Attached to federal legislation that extends the first-time home buyer tax credit and unemployment benefits is a curious provision. It provides a $6,500 tax credit for home buyers who have lived in their current home at least five years. And this is a good idea because ... ?
Evidently the idea is to stimulate a rebound in home values, which got hammered by the real estate market collapse.
Whether the new credit does that or not, it will deliver six months of stimulation for real estate agents and a tax break for people who don't need one.
No question the tax credit will appeal to American homeowners in good financial shape who have been thinking of another home, planning a relocation or just hoping to trade up.
But let's back up a little.
The first-time home buyer credit makes sense given the weak economy and home foreclosure mess the United States has been dealing with. Give first-time, qualified buyers a substantial tax break and they'll buy and clean up some of that foreclosed blight, improve their own lives and long-range financial prospects, shore up neighborhoods and serve long-standing national and local policies to encourage home ownership.
This credit for current homeowners, though, looks like a politically inspired giveaway. Single taxpayers making up to $125,000, or joint filers making $225,000, would qualify for the full $6,500. Single filers with incomes up to $145,000 or joint filers up to $245,000 would qualify for partial credits.
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