Pros And Cons Of Extending, Expanding Homebuyer Tax Credit – KTHV – News Channel 11 in Arkansas

Reported By: Katherina- Marie Yancy – KTHV – News Channel 11 in Arkansas

 

The $8,000 tax credit that’s helped thousands of Arkansans move into their first home expires November 30th, but there are several bills on the table to extend the credit through the middle of next year.

 

More than $1.4-million taxpayers across the United States have benefited from the tax credit so far. Today’s THV spoke with professionals on both sides who gave us insight into the pros and cons of extending the tax credit.

 

The first time home buyer tax credit is set to expire November 30th unless congress passes an extension. Maurice Taylor says, “It’s being introducing into legislation and from everything I hear it is very favorable to pass.”

 

Managing Broker, Maurice Taylor with Crye-Leike says the new Bill will extend the credit through May 2010 and it’s critical to get the local and national economy where it needs to be, while making home ownership more accessible.

 

He continues, “I’ve been in the real estate business for 10-years and the month of October has been the largest volume month I have ever had. It is in direct correlation with the $8,000 tax credit.”

 

State Economic Forecaster Michael Pakko with UALR says, “But you also have to consider the cost as well. Clearly somewhere down the road we have to pay for these subsidies. That means a larger deficit or somewhere down the line higher taxes or less spending in other areas.”

 

Pakko says it’s had a positive effect on the market, but at some point the government needs to let the market stand on its own. “Part of the big build up we had in housing and in the real estate markets was attributable to government policy to encourage home ownership,” Pakko adds

 

Taylor says there won’t be many incentives without the tax credit and the current ripple effect creates jobs. He says, “Once a house is sold there are a number of things that have to happen, you have appraisers, inspectors, people doing repairs, construction workers, new furniture; all of those things that go along with owning a home.”

 

Pakko adds, “The hope would be once this program has had its impact that the housing market would be on a self sustainable path.”

 

Taylor says there is also a possibility to make all homebuyers eligible, possibly making business quadruple, but Pakko says that would be poorly targeted because it would add to the deficit and give credit to homebuyers who would buy a home anyway.

 

Currently, the credit phases out for individuals earning more than $75,000 and married couples earning more than $150,000.