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Posted by: Prashant Gopal on October 29, 2009
Majority Leader Harry Reid’s office just sent me an outline of the Senate Democrats’ plan to extend and expand the home buyer tax credit. Much of this was covered in my previous blog post. But there’s one new detail that hasn’t been reported elsewhere. It will cost $10.8 billion. That’s a bit more expensive than the existing credit, which will have cost taxpayers about $8.5 billion by the time it expires Nov. 30.
Some more details:
*The credit is available for homes that go under contract by April 30, 2010 and close within 60 days after that.
*It will be attached to a bill to extend unemployment benefits, but it’s unclear when that bill will be voted on.
* First-time buyers (those who have not owned a home for three years) can claim an $8,000 credit. Homeowners who buy a new principal residence after living in their current home for at least the last five years can claim up to $6,500.
*Income limits: $125,000 a year for individuals, $225,000 a year for married couples.
* The proposal will include anti-fraud measures, including minimum age requirements and additional authorities for the IRS.
I ran the $10.8 billion figure by Moody’s Economy.com chief economist Mark Zandi, who hasn’t yet come up with a cost figure for the current proposal. But he said “that sounds in the ball park.”
BusinessWeek editors Chris Palmeri, Prashant Gopal and Peter Coy chronicle the highs and lows of the housing and mortgage markets on their Hot Property blog. In print and online, the Hot Property team first wrote about the potential downside of lenders pushing riskier, "option ARM" mortgages and the rise in mortgage fraud back in 2005—well ahead of many other media outlets. In 2008, Hot Property bloggers finished #1 in a ranking of the world's top 100 "most powerful property people" by the British real estate website Global edge. Hot Property was named among the 25 most influential real estate blogs of 2007 by Inman News.