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November 3, 2009

Homebuyer tax credit could go on

The program, which offers a maximum $8,000 credit, has been praised as a spur to the economy.

By Andrew M. Seder aseder@timesleader.com
Times Leader Staff Writer
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Those who were unable to take advantage of the first-time homebuyer tax credit, which is set to expire at month’s end, could still have a few months to find that dream home.

Larry Smar, a spokesman for U.S. Sen. Bob Casey, D-Scranton, said the Senate could vote on legislation as early as today that would extend a multitude of federal incentives, unemployment benefits and the homebuyer tax credit.

The credit, which is worth 10 percent of the purchase price of a home up to a maximum credit of $8,000, has been deemed a success by senators and Realtors, who said the enticement has helped spur the economy and given renters a chance to secure the American dream. But it also has been a target of scammers who have tried to benefit inappropriately from the program.

A report recently released by the Treasury Department’s inspector general found 167 suspected schemes and over 100,000 individual cases that require examination.

Some of the findings by the Internal Revenue Service’s inspector general included 580 “taxpayers” under age 18, including some as young as 4, claimed the credits and nearly 74,000 buyers likely already had owned a home within the past three years, contrary to program rules.

In response, Casey has introduced legislation that could be included as an amendment to the extension bill that would add protections and increase oversight.

“The first-time homebuyer tax credit has proven to be a popular and successful effort that has spurred the housing market and provided tax relief to 1.4 million Americans,” Casey said. “Despite the success of the program, there are significant and troubling issues with its oversight. My legislation would help to fix these problems as we look to extend the tax credit to continue providing economic relief.”

The provisions of the bill would not be retroactive and would not apply to those who file tax credit requests based on the original law, Smar said.

 

Mike Johnson, president of the Greater Wilkes-Barre Realtor Association, said there’s no way to tell exactly how many people will file for the tax credit in Luzerne County but guessed the total will top 100 based on what he’s heard from area Realtors.

“It’s been extremely successful. It’s helped a lot of people. Most of my sales, the people have taken advantage of the tax credit. And why wouldn’t they?” said Bob Kopec, with Humford Realty in Wilkes-Barre.

Kopec said he’s not surprised the Senate has put an extension of the credit on the table.

“It’s a trickle down. Those people buying homes are also buying paint and furniture and appliances and carpets. It really helps the overall economy,” he said.

Several versions of an extension bill are on the table. One would extend the credit through July 1. Another would gradually reduce the maximum credit each quarter of next year. The plan gaining the most traction, which was introduced by Senate Majority Leader Harry Reid, D-Nevada, and Sen. Max Baucus, D-Montana, would extend a $6,500 tax credit to home buyers who already own homes, as long as they have been in those homes for at least five years. That plan would extend the tax credit through April 30 and would increase the income limitations to $125,000 for individuals and $225,000 for joint filers. Currently those totals are $75,000 and $150,000.

Sen. Arlen Specter, D-Philadelphia, said he, too, supports extending the tax credits into next year.

A consensus bill that combines House and Senate bill language would have to be agreed to before it’s sent to the president to be enacted.

Andrew M. Seder, a Times Leader staff writer, may be reached at 570-829-7269.

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