Tax "credit" could help jump start housing market -- but there's a catch - WDRB 41 Louisville News

Tax "credit" could help jump start housing market -- but there's a catch

There was a lot of publicity when President Bush signed the Housing Rescue Act last week.  But Louisville housing experts are worried most people are not aware of a provision that could save them thousands.

The original aim of the Housing Rescue Act was to find ways to prevent home foreclosures.  The new law will allow many struggling with high house payments to refinace.  But the local housing industry says it also offers a big incentive to buy a home by next July.

Dave Monsour of Monsour Builders tells Fox 41's Dick Irby, "They're down anywhere between 20 to 30% where they were a few years ago."

With new homes starting at $150,000, builder Dave Monsour says business should be booming at his Cedar Brook Subdivision.  He hopes the federal Housing Rescue Act helps generate new low and moderate income buyers.  "We do have first-time homebuyers here and the Act will certainly help them."

As Congressman John Yarmuth put it, "Owning your first home is now $7500 easier."  Yarmuth and local housing industry groups gathered Wednesday to promote a new $7500 tax credit offered to some homebuyers through the Housing Rescue Act.

While it is limited to first-time homebuyers, first-time buyers are anyone who hasn't bought a home for at least three years.

Rocky Pusateri of the Home Builders Association explains, "This should be the item that will get a lot of people who are sitting on the fence into home ownership."

Will a $7500 tax credit really jump start the housing market?  The housing experts who were here say all they know is, a similar short term tax credit in 1975 did get a dead market moving again."

Nelson Collins of the Louisville Associaton of Realtors says, "This will do, as it did in 1975, it will help clear out this inventory of unsold homes."

A $7500 savings on a house purchase is a big plus.  But Fox 41's Dick Irby learned while doing some research after Wednesday's news conference, there is some fine print to consider.

What local speakers called a "tax credit" is really a tax-free loan.  You can take the $7500 off your 2008 or 2009 taxes, but you must pay it back in equal installments, reducing your tax refund by $500 a year for 15 years.

Congressman Yarmuth's office says there was no intent to mislead anyone, but agrees speakers were not specific enough about how the $7500 benefit is structured.

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