Congress appears ready to extend home-buyer credit

Thursday, October 15, 2009
Stephen Koff
Plain Dealer Bureau Chief

Washington- First-time buyers still might want to find their dream houses quickly so they can get up to $8,000 in a tax credit, but Congress could soon grant them more time.

The home buyer credit is scheduled to expire Nov. 30. But with 20 separate bills proposing extensions, according to a count by the National Association of Realtors, it's clear that many in Congress want to keep the program going. Some even want to expand the income rules, allowing upper-middle-class home buyers to participate.

Currently, individuals can make no more than $75,000 and couples no more than $150,000 to get the full $8,000 credit, which was designed for first-time buyers. A new measure proposed by Sens. Johnny Isakson, Republican of Georgia, and Chris Dodd, Democrat of Connecticut, would raise the limits to $150,000 for individuals and $300,000 for couples.

It would not matter if this was their first or fifth purchase, as long as the house was for their principal residence. Isakson and Dodd could offer their measure as soon as next week as an amendment to a bill extending unemployment compensation, an Isakson spokeswoman said.

"Sen. Isakson has argued that the first-time buyer credit helped the first-time buyer, but it hasn't helped the move-up buyer - the person who had a job transfer from Atlanta to Cleveland" and must buy a new home, said Sheridan Watson, Isakson's press secretary.

An expansion of the program's income limits would probably trigger debate about government subsidies. Yet putting aside income limits, there's no shortage of lawmakers who favor extending the tax credit in one form or another, reasoning that it could speed up the economic recovery. That bolsters the chances of some form of extension passing.

Sen. Sherrod Brown, Democrat of Ohio, backs a bill to extend the existing program until May 31. Isakson, too, supported it earlier. Asked if he would support inclusion of higher incomes, Brown said it might be too expensive from a budgetary standpoint. But "I'm not going to close the door on any proposals," Brown added.

Watson said a review by the congressional Joint Committee on Taxation found that the Dodd-Isakson measure, expanding the program and extending it until June 30, would cost $16.7 billion. Simply extending the current program without a change in income limits would cost about $1 billion a month, or $6 billion until May 31, Brown said.

The program was created in 2008 to spur the troubled housing market, and was extended as part of this year's economic recovery act. Brown said that by the end of August, it had already helped more than 1.4 million Americans buy homes, 48,000 of them in Ohio.

The White House is still reviewing the economic impact, but Democratic congressional leaders appear to support an extension. So does House Minority Leader John Boehner, of West Chester, Ohio, who early this year proposed an extension as an alternative to President Barack Obama's economic stimulus package, according to Boehner spokesman Cory Fritz.