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Congress Mulls Homebuyer Tax Credit

There are some big differences in the homebuyer tax credit included in the distinct versions of the economic stimulus package passed by the House and the Senate. The Wall Street Journal provides an informative overview of the two proposals here.

The Senate approved its $838 billion economic stimulus bill today, clearing the way for negotiations with the House, which passed its $820 billion version of the stimulus plan last week. President Obama has pressed Congress to deliver him a final version of the legislation to sign within days, the New York Times reports.

Soon after the Senate voted to approve its version of the stimulus bill, NAR hailed the measure’s homebuyer tax credit as an important housing component that will help shrink housing inventory, bring stability to home values and move the country closer to an economic recovery.

NAR president Charles McMillan said, “The credit of up to $15,000 for homebuyers is a critical provision in the Senate bill that will result in approximately 1 million additional home purchases this year.” The provision also eliminates the repayment feature of the earlier tax credit, makes the credit available for all purchases of primary residences and extends the credit for one full year. These are all provisions NAR has continually called for in any federal stimulus plans.

The National Association of Homebuilders (NAHB) also issued a statement in support of the proposed homebuyer tax credit. “The enhanced $15,000 tax credit offers a powerful incentive for homebuyers to get off the sidelines and represents the best opportunity for economic recovery,” said NAHB Chairman Joe Robson, a home builder from Tulsa, Okla. “Congress must make sure that the full $15,000 tax credit remains in the final stimulus plan.”

The bipartisan amendment to the stimulus package, offered by Sens. Johnny Isakson (R-Ga.) and Joe Lieberman (D-Conn.) and approved by unanimous voice vote, would replace and sunset a much narrower tax credit that was enacted last year. Available only to first-time homebuyers, the current $7,500 tax credit works like an interest-free loan that must be repaid over a 15-year period. It is set to expire on July 1.

UPDATE, 2/11/09 3:45 p.m. ET: The Associated Press reports that an agreement on the economic stimulus bill has been reached. AP reports that Congressional negotiators “effectively wiped out a Senate-passed provision for a new $15,000 tax credit to defray the cost of buying a home.”

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