will be a nice cushion and piece of mind for my new family. With that and my own reserves, I will be able to own a home knowing I can make do for a while if I lose my job.
If people use the credit in this way and buy within their means, it will certainly help the economy. Alas, people don’t learn responsibility overnight and the credit will be used by many people who are unable to produce a fraction of a down payment. These buyers will create an inflated portion of the market which could easily collapse again a few years down the road.
Fools
October 28th, 2009
2:17 pm
You people are fools. An $8k tax credit inflates the value of the houses by $8k. Eventually they will have to take the tax credit away. When they do – prices will drop $8k. Anyone who buys a house now is paying $8k too much.
Mortgage Lender in Atlanta
February 14th, 2010
12:34 pm
Most of the people talking on here are clueless. There are a lot of people trying to buy homes now, because of the 8K gift from the Government. Each purchase takes one more home out of the inventory and helps someone else move up. There are millions of homes that are being held back by the banks right now which will flood the market. They cannot afford to release them all at once and they cannot afford to hold them forever. Any incentive to help people get a home now will help.
The Government and Banks have tightened the standards for mortgages considerably. This is helping to keep a lot of people who can’t afford to keep a home, out of the market. Perhaps we would not be in this predicament if we had made owning a home a priviledge for those who saved and were responsible. There are those who think that everyone should own a home regardless of their ability to make good decisions about their finances.