tax-credit

There are many critics voicing arguments against the stimulus package that was passed last February but nearly all experts agree that the expansion of the tax credit scheme for home buyers will go a long way in improving the health of the housing sector. The $8,000 tax credit offered to first time buyers of houses is producing the expected results. It has been stimulating demand in the middle of record breaking unemployment and economic gloom.

Thus it is of vital importance that when the Congress meets again after the recess the credit that is soon to expire, be extended right till the end of 2010. If Congress is keen on bolstering the economy that has just started to try its wings, they will extend eligibility criteria also.

The credit formula has helped to stabilize the real estate market across the country but the same cannot be said about the Bay Area. Here it has not been of much help. The credit facility can be availed by only those who are buying property for the first time and whose earnings are below $75,000 for single persons and $150,000 for couples. This is causing the impact to be diminished.

By doing away with the income conditions and stretching the credit to take under its umbrella all purchasers of primary residences the current house owners would be nudged to move upwards. There would be the entry of more buyers in the market for the houses priced at the lower end where the first time purchasers have had to retreat against the attack from investors coming forward with cash. If these changes were effected the homeowners would finally reap the only benefit from this foreclosure fiasco – low prices for affordable homes.

Linked with activity in buying and selling is the welfare of locksmiths, painters, plumbers, electricians, furniture makers, interior decorators etc. The move will help to create jobs and prevent the apprehended next wave of foreclosures that experts opine is poised to break out fueled by staggering unemployment.

As per the estimates of National Association of Home Builders the expansion and extension of the tax credit till the close of 2010 would generate additional 500,000 sales, about 350,000 jobs and enrich the federal and state tax kitty with $11.6 billion.

The prime argument deterring expansion of credit is that it would mean a cost of $30 billion. Secondly it is said that would go to assist help to those who would have in any case bought homes. In costly neighbourhoods a salary of $150,000 is insufficient to make a jump to a bigger house. In such instances credit offers will tempt the wavering into taking a decision.

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