Don't Mess With Taxes

It's really no big surprise that the first-time home buyer credit will likely extend past its Nov. 30 expiration date.

The housing market, while not quite as disastrous as a few months ago, still is stumbling in much of the country. The National Association of Home Builders is putting predictable pressure on Congress to continue the credit as a way to help keep the nominal real estate market recovery on track.

And 2010 is an election year. Homeowners, both first- and long-time, are traditionally more inclined to vote than other electorate sectors.

So sound tax policy and deficits be damned! Onward housing credits!

The amendment strategy: With just about six weeks before the scheduled end of the tax break, word is in D.C. that he first-time home buyer tax credit could be tacked onto a Senate unemployment insurance bill.

Housing credit champion Sen. Johnny Isakson (R-Ga.) would like to add the tax break continuation as a floor amendment to the Emergency Unemployment Compensation Extension Act of 2009. That's the Senate version of the House's unemployment extension bill.

Isakson, however, wants to do more than simply perpetuate the existing credit.

In addition to extending the home buyer credit through June 30, 2010, Isakson's amendment, which has support across the aisle from his colleague Sen. Chris Dodd (D-Conn.), would make the tax break available to anyone purchasing a primary residence. It also would raise income limits to $150,000 for individuals and $300,000 for joint filers.

Cost considerations: While many lawmakers are on board with a temporary extension, such a broadening of the home buyer break meets more resistance.

On the House side, Democratic leaders say they plan to follow proposed statutory budget rules (aka "pay go") that demand any costs be offset by cuts or increased taxes elsewhere.

As Nov. 30 nears, things could get really exciting on Capitol Hill.

Related posts:

• House OKs military home buyer credit
• Homebuyer tax break update
• First homes, continuing taxes (Eye on the IRS)
• Housing tax topics roundup