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Stimulus Provisions to Help Put Housing on the Right Track
The $787 billion economic stimulus package signed into law on Feb. 17 by President Barack Obama contains elements that will bolster housing and the economy, according to NAHB.
“While we believe that including a more enhanced home buyer tax credit in the final legislation would have been the best way to spur housing demand and move the economy forward, the new law does include several provisions that should help to put housing and the economy on the right track,” said NAHB Chairman Joe Robson.
Chief among these is an $8,000 first-time home buyer tax credit for qualified home purchases in 2009. To encourage prospective home buyers to get off the fence, the tax credit:
- Does not have to be repaid
- Is fully refundable
- Will remain in effect until Dec. 1, 2009 so that consumers can utilize it during the critical summer and fall home-buying months
- Allows tax credit home buyers to participate in the mortgage revenue bond program
- Permits state housing finance agencies to help buyers at closing by advancing the credit amount as a loan using tax-exempt bond proceeds
More information on the first-time home buyer tax credit can be found at www.federalhousingtaxcredit.com.
Other important components in the American Recovery and Reinvestment Act of 2009 will help small businesses and bolster the housing market. The legislation will:
- Help home borrowers by restoring the higher 2008 FHA, Fannie Mae and Freddie Mac loan limits through the end of this year (the limit will return to $729,750 from the current $625,500 in the highest cost markets, and will also rise in many other areas because the 2008 maximums were based on a more generous formula and, for most areas, higher median prices)
- Temporarily allow exchange of Low-Income Housing Tax Credit allocating authority for tax-exempt grants and it appropriates $2 billion in HOME funding for affordable housing projects
- Provide up to a 10-year deferral of tax due to business debt restructuring
- Expand the net operating loss carry-back period from two years to five years for small businesses (businesses with average gross receipts of no more than $15 million over the prior three years) for losses arising in tax year 2008
- Extend the 25C existing home remodeler credit through the end of 2010, increase the credit rate from 10% to 30%, raise the lifetime cap from $500 to $1,500 and expand the set of qualifying property
- Provide an Alternative Minimum Tax patch for tax year 2009
- Increase bonus depreciation and Section 179 small business expensing for business investment in 2009
To view a one-page summary of the key housing provisions in the legislation, click here.
The housing sector still faces significant challenges, said Robson, including a severe credit crunch, particularly for acquisition, development and construction lending; skyrocketing foreclosures; and stimulating demand for home buying to stabilize housing markets.
“We look forward to working with Congress and the Administration to build upon the provisions of the new economic stimulus law to address these pressing needs and, ultimately, lead the nation’s economic recovery,” said Robson.
For more information on the stimulus legislation, e-mail Greg Brown at NAHB or call him at 800-368-5242 x8421.
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