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Thread: $6500 tax credit for current homeowners to purchase new homes

  1. #1
    SueW is offline INCIIDer - A Community Creator
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    Default $6500 tax credit for current homeowners to purchase new homes

    So, signed into law, is a tax credit for those who have owned their homes for at least five years - to buy new homes. Income limits are high ($225K gross for married couple), home prices are up to $800K - and the credit is $6500. Can someone explain this to me - an economist perhaps?

    Perhaps I'll go house shopping this afternoon - waterfront property is way down.....

    How dies this stimulate the economy? I truly don't understand.

    Sue

  2. #2
    Pleaky is offline INCIIDer - A Community Creator
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    Default I'm no economist

    so this is just my guess. I'm thinking that the first stimulus got the entry level of the home market moving, but the mid to upper priced homes are still sitting there. This may be an attempt to get that sector moving? And I'm guessing overall that the desire is not just to sell homes but to stem the tide of foreclosures, so again, maybe this will help higher priced homes that are in danger of foreclosure.

    Pure speculation - I haven't really read anything about this.

    Pleaky

  3. #3
    Laura H1 is offline INCIIDer - A Community Creator
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    Default Oh, me! Finally one I may be able to answer!

    We moved from NC in July 2006 so my dh could try a business venture with his brother... we kept our house in NC and rented a house in our new state, FL... After carrying a mortgage in NC for over a year, we decided to sell... after 6 months on the market, our home finally sold in March 2008 (a home we had owned for 14 years)...

    we are now in our third rental home in FL and HAD no interest in buying in this DOWN housing market... we first felt weird renting, because we've always been taught to own our own home... well now that his has passed, dh and I are seriously considering buying a home...

    However, for it to be really effective for the economy, the gov REALLY needs to extend the amount of time for purchasing a home for the newest included potential home buyers (the deadline is too narrow for having just passed; the home has to be purchased "before April 30, 2010 (or purchased by June 30, 2010 with a binding sales contract signed by April 30, 2010)."

    But then again, I can't see us buying a new home until school is out...

    There is a LOT of us in SWFL that fall into this newest category... not sure about the numbers overall in the US though... without this "teaser", we would just continue to wait for the housing market to hit ROCK bottom... and it absolutely has not hit bottom in Naples, FL...

    so perhaps you are right... if they don't extend the deadline, the tax credit probably isn't enough of a teaser to get us to buy...

    just wanted to post a scenario that may be the target... hmmmmm....

    Laura

  4. #4
    jvirginia is offline INCIIDer - A Community Creator
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    I am an economist and it is a terrible policy.

  5. #5
    SueW is offline INCIIDer - A Community Creator
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    Default Just more sausage?

    Quote Originally Posted by jvirginia View Post
    I am an economist and it is a terrible policy.
    Well, that's what I thought. Thanks for confirming. What's next?

  6. #6
    Pleaky is offline INCIIDer - A Community Creator
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    Default Tell us why?

    Quote Originally Posted by jvirginia View Post
    I am an economist and it is a terrible policy.
    Why is it terrible? I have no opinion of this policy - just curious about yours...

    Pleaky

  7. #7
    jvirginia is offline INCIIDer - A Community Creator
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    Can you clarify where this was passed though? Is it an Alaska-only thing or is it nation-wide. I tried to find info on the web and all I could find was an extension of the first time home buyers tax credit.

    So, bad idea because ... well, first of all, if it results in people buying existing homes (vs. new construction) it isn't really creating any new jobs except maybe for realtors. If it does lead to more home construction - we do not need more housing stock in this country, and we certainly don't need to distort economic incentives towards more housing stock, or more $$$ going into housing, when that's what caused this crisis to begin with. We need the value of homes to settle down to their *real* value, not one that is distorted by temporary government incentives.

    Generally the government should encourage investment money to go into things that are productive (businesses, factories) vs. homes, which don't produce anything.

    Generally American public policy is way too geared towards/invested in home ownership anyway. It directs our investment dollars into non-productive assets and decreases individual flexibility.

  8. #8
    SueW is offline INCIIDer - A Community Creator
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    Quote Originally Posted by jvirginia View Post
    Can you clarify where this was passed though?

    http://bucks.blogs.nytimes.com/2009/...-need-to-know/

    So, bad idea because ... well, first of all, if it results in people buying existing homes (vs. new construction) it isn't really creating any new jobs except maybe for realtors. If it does lead to more home construction - we do not need more housing stock in this country, and we certainly don't need to distort economic incentives towards more housing stock, or more $$$ going into housing, when that's what caused this crisis to begin with. We need the value of homes to settle down to their *real* value, not one that is distorted by temporary government incentives.

    Generally the government should encourage investment money to go into things that are productive (businesses, factories) vs. homes, which don't produce anything.

    Generally American public policy is way too geared towards/invested in home ownership anyway. It directs our investment dollars into non-productive assets and decreases individual flexibility.
    The Worker, Homeownership, and Business Assistance Act of 2009

    http://www.whitehouse.gov/the-press-...tance-act-2009

  9. #9
    jvirginia is offline INCIIDer - A Community Creator
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    Thanks. Bad public policy.

  10. #10
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    really? the adoption tax credit has enabled many middle class people to adopt children when it might not have been financially possible.

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