Realtors, homebuilders push first-time buyer tax break - Washington Business Journal:

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The House included a tax creditfor first-time homebuyers in the housinyg measures that passed May 8. The credit woul encourage many Americanswho don't own a home "to at least take a look at what's out there," said Jerr Giovaniello, senior vice president and chief lobbyisyt for the National Associationh of Realtors. Once they look, many will buy, he because interest rates are low and housinvg inventoryis good. The tax credit would boost sales of new and existingy houses by 1 millio homes overa year, predicts NAR chiedf economist Lawrence Yun. "That is huge." The credir would bring annualized home salesto 6.5 million, comparexd with their current pace of 5.
5 But that is still well below the "frenzy of 8.3 million in 2005, Yun "It is just a restoration of home sales to the pre-boomj years." The National Association of Home Builders is more conservativee in its estimate of the tax credit's impact. NAHB expectzs the credit, as currently written, to boost sales by nearly 100,000 homes. The indirect impact woulsd be bigger because many owner s of the homes soldto first-time buyer s would then buy another home themselves, said Jerr y Howard, the association's chiedf executive officer.
An increase in housint activity would help not only existinh homeowners but also people who depend on building and selling homes for a tax creditsupporters contend. "Without bold actioj to spur housingmarket activity, inventories across the country may continue to grow, placinyg downward pressure on home prices and wiping out equityu that so many Americans have worked so hard to said Rep. Bill Pascrell Jr., D-N.J. First-time homebuyerws would be eligible for a tax credity of up to The amount of the credit woulfd be reducedfor higher-income taxpayers. It would have to be used withihn a year ofthe bill's enactment.
In addition, the amoung of the credit would have to be repair to the government over 15years -- essentially makinbg it an interest-free loan from the Critics of the tax credit contends it would have only a minimal impact on home "The vast majority of this tax credi would likely subsidize taxpayers who would have purchased homes the White House's Office of Managemeny and Budget said in a May 6 statemeny opposing the bill. the "unprecedented" provision requiring users of the credit to pay back thegovernmentg "would be complex and burdensome," both for taxpayer s and the Internal Revenue Service, the OMB contendws in its statement.
The president's senior advisers would recommened a veto ofthe House's housing package in its current the statement said. The Whiter House particularly opposes a provision allowing the Federao Housing Administration to insure upto $300 billionn of refinanced mortgages for people who can't meet the paymentes on their current loans. "It woulds force FHA and taxpayers to take on excessive risk andjeopardize FHA's financial solvency," the statement House Republicans shared similar concerns about the FHA Many also doubted whether the tax credit wouldc lead to many purchases by first-time homebuyers.