Eric Rojas, Chicago Real Estate Broker

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Tuesday, August 18, 2009

Biting the hand that feeds me: Federal first-time-buyer tax credit unfair?

Stretch for this kitchen...it's on me!



I read an interesting column at Inman News that could be applied to any tax incentive. Columnist Marcie Geffner gives a bite-size shake down of the sham first-time-buyer's tax credit dished by our Federal government. I agree with her points that current home-owners are basically paying for past risk and the credit distorts current home prices to an extent. The unfairness tag can be applied to any tax credit. We get ourselves so tangled up in qualifying for tax credits... but one way or another, we pay for some other incentives offered by Uncle Sam. Geez.



I've mentioned in past posts here that my clients (and buyers viewing my homes for sale) are very aware of the tax credit deadline. I benefit from these motivated buyers. But, I'd be okay with flattening the tax code in general and firing my accountant!

2 comments:

MichaelM said...

Can't read the entire column without being a subscriber to inman news.

Eric Rojas said...

Sorry Michael, when I tested the link when posting, I must have been signed in to the site. I can't reproduce the article on the web... only print.

Here's some answers by the author "defending" some of her points from reader (Realtor) comments:

"As I said in the first sentence of my column, the tax credit is of course a tremendous benefit for home buyers and people who work in real estate. It's *homeowners* who have to pay for the credit and receive no benefit from it.

We already have rock-bottom interest rates, thanks to easy monetary policy, so why should homeowners also have to throw in their hard-earned tax dollars through this sort of fiscal policy as well? (Of course taxes aren't fair, as Robin Harris so aptly pointed out.)

I'm not convinced by the stronger economy argument because personally, I'd rather have the money in my pocket than have the government give it to my neighbors just because they bought a home. I could spend it on my house as well as they can spend it on theirs and that would stimulate the economy too.

On the subject of whether the tax credit inflates house prices: The fact that prices have fallen doesn't mean that the credit doesn't provide an additional prop for prices since without it they might very well be even lower than they are. An additional $8.8 billion has to have some effect on the market.

For the record, my intention isn't to stir the pot or ruffle any feathers, but rather to express a point of view that hasn't much been heard apart from over the back fence. Home buyers and sellers get a lot of ink; homeowners, not so much. And hey, last week's column was about lawns--not exactly a controversial topic, but again, one of interest, I hope, to homeowners."