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I am going to annoy, anger and irritate a lot of my fellow real estate agents with this.
Let the $8000 first time home buyer tax credit expire at the end of November. Congress should not vote to extend it.
It is not that I want the market to slow further, prices to drop more or the real estate market overall to get worse than it currently is.
I do have several reasons for my belief that we should let it go...for now.
1. Deadlines are good!
The credit was out there a long time before people really started to focus and pay attention. What got them to pay attention was a deadline! An indefinite tax credit does very little to help the market. Human nature is to procrastinate. Deadlines give them a reason to stop procrastinating.
2. Fraud
Apparently there have been a fair number of people claiming the credit who are not eligible for it. These are people who are either not first time home buyers, or who never actually even bought a house. The IRS is not requiring proof that you qualify for this tax credit and so there are some people taking advantage. If you're tempted, be aware that there are now over 100,000 tax returns flagged for an audit because of this and one tax preparer is already headed to jail!
Let them work out these issues before they give another tax credit or extend this one.
3. Assess
There are a multitude of arguments both for and against extending this tax credit. Each side has their economists with their data. Let's take some time to assess how much good this is doing and whether to extend it and what form that extension should take. Should it be more or less than $8000? Should it apply to more than first time home buyers? The current guidelines are not because data showed this was the best solution. It was a political compromise. Why not look at actual data now, analyze it and determine what makes sense?
I'm not anti-credit. I'm pro a thoughtful approach to this.
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