Op-Ed: Homebuyers Tax Credit "Whipsaws" U.S. Home Sales, Down 16.7%

Op-Ed

According to the National Association of Realtors and reported in Marketwatch, U.S. home sales declined 16.7% in December -- the largest decline on record, dating back to 1968. A contributing factor: uncertainty in the marketplace over extending the homebuyers tax credit. Marketwatch reports:

Sales had surged about 40% from June to November in response to the federal tax credit for first-time buyers, which was set to expire on Nov. 30. As it happened, the tax credit was extended until June 2010 and expanded to cover repeat buyers.

But buyers didn't know the credit would be extended when they were shopping for homes in October. In order to close in December, they would have had to sign a sales contract by early November at the latest. Existing-home sales are recorded at the closing. [. . . ] (Rex Nutting, Marketwatch, January 25, 2010)

At a time of serious economic challenge, Congress should be doing everything in its power to inject stability in the marketplace -- particularly in the volatile housing industry, whose financial downfall precipitated the economic recession.

I believe that the off-again on-again tax credit is another example of failed leadership in Congress -- where Democrats' prioritized their tax-and-spend agenda of energy taxes and government-run health care over creating jobs and growing the economy with certainty in the marketplace.

In additional news, the IRS has finally announced tax filing requirements for the $6,500 federal tax credit for repeat home purchases. Subject to purchase price and income eligibility, the tax credit can apply to purchase contracts dated from Nov. 7, 2009 to April 30, 2010, and the closing must occur no later than June 30, 2010. Specific filing instructions, including required documentation, as well as a revised Form 5405 can be found at www.irs.gov.

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