2:21 pm ET
Oct 20, 2009


Extend the Home Buyer Tax Credit? Not So Fast

    • What is the "clear evidence" he has referred to? I would like to see it.

    • This insane credit needs to be ended immediately.

      Let's go further into debt creating jobs, not flipping existing housing inventory.

    • I think an extension of the home buyer tax credit would be irresponsible given the state of our economy right now. I don’t believe this program is all its cracked up to be. Americans looking for homes right now are already getting a ridiculous deal on houses due to foreclosures and existing home owners who are in trouble and willing to sell well below what they could have gotten a few years ago. Now, I am definitely not against tax credits; I just think this type of federal aid could be used in a way more beneficial to the state of the economy. I think the housing market will naturally bounce back. The job market is where the government should focus its efforts. When people have jobs they spend money and the economy is naturally stimulated and people will have the confidence to buy houses. Money would be better spent on creating jobs. Also, with the increasingly competitive job market, what about helping those trying to further their education and, therefore, giving them an advantage in the job market? If the government wants to stimulate the economy by going into debt, why not use federal funds to create jobs and generate more federal aid for college students?

    • Alternate:

      I know there's no numbers out there, but, I've read a lot of reactions from average folk who whine and whine that this actually is quite the incentive for buying their little palace, especially since the credit can be used as a down payment.

      We'll be seeing those same people in the foreclosure numbers in a year or so.

    • How did the govt arrive at Nov30 as the end date? Why not extend it through Dec31? I'm even in favor of extending it an addtional 90 days- thru the 1st quarter of 2010.

    • There are so many restrictions that many people can't take advantage of the credit - i.e., the income restriction. I dont know how anyone making less than $75K can buy a house in this economy. The stats would look better if the restrictions were removed.

    • Improve the housing market by accelerating the depreciation for residential rental real estate valued less than $300,000.00 adjusted for inflation. This will spur investors to buy and rent out currently unused properties without bailing out bad commercial loans

    • . . . . what is this $ 8,000 credit nonsense . . . . . the foreclosure filing counters at the courthouse and the bankruptcy court is where the truth is . . . . tax credit nonsense . . . . . . .

    • Well, as a builder with 3 homes on the market at a price point for new or second time home buyers.....i am in favor of continuing the credit as additional incentive. I know for a fact that many of myprospective customers are out shopping around right now because they want that tax credit. If you end it, you're going to end a lot of the incentive for these buyers who $8K makes a HUGE difference in their ability to buy these lower priced homes. Remember, for every new home bought, someone goes and buys a new washer and dryer, and new blinds, and new TV's etc etc. It's all good for the economy.

    • In the San Francisco Bay Area many run-of-the-mill homes are still in the $600,000 range and that's after price reductions. The minimum downpayment on an FHA loan is $21,000--that's a lot of money. Even 10% down is a small fortune. The ability to use the tax credit as part of the down payment is obviously very helpful.

      King Cash worries that the tax credit alone will cause more foreclosures. We got into this mess by ignoring fundamentals--by borrowing more than what one can afford to pay back. The lender must force the buyer to meet the loan restrictions, debt/income ratio, etc., or we will contunue to have more problems. The tax credit is not the problem.

    • Tax incentive IS a problem, as it is money down the drain. Money we do not have = money we will have to print (and debase current money) or borrow and pay interest on. Why? So someone buying on a margin could stretch themselves $8K higher? This is the same fundamental lunacy that helped create subprime, because all those who could not afford a home needed one. Anyone who is considering to purchase because of the $8K, please take a deep breath and realize that free cheese is only found in a loaded mousetrap. You will be underwater by $20K same time next year, all for $8K of public money? This just does not make any sense. Certainly, the housing industry tanked, because it was abused in similar fashion for decades. Now we are back with the same gimmicks and the same actors, spouting the same nonsense. You can't pay your way out of debt by borrowing more, it is simply INSANE.

    • See what I mean Alternate? Betcha 50 bucks this little item gets twenty responses in favor of the credit. People like free money.

    • Well, snoop, of course you would say that "as a builder with 3 homes on the market". If only the rest of us in biz got such a gift from the taxpayers. But, then, we'd all be a bunch of socialist commies, I guess.

    • The Banks are not losing a dime on so called short sales....they set up bidding wars which net them a profit not a loss. I don't know every person out there buying a home but the ones that I do know are doing it because of the tax credit. I am...i am a disabled vet and planned to use the credit to modify a home when and if I can find one before co-op lawyers and the rich buy up all the median priced homes before I get a chance to even put in an offer.

    • I'm one of those "home buyers" looking to take advantage of this tax credit, $8000 would go a long way to putting me into an affordable home for me. I make a little over 50K a year, I have VA Loan help and know how much I can afford to pay. for me the tax credit would allow me to have a nicer margine rather then living (as I do now renting) from month to month. Also in my area a 200K home (what I feel I could afford safely) is Not the easiest thing to find, in order to use VA the house has to be move in ready (not a fixer upper) , This Tax credit if applied directly to a down payment might allow so leeway towards something more obtainable!

    • The First Time Home Buyer Tax Credit should be extended and it should be renamed the "Home Buyer Tax Credit". It should be for any home buyer who buys a home to use as their principal residence and it probably should be increased to $15,000. There are a lot of Americans out there who are ready to buy their first home or to right-size to a different home. And where should the money come from (since the administration is worried about losing tax revenue)? It should come from the savings realiized by not giving away a lot of money to other countries who squander it and don't give a crap about the United States of America. What's more, if a team of bright and unbiased individuals (maybe some top-notch consultants instead of government workers) reviewed the entire budget based upon what's best for America, the savings realized would be astronomical and some funding could be redirected to do what's right for Americans and for our country.

    • To all of those willing to choke their own mother for the $8K of public dole, be warned. The only thing you are buying is direct ride to an upside-down mortgage and eventual default;





      Mark Zandi, chief economist with Moody's Economy.com, agreed with Fiserv's current assessments. "I think more price declines are coming because the foreclosure crisis is not over," he said.




      Entire article here:

    • Alternate Reality wrote: "... So someone buying on a margin could stretch themselves $8K higher? ..."
      Exactly! People, like the posters here, should look at buying houses that are at least $8k less so they don't "need" the tax credit (or, in other words, homes that are actually affordable)! If you "need" the tax credit as part of a downpayment (because you haven't had enough disposable income to save), then you are stretching yourself to the absolute limit. If there are any unexpected costs or downturn in the market, you'll be sunk. For example, if you "need" the $8k for a $200K house, then you should consider buying a less expensive house (say $180K...) The financial illiteracy of the tax credit supporters is astonishing, and it's no wonder so many people got into inappropriate mortgages.

    • I'm sure that King Cash and Alternate Reality do not write off their mortgage interest and property taxes on their taxes because they would be taking a government subsidy--free money given to them by the tax payer. LOL!

    • To Anonymous. You may be right! I can't speak for King Cash, but I do not write off any mortgage interest because I do not have a mortgage!

    • To Gorilla Monsoon: The only way to change the culture of American arrogance and ignorance is to face prolonged hardship, I am fraid. Which is exactly what is going to happen. Give it a decade or two or miserable economy and even the dumbest individuals will realize the economy works in a "up-down" approach - it all starts with you as individual and your own responsibilities...

    • Anonymous: Same here! Happy renter, watching this **** show from the sidelines. The only people I envy are the people gaming it. And that isn't the poor fools who think a tax write off justifies being underwater for the next decade. Or so.

    • AR,
      I agree. Let them fail. Just hope they recognize that they will have no one to blame but themselves.
      Though I often think that the people posting who say that they couldn't afford to buy with out the tax credit are being less than truthful. I think rather that they can indeed afford to buy, but just want to get their freebie. I say this because if affordability was really dependent on an $8K tax credit, then I'd be surprised if any bank would write such a loan (not after the spanking tha banks have gotten lately).

    • Oh, and by the way, I am fine with doing away with mortgage interest tax deduction. We are facing critical tax revenue shortfalls, and this is perhaps one of the low hanging fruits. Why are we treating home borrowers differently? I get the student loan interest tax deduction - students typically are not strong financially and do need government subsidy. In case of home borrowers, what's the point? To promote home ownership? This is just as admirable as building communism or any other utopian idea that it hard to define. Why are we promoting the home ownership culture? Are people too dumb to make their own decisions in life (from reading some of the "extend tax credit" replies, this may be the case) ? Why not then subsidize someone who buys a house outright instead of borrow other peoples money to do it, if we are aiming to promote responsible behavior? Generally, government needs to stay away from the big brother role and focus on things that are 100% government responsibilty - roads, infrastructure, military, police and maybe, just maybe schools. On everything else, government needs to mind their own business.

    • Finally a tax break for the workers/middle class and you want it killed!!!! Sorry, I don't make seven figures and pay my accountant to beat the IRS with loopholes.

      Extend the credit!!!

    • A tax break for the workers/middle class? Is that what you call taking money out of you left pocket and putting it into your right pocket? Indeed, some break. Your ignorance of basic economic pronciples is unbelievable...

    • More "tax break" news:

      WASHINGTON (AP) -- Tens of thousands of people may have taken advantage of the first-time home buyer tax credit to defraud the government, an IRS watchdog office said Thursday, in testimony that could jeopardize efforts to extend the popular program.

      Treasury Inspector General for Tax Administration J. Russell George told a House panel that more than 19,000 people filed 2008 tax returns or amended returns claiming the credit for homes they had not yet purchased. Those claims amounted to $139 million and it was not clear that the IRS planned to go back to verify that those purchases actually took place, he said.


      George's office said the IRS did not require taxpayers to provide documentation to substantiate the purchase of a home. They were told by the tax agency that it did not have the ability to accept such documentation electronically.


    • I know I pay my fair share of taxes every year, and for five years I've saved to buy a home. If the government can spend hundreds of billions rescuing Wall Street, I think Washington can spend much less to keep something in place for the middle class.

      I don't collect welfare because I'm not poor and because I'm not CORPORATE. If the government is going to continually run deficits, why can't the workers get some money?

      Keep the credit. Once Washington stops giving away money to the wealthy, I too will stop asking for tax breaks.

    • So lets end it for the 'Honest' because of the dishonest? Yeah that sounds fair......maybe if we actually held responcable the dishonest for thier actions it would make a difference, but instead we bail out corps and keep the same managemnet in place.....give billions away to other countries that actually hate us and have no intent to pay us back...or on an unwinnable war , where big corps profit on the deaths of our young and patriotic?

    • Wow. So, because you see some crooks getting away with public money, you want some too? Nice proletariat thinking - look it up. Lol

    • Alternate Reality is a student! Probably never paid taxes. Probably lives with mom and dad. Maybe after graduation real-world reality will set in. LOL

    • I graduated back in 2000. I am making close to $120K per year, plus bonus, in corporate finance field. I am renting a 2100 sq. foot home with pool in Florida for $900 per month. Any further questions, anonynous?

    • The fact is that the First Time Home Buyer credit phases out after you earn over $75,000 and ends if you make over $95,000. It's for the middle class. It's not for Citi, AIG, or whatever else corporation needs money to fund their hundreds of billions in bonuses.

      If Alternate Reality has a problem with the First Time Home Buyer credit, I hope he or she has a problem with the hundreds of billions in corporate welfare.

      If Obama's administration wants to deprive the middle class by ending this credit, I will vote accordingly in 2012.

    • Worker, those are INDIVIDUAL caps, while family caps are different - just read the bloody detail. Couples under $150K qualify. My wife does not work, so we do qualify for this. However, I would never consider actually applying for this credit, as it is designed to capture more underwater borrowers, those who cannot read and do not understand economic basics or program provisions. My advise is, stop dreaming about house and just enroll in college - you will get a whole new outlook on life.

    • If your college tells you to turn down $8,000 of a federal tax credit then I would ask that school for a refund of tuition.

      My info was in regard to individuals, so I don't know what your problem is with my "details." Speaking of details, I know that advice is spelled with the letter c. I at least learned that at school.

    • I'm not a fan of Obama and will never vote for him but the corporate welfare has got to stop.

    • Alternate Reality gets paid $120K a year to play games on the Internet? Doubt it. Talk about welfare!!

    • Alternate
      You like to group people into one .....i am an honest person, gave up the ultimate for this country, I did not say I wanted illegal money or come about it dishonestly...i think 'reality' for you is whatever 'you' make it.

    • At least I am reading WSJ while at work. My question is, what are you proletariat rats doing here? Shouldn't you be blogging on "Manure Recycler of Jefferson County" or something? I mean, with your level of reading comprehension, you may as well be reading Chinese!

    • That last post confirmed it. Alternate, you are TOOL.

    • Agreed..end of enabling..

    • Worker & JD,
      I won't speak for Alternate Reality specifically, but I do believe the vast majority of us have been against the corporate bailouts from the get-go. NO bailouts, period! Not for big biz and not for individuals (e.g. home buyer tax credit). The few who are currently in favor of corporate bailouts are the Dems and the Obama administration (and the few who benefitted from them).
      I repeat: NO corporate bailouts and NO tax creedits for home buyers!

    • Monsoon

      are you replying from your comfortable home with the air on or are you renting and giving your money away? Just like to know where youre coming from to understand why you oppose tax credits to american citizens and not the billions spent on bombs. Or the "loans' to other countries that never intended to pay them back. Corporate bailouts? Yes I agree....no one bailed my Dad out when 'big' business put his store out of business..i agree with that. But helping Americans buy a home, i don't get the opposition when the pork wasted far exceedes the money spent on this home buyer deal.

    • JD,
      I am a property owner. I bought my current property late in 2004. I'd like to sell it this winter and buy a new home this spring. Yet, as a seller and buyer who could stand to benefit from this tax credit, I am staunchly oposed to it. It is wrong morally, financially, economically, and in every way.
      That the government wastes money on pork is not an excuse to keep throwing good money after bad. Two wrongs don't make a right. No pork, no waste, no bailouts and NO handouts!

    • Gorilla,

      Your argument is sound, but you must agree that it is unrealistic. You must agree that government has looked after the wealthy. And that only makes sense, after all, without the financial backing of Wall Street almost no politician could be elected President.

      My support for the First Time Buyer Credit is rooted in the fact that this legislation actually helps the middle class.

      Wall Street will always be bailed out as long as Wall Street helps elect Presidents, and as long as Presidents appoint Wall Street bankers to government posts. Well the middle class votes, and I think it would be worth the while of our politicians to support the middle class.

      Honestly, I'm not asking for dollar to dollar match spending (eg every dollar pledged to bailout Wall Street, the same amount to the Tax Credit). Can you imagine $700 billion dollars in TARP money, and then Congress pledging $700 billion dollars to Home Buyers!?!

      Please, we're just asking for an extension of the existing program.

    • As I stated before, as long as this government can afford to pay CORPORATE welfare, this government should make the lives of its middle class better too.

    • The sooner the artificial subsidy program is ended and banks' housing inventory finally foreclosed on and marketed, the faster are all of the "toxic" or "ambiguous" paper, loans and derivatives valued and much of the financial value chain finds its railings. Wellfare type backdoor give-aways would never make middle class stronger or more prosperous. If the American middle class is so concerned, maybe they should pay a more focused attention to the political situation in this country than say college football season brackets or American Idol? It is not even craftsman-like to be so eager to rely on public dole.

    • No, "Worker", the government canNOT afford to pay corporate welfare... It has to end and we ALL need to take some bitter medicene now rather than more so later. That too many people refuse to acknowledge that doesn't justify more of the same insanity. Anyone who understands even the basics of economics understands that all this government spending WILL be the receding tide that sinks us all...

    • But it sounds so whimsical...free money from the government...to each in accordance to their needs...let's show them commie b4stards how it's done!

    • How's this for "basic" economics? The cost to extend AND expand the tax credit is $16.7 billion dollars (I don't even need the program to be expanded btw), while Bush's TARP cost $700 billion and Obama's second stimulus cost $787 billion.

      $1.5 trillion versus $16.7 billion. Can you do "basic" math?

      Why don't you leave programs that help the middle class alone? Go blog against GM, AIG and Citi. In other words, criticize where the real chunk of money is going.

    • So, the new middle class American dream - living off the graft commission. You must be a unionized "worker". Did I get that right? ;-)

    • What about those homeowners who would love to refinance, but are so cash poor, they can't. How about a tax credit for them?

    • I see Alternate Reality is at it again. Florida is so frick'n cheap I could sell my dog for what would be 5% down on many homes there...especially now, after the crash. Good luck AR, you will need it. You might as well quit your corporate finance job (read sales) and leave Florida now because the prices aren't coming back. Remember: Always be closing! Coffee is for Closers!

    • I am quite happy prices are not coming back. I want them lower, maybe another 40% lower, then we'll talk.

    • I'm pretty iffy on this credit. It was an artificial one-time attempt to stimulate the housing market and stop the freefall in prices and to provide first-time homebuyers with a dubious tax break.

      But first, why are many commenters acting like it's some sacred Middle-Class perk that's been around for decades?? Geez it's only been around for a few months it's not like rescinding it is an all out war on the first time homebuyer. Give me a break.

      This credit is insane in many ways in that it's incentivizing people to buy homes they can't really afford at a time when many people are losing jobs in a poor economy (in a downward housing price environment to boot!). Our insane governemnt is now once again promoting homebuying (through the FHA) with practically no money down. So once again we have a situation where people are putting zero to no money down, leveraging themselves to the hilt, and barely being able to make the payments on the mortgage just so they don't have to rent but can own!!! So now we will have yet ANOTHER round of mortgage defaults because ONCE AGAIN our idiotic government is incentivizing foolish buyers to buy homes they can't afford which is also propping up temporarily housing prices (which should continue to fall as we're overbuilt and people are losing jobs). And once AGAIN the taxpayer is doing to have to foot the bill when 30% of these joyful first-time buyers who supposedly are keeping our economy going (yeah, right) eventually default and the rest of us have to pay for it. And oh yeah since they put practically no money down they can declare bankruptcy and start fresh too.

      Sounds look good government policy to me! And by the way I'm 40 years old and have rented my entire life so spare me with any of the "middle-class needs to own a home" garbage that's all over this board no they don't and prices need to be allowed to settle and people should be incentivized to buy only what they can afford. We're supposed to be saving more not spending anyway! (and housing is not really an investment anymore IMO).

    • Again! Another unfair bailout coming out of Washington!

      I just read about bill 3548...It's great that SOME people can get a tax
      credit for buying a house, but many Americans reading about this bill
      are as disappointed as I. We've been forced to sell 2 homes (both our
      primary residence at the time) in this terrible economy in order to
      maintain continued employment and both at a loss. And now, congress
      wants to give first time home buyers and those who have been in their
      homes for 5 years who "trade up" a tax credit. We HAD to "trade up" by
      moving from Richmond county to Columbia county GA in order to get our
      son into a school district that is not failing in its mission to educate
      our youth. Apparently our willingness to "trade up" while our economy
      was at its lowest point (April 2009) doesn't warrant a tax credit.
      Either make the bill retroactive for all those who have "traded up" to
      the date of the initial incentive for first time home buyers, or kill
      it. My willingness to bail out banks, businesses to big to fail and
      people who can't afford a home in the first place is exhausted. We
      Americans who continued to work hard, pay our mortgages and support our
      communities during these bleak economic times deserve a break. IT'S MY
      TURN AS A MIDDLE CLASS AMERICAN to reap a benefit for being personally
      financially responsible and paying for the financial mistakes of others!

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