There are pros and cons when it comes to extending the $8,000 tax credit.  The ones who are in the camp for the extension are the National Association of Realtors, The National Association of Home Builders, and The National Mortgage Brokers Association.  They claim that in the last nine months, the credit has spurred sales of homes by 355,000 and that 187,000 jobs have been created.  There’s no doubt when you talk with Realtors about the tax credit that they have all experienced a pick up in activity since the tax credit began.  First time home buyers (ones who have not owned a home in the last 3 years) are frantic to find a home in time to not only go to contract on, but to close on by the deadline of November 30, 2009, the date the tax credit ends.

Now while the extension is being hotly debated, pros and cons, it turns out that fraud has entered the picture.  A person called us the other day and said that she had paid an accountant $400 to fill out a form for her to get the credit.  She hasn’t bought a home yet, but she just received an $8,000 check from the IRS with a small amount of interest added to the $8,000.  She asked us if she could keep it.  We told her to return it.  Now that we think about it, we should have told her to tell the IRS who her accountant was. The problem  is that there’s just a simple form for a taxpayer to send to the IRS with a house address on it, and within weeks a check is sent out to the taxpayer for the $8,000 credit.

 

dollar house © Paul Bodea - Fotolia.com
© Paul Bodea – Fotolia.com

Opponents of the extension will use the fraud as another reason to not extend it.  Their other reason is the cost.  If it is exended to include all buyers as well as buyers with a higher income (currently capped at $75,000 per person or $150,000 per married couple), the cost could be as high as 16.7 billion in just five years.


There is a cost to not extending it as well.  Ask anyone who has had one or more homes foreclosed on in their neighborhood and what that did to the value of their home.  The appraisal rules allow appraisers to use short sales and bank owned sales if they are predominant in a one mile radius from the subject home.   In Port St. Lucie, and many other cities in Florida, Nevada, California, and elsewhere, this is the case.

The real problem though is unemployment.  If you don’t have a job, an $8,000 tax credit is of no use to you.  It’s a catch 22 in that  housing, as well as the rest of the economy has to recover to help the unemployment picture.  Housing  recovery is a big ingredient in the unemployment rate as so many people depend on it for their income.  Not just Realtors, Builders, and Mortgage Brokers and Lenders, but restaurants, furniture stores, advertising reps, title companies, and a long list of other businesses are dependent on a healthy, stable real estate market.

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