ADVOCACY: Extension/Expansion of Homebuyer Tax Credit

I am writing to update you on the status of NAHB’s efforts to secure an extension and expansion of the first-time homebuyer tax credit (tax credit) and five-year carryback of Net Operating Losses (NOLs) established under the American Recovery and Reinvestment Act of 2009.

This week the Senate began its consideration of legislation to extend additional unemployment insurance benefits to unemployed Americans. Because of the work of NAHB, members of the Association from around the country and a number of our allies in the Senate, proposals to extend and expand the homebuyer tax credit and expand the NOL carryback are included in that legislation. These proposals are the result of bipartisan efforts of Senate Finance Committee Chairman Max Baucus (D-MT) and Senators Johnny Isakson (R-GA), Chris Dodd (D-CT), Olympia Snowe (R-ME), Lamar Alexander (R-TN) and Joe Lieberman (I-CT), and Senate Leaders Harry Reid (D-NV) and Mitch McConnell (R-KY). Without their support and persistent advocacy in the Senate, we would not have been able to achieve this result.

Also, the Obama Administration, through a joint statement issued by Treasury Secretary Tim Geithner and HUD Secretary Shaun Donovan, last week said, “We welcome efforts taken by Congress to extend the First Time Homebuyers Tax Credit for a limited period. This credit has brought new families into the housing market and contributed to three consecutive months of rising home prices nationwide.”

Here are the specifics of the proposals as we know them:

• Extends the $8,000 tax credit until April 30th for first-time homebuyers;
• Creates a new $6,500 tax credit for move-up buyers for the same period;
• Both categories of homebuyers have an additional 60 days (June 30th) to close on the home;
• Both categories of homebuyers have new, higher income limits of $125,000 for individuals and $225,000 for couples;
• Move-up buyers must have been residing in their primary residence for 5 consecutive years out of the last 8 in order to qualify for the credit; and
• Homes over the purchase price of $800,000 do not qualify.

• Five year carryback for NOLs in either 2008 OR 2009, not both;
• Years 1-4 allow for 100 percent use of NOLs, year 5 is limited to 50 percent of a company’s taxable income in that year;
• No size limitation or other cap on revenues; and
• Unused NOLs in year 5 are still eligible for 20 year carry forward.

We anticipate that the Senate will pass this legislation this week with the House to follow shortly after that. We anticipate that the House will accept the bill – and homebuyer credit/NOL proposals – as crafted, although that could change.

I wanted you to have the latest information on the status of our efforts. Hopefully in a matter of days I will be able to report that these critical proposals have passed both Houses of Congress and signed into law by President Obama. As always, please contact me with any questions or comments.

Regards,

Joe Robson

NAHB Chairman