Builders Drop Rebate Plea, Seek Big Tax Credit

The National Association of Home Builders has dropped demands that struggling builders receive tax rebates, and now the trade group is urging Congress to pass a "robust" homebuyer tax credit to stimulate the housing market. "That tax credit needs to be as big and unencumbered and as rapid-acting as Congress can make it," NAHB chief executive Jerry Howard told reporters. In February, the NAHB cut off political contributions to legislators because Congress refused to include a net operating loss carry-back provision in an economic stimulus package. The NOL provision would have allowed homebuilders and other unprofitable companies to deduct losses in 2008 and 2009 from their profits in prior years and receive tax rebates. In April, the Senate passed a foreclosure prevention bill that included an NOL provision, but it came under heavy criticism. House tax writers did not include an NOL provision in a bill that gives first-time homebuyers a $7,500 tax credit. However, the tax credit works like an interest-free loan that has to be paid back in 15 years. The builders want a real tax credit that is not limited to first-time homebuyers. The NAHB's analysis shows that a robust tax credit would have a more stimulative effect on the economy than an NOL provision, Mr. Howard said.