The Herald, Sharon, Pa.

Business

November 5, 2009

Tax credit to spur home sales extended, expanded

WASHINGTON — Missed out on Cash for Clunkers? Congress has another deal for you: Buy a home before May 1 and collect up to $6,500 from the government. If you’re a first-time homebuyer, get up to $8,000.

As part of the government’s efforts to encourage people to spend money to help revive the economy, the House voted 403-12 Thursday to expand a popular tax credit for homebuyers. The bill, which also extends unemployment benefits and expands a tax break for money-losing businesses, now goes to President Barack Obama, who plans to sign it today.

First-time homebuyers have been getting tax credits of up to $8,000 since January as part of the economic stimulus package. But with that housing program scheduled to expire at the end of November, the House voted to extend it into the spring — and to expand it to many people who already own homes.

Buyers who have owned their current homes at least five years would be eligible, subject to income limits, for tax credits of up to $6,500. First-time homebuyers — or people who haven’t owned homes in the previous three years — could get up to $8,000. To qualify, buyers have to sign purchase agreements before May 1 and close before July 1.

The credit is available for the purchase of principal homes costing $800,000 or less, meaning vacation homes are ineligible. The credit would be phased out for individuals with annual incomes above $125,000 and for joint filers with incomes above $225,000.

Real estate agents say the first-time homebuyers’ tax credit that’s already in effect has boosted sales, much in the same way the Cash for Clunkers program increased auto sales last summer by paying car buyers as much as $4,500 for exchanging their old gas guzzlers for new, more fuel efficient models.

The real estate industry, including Realtors, home builders and mortgage bankers, have lobbied hard for the expanded tax credit. Lawmakers said the program will not be extended again.

Critics say the tax credit is poorly targeted because the vast majority of people receiving it would have bought homes anyway.

“Essentially we’re giving money to people for doing nothing different,” said Ted Gayer, co-director of economic studies at the Brookings Institution, a Washington think tank.

The homebuyers tax credit is one of two tax breaks totaling more than $21 billion that were included in a bill extending unemployment benefits for those without jobs for more than a year. The other tax break would allow money-losing companies to use current losses to offset taxable profits earned in the previous five years.

That break would help industries that have suffered big losses in the recession, including retailers, homebuilders and newspapers.

Expanding the tax credit for money-losing companies is projected to cost $10.4 billion.

The tax breaks would be paid for largely by delaying a tax break for multinational companies that pay foreign taxes. It was passed in 2004 and originally was to have taken effect this year, but would now be delayed until 2018.

Text Only
Business
  • Authority OKs change order for temporary work

    Hermitage Municipal Authority begrudgingly approved paying more than $7,000 to move electric lines that will soon be abandoned.

    February 2, 2012

  • indianapolis.jpg Indy draws on super effort to overcome skeptics

    Leaders of Indiana's capital city spent years gussying up their downtown to prepare for Super Bowl XLVI -- by building big sports and convention venues and luring nice hotels, popular restaurants and a four-story shopping mall.

    January 31, 2012 1 Photo

  • Despite new construction, building slumps in city

    Although it’s hard to compare dollar values from today and even a few years ago, it’s safe to say there was not much new development in Hermitage in 2011.

    January 31, 2012

  • Distinguished service award going to Hudson

    On Feb. 2, Thiel College will recognize 10 faculty and staff members and John M. Hudson at the college’s annual Founders’ Day convocation in the Lutheran Heritage Room of the Howard Miller Student Center.

    January 27, 2012

  • Contractors, workers eye CHOICE housing jobs

    There are no guarantees that Shenango Valley residents will be among the workers who build a 34-unit apartment complex and 10 homes in Farrell, but an open house Wednesday gave them a chance to lay the groundwork to be considered.

    January 26, 2012

  • FNB: 2011 earnings up 16%

    FNB Corp. reported its fourth quarter earnings edge down slightly from a year ago but the results were due to a one-time credit a year ago of nearly $7 million. For all of 2011 earnings for the company were up 16 percent from 2010.

    January 24, 2012

  • Retiring Reichard feted for service to Penn-Northwest

    For more than a quarter of a century, Larry Reichard was the voice and spirit of Penn-Northwest Development Corp.

    January 20, 2012

  • GE receives order for 43 more locomotives

    GE Transportation on Tuesday said it signed a deal to sell 43 locomotives to Transnet SOC Ltd., South Africa, which will benefit its Grove City plant.

    January 11, 2012

  • City planners prefer new facade for Chipotle

    A month after calling the proposed Chipotle Mexican Grill building “ugly,” Hermitage Planning Commission Chairman Charles E. Rogers was much more reserved in his comments about a revised facade.

    January 10, 2012

  • Kelly raps role of feds in Volt fires

    U.S. Rep. Mike Kelly complimented General Motors Co. for telling Volt owners to return the car to dealers for repairs, but continued his call for repealing the $7,500 tax credit for the plug-in electric-drive vehicles.

    January 9, 2012