In hopes of jumpstarting the state’s economy, lawmakers have proposed a $7,000 tax credit for new home buyers. The National Association of Home Builders have issued a report that determines that the proposed $7,000 state income tax credit for home buyers will generate enough revenue for the state to offset any loss of proceeds and also induce many more prospective buyers to purchase homes this year than would otherwise have been the case.
The report also finds that the home-buying activity created by the tax credit will generate fees for real estate agents, income for the professionals who provide services at closing and additional spending on items such as home appliances and furnishings. The activity caused by the tax credit will then generate income, sales and other tax revenue for the state.
Increased home buying means that vacant units for sale on the market will be absorbed more quickly and allow production of new housing to recover from its current depressed condition to more normal levels, the report stated. “Real estate sales and housing starts in New York State have undergone a precipitous decline,’’ said Philip LaRocque, New York State Builders Association executive vice president. “This (National Association of Home Builders) study clearly shows that the tax credit will create economic stimulus for New York State’s real estate market, and will encourage buyers to make home purchases with resulting positive impacts on the economy.
The legislation, sponsored by Assemblyman Vito Lopez and Senator Joseph Addabbo Jr., provides for a tax credit in the amount of $7,000 for the purchase of a home with a price of $1 million or less. The tax credit applies to coops and condos, in addition to one and two family residences — irrespective of whether it is an existing or new construction — and may be taken for the first three years of ownership of such primary residence.
The tax credit will work in tandem with the federal housing tax credit to jumpstart the economy, assist in stabilizing home values, slow the rate of foreclosure and help mortgage portfolios. Jan R. Murray, Chautauqua County Board of Realtors Inc. executive officer, said last month with low mortgage rates and moderate prices, it is a great time to invest in the housing market. Plus, if you’re a first time buyer there is a possible $8,000 housing credit thanks to President Barack Obama’s economic stimulus plan.
The latest federal economic stimulus plan includes the $8,000 tax credit for first-time buyers who purchase a home on or after Jan. 1 and before Dec. 1. Unlike previous tax credits for first-time buyers, this one doesn’t have to be repaid. The $8,000 tax credit is part of the American Recovery and Reinvestment Act of 2009 that was recently signed into law by Obama.
The National Association of Realtors estimates the new tax credit will boost first-time buyer home sales by 300,000 this year. “This is a good incentive to buy,’’ Murray said. “If you’re on the fence about buying a home, this should help make the decision.’’ Home buying activity that is stimulated by a tax credit results in positive multiplier and ripple effects throughout the economy, not just in the housing sector.
A tax credit is an investment by the state which will be repaid throughout the economy. The New York State Builders Association is a not-for-profit trade association comprised of 16 local affiliates across the state. Chartered in 1951, the organization represents 3,500 single and multi-family builders, remodelers, developers and associate member firms — ensuring that their interests are represented at the state level. These members perform over $5 billion in single and multi-family new and rehab residential construction annually and employ over 250,000 across the state.