Congress has stirred up a hornet's nest with a minor provision tucked away in the massive economic stimulus package that's on track to be passed this month. The provision seems simple enough: Take a law passed last year that provides a tax credit of up to $7,500 to first-time home buyers and strip out the part that says the credit must be paid back to the federal government over 15 years. Without the easing, the "credit" is essentially a no-interest federal loan. Thus the juicier credit would theoretically spur even more first-time home purchases.
Problem is, the home buyer credit applies to purchases after April 8, 2008, and before July 1, 2009, while the easing was written to cover only folks who bought a home during the first six months of this year. So under the proposal in the stimulus package, if you purchased your home before Jan. 1, you still have to pay back the credit. Score one for the procrastinators.
Needless to say, folks who acted last year to take advantge of the home buyer credit are pretty upset about the double standard. They're raising a hue and cry that Congress changed the rules in the middle of the game. Why would lawmakers make such an obvious political blunder? It isn't hard to figure out what happened. The point of an economic stimulus package is to spur future economic activity. If what you're trying to do is get more people to buy homes, it doesn't make sense from an economic standpoint to extend the incentive to folks who already made a purchase.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
But fairness has to enter the equation, too. Easing the credit just months after creating it is tantamount to saying that it didn't have enough oomph in the first place and should never have included the repayment requirement. If Congress believes the credit needs to be heftier, then shouldn't everyone who qualifies for the credit get it on the same terms? If folks who bought last year put up a big enough stink, it's possible lawmakers will take a second look, but so far they haven't given any indication they're listening to the complaints. Instead they're talking about juicing up the credit in ways that might make recent buyers even madder: Removing the $7,500 maximum and opening up the credit to folks who aren't first-time buyers.
-
What Is a Qualified Charitable Distribution (QCD)?Tax Breaks A QCD can lower your tax bill while meeting your charitable giving goals in retirement. Here’s how.
-
Embracing Generative AI for Financial SuccessGenerative AI has the potential to reshape how we approach learning about and managing our personal finances.
-
AI Regulation is Looming: Kiplinger Economic ForecastsEconomic Forecasts Find out what Washington and regulators have planned for artificial intelligence.
-
The Biden Tax Plan: How the Build Back Better Act Could Affect Your Tax BillPolitics Depending on your income, the Build Back Better Act recently passed by the House could boost or cut your future tax bills.
-
Kiplinger's 2020 Election ForecastPolitics For nearly a century, The Kiplinger Letter has forecasted the outcome of presidential elections to keep readers informed of what's coming and what it means for them. Here's our call for 2020.
-
The 2020 Election and Your MoneyPolitics We’ve assessed how the presidential candidates’ stances on financial issues will affect your wallet.
-
5 HEROES Act Provisions with a Good Chance of Becoming LawPolitics The massive federal stimulus bill just passed by the House of Representatives is "dead on arrival" in the Senate. But a few proposals in the bill have enough bipartisan support to eventually become law.
-
Vote by Mail: A State-by-State Guide to Absentee Ballot VotingPolitics With health authorities recommending people continue to social distance, the idea of voting by mail is becoming an increasingly hot topic.
-
9 Ways COVID-19 Will Change the 2020 ElectionsPolitics The 2020 election will be like no other in history, as the COVID-19 pandemic will upend the business of politics as usual.
-
How to Run for Local OfficePolitics If you’ve ever thought that you could do a better job than the elected officials currently in office, here’s how to launch a campaign—and win.
