Better Buyer Tax Credit Sought

With Congress set to eliminate the recapture feature that goes along with the $7,500 tax credit for first-time homebuyers, four key housing and finance groups are urging lawmakers to also extend the credit for the remainder of 2009. Currently, the credit, which has failed to light a fire under the sagging housing market, expires June 30. Thus, if the latest economic stimulus package were adopted in February, as President Obama has asked, the revised credit would elapse in little more than four months. Allowing the credit to expire so quickly "undermines" its potential, especially since it would end before the key summer and fall buying seasons arrive, the Mortgage Bankers Association, National Association of Home Builders, National Association of Realtors and the Independent Community Bankers said in a joint letter to the Senate Finance Committee. The groups also asked the panel to "monetize" the credit so it is available as cash at closing, maintaining that the money would be spent by buyers on updates and upgrades. "This multiplier effect would increase demand for a host of goods and services, thereby increasing activity and demand in other sectors of the economy," they wrote. Currently, the credit, which was put into place last July, is taken as a write-off on tax returns filed for the year in which the house is purchased, and must be paid back in $500 yearly increments.