Commentary By U.S. Senator Benjamin L. Cardin (D)
There are signs that the housing market is stabilizing, but we are not out of the woods yet. That’s why I recently introduced legislation—which has strong bipartisan support—to extend the $8,000 first-time homebuyers tax credit for another six months, past its current expiration date of December 1, 2009 to June 1, 2010. This credit is fully refundable, which means if you do not owe taxes you will still get the full tax credit from the Internal Revenue Service (IRS).
Just as the Cash for Clunkers program has been a boost for the auto industry, the $8,000 tax credit also has helped to stimulate housing sales. According to the most recent IRS data, more than 1.4 million Americans have already claimed the credit, with an additional 350,000 people expected to take advantage of the program in the near future.
This year, as many as 40 percent of all homebuyers will qualify for the credit. The amount of the credit equals 10 percent of the price of the home up to $8,000. To qualify for the credit, you cannot have owned a home for three consecutive years prior to purchase and your income must be within certain eligibility limits – up to $150,000 for couples and up to $75,000 for individuals.
Our economy is beginning to show early signs of recovery, and I am proud that the current tax credit has had a strong, positive effect. According to the National Association of Realtors, the tax credit has injected approximately $22 billion into local, state and national economies, causing a ripple effect that translates into jobs.
This tax credit is a stimulus to the critical housing market and an investment in our communities. While I am committed to an extension, I am working with my colleagues to ensure that appropriate offsets are identified so that it will not add to the deficit. I am confident that can be done.
There may be some who question why we should provide additional help to the housing industry, but we need to remember that the collapse of the housing market was one of the major contributing factors that led to this economic downturn and recession. I firmly believe the housing market’s resurgence will be one of the factors that will help pull us out.