Real Estate News

• Home Buyer Tax Credit Called Successful, but Costly – NYTimes.com

  There’s no doubt that the federal tax credit has had it’s advantages, but it has also been quite costly, somewhere in the range of $30,000 for every buyer stimulated.

  tags: tax credit

  • the Treasury Department and the real estate industry have termed the program a success, helping 1.8 million people buy homes, many tax policy experts say it has been singularly cost-ineffective: most of the $12.6 billion in credits through end of February was collected by people who would have bought homes anyway

  • For every home buyer like the Greens, real estate agents say there are at least three others who collected the credit even though they would have bought without it. That means for each new buyer who was truly lured into the market by the credit, the federal government paid more than $30,000.

  • An audit by the Treasury Department’s inspector general released last year found that hundreds of millions of dollars in credits went to people who had not yet bought homes or who were not first-time home buyers, as the program initially required.

    Hundreds of others who received the credit were not old enough to sign a binding contract, the audit found, with some as young as 4 years old.

  • Nearly half of all March home sales involved first-time buyers

  • the program was open to widespread misuse. The first two phases of the credit did not require taxpayers to prove that they had actually bought a house. The Treasury’s inspector general found in October 2009 that the I.R.S. had allowed $139 million in credits to people who had not yet bought homes, and $479 million to taxpayers who were not first-time buyers.

  • economists say that, whatever its inefficiencies, the home buyers’ credit had a valuable effect on the psychology of millions of Americans who were alarmed to watch their largest investment lose value.

    “The tax credit helped to stanch the price declines, which had substantial benefit for the entire economy,” said Mark Zandi at Moody’s Economy.com. “The home is still the largest asset on most people’s balance sheet, so when prices are falling, nothing works for most families. But now people can take a deep breath and think clearly again.”

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