Tell Your Clients: Don’t Wait on Tax Credit

By Robert Freedman, Senior Editor, REALTOR® Magazine

A handful of bills to extend and increase the First-Time Home Buyer Tax Credit are under consideration in Congress, but if you have clients who are holding out in anticipation of one of these bills passing, you might want to encourage them not to wait. The likelihood of any of these bills getting enacted this year is highly uncertain.

That’s the message I’m getting from NAR analysts. The issue isn’t the tax credit itself. From everything we’re seeing, the credit enjoys broad bipartisan support and, as our chief economist Lawrence Yun has said, the credit is a bargain when it comes to economic stimulus. You get a lot of bang for the buck, and I think it’s safe to say that a lot of lawmakers realize that. Certainly Sen. Johnny Isakson (R-Ga.) does. He’s the lead sponsor of a bill to extend and increase the credit, and he’s been a champion on what the credit can do for the economy.

The problem, rather, is far more prosaic. It’s an issue of timing–even workload. Congressional leaders in both houses are determined to get something out this summer on health care reform. That’s a huge undertaking. There are five major bills in the works and all of those approaches must be merged somehow into a single bill. What’s more, different pieces of different bills are under different committee jurisdictions. It’s a tangled web that Congress weaves!

The good news on health care reform is that lawmakers generally recognize the need to help small business owners and the self-employed. That’s something else I’m hearing from NAR analysts. So, there’s reason to be optimistic that whatever comes out of Congress will recognize the tough conditions faced by REALTORS®.

But the downside is the precious little time this process leaves for other matters.

For that reason, it wouldn’t be bad idea to tell your customers that, when it comes to the tax credit, a bird in the hand is worth two in the bush. If they hold out in the hopes of getting a richer credit, they could see their chance of getting any credit disappear.

Bottom line: With Congress, you never know what’s going to happen. Sometimes legislation moves at a glacial pace; other times it gets turned around in an instant. It’s impossible to know beforehand what legislation might get put on a fast track. But, if you let your customers know about the uncertain prospects for any legislation, not just the tax credit legislation, they can make their own informed choice. Certainly they’ll appreciate that you let them know the potential consequences of waiting.

Robert Freedman

Robert Freedman is director of multimedia communications for the NATIONAL ASSOCIATION OF REALTORS®. He can be reached at rfreedman@realtors.org.

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Comments
  1. I think the tax credit is great and I’m all for extending it for a longer period of time AND to all buyers of a primary residence. However, I believe the media coverage about increasing the dollar amount will hinder the program’s effectiveness. Why on earth would a prospective buyer jump off the fence if they think they can get an extra $7,000 by waiting a few months? This isn’t going to stimulate the market, it’s going to halt it. This public discussion should be shelved until after the current tax credit has taken been completed in November. If you must continue the public debate – take steps to make sure any future credit changes will be retro-active as not to deter buyers currently thinking of entering the market.

  2. I think congress is missing the point of a tax break stimulus. Don’t make one that’s discriminatory, make it available to anyone who wants to buy a home in a down market like this one. The idea is to stimulate the economy. Also lets not put short time limits on it. Put a time limit based on the market recovery. Another words offer the the tax break until there is a definite recovery. Better yet ditch the current tax code all together and go to the Fair Tax HR 25 which has been on Capital Hill for 10 Years or so.

  3. Shannon Rust

    Every time I see articles about the tax credit, I think of the people who dived in last year and have to pay their stimulus money back, versus those who don’t this year. This incentive is becoming dangerously similar to the “As Seen On TV” product commercials, i.e. “BUT WAIT! THIS year we’ll increase the stimulus money to DOUBLE the amount!” I agree with Mr. Andre, there should not be a cutoff date, it should end in tandem with recovery statistics. Don’t get me wrong, the program is giving the economy a badly needed “jump start”, but with the two previous scenarios, can you blame buyers for waiting it out? Sales are increasing, in part, because consumers are seeing interest rates begin to rise, they’ve been waiting it out too, and that’s contributed to the mentality….

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