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Home Buyer Tax Credit Updates

2/3/2010 - IRS Updates Form 5405 for Home Buyer Tax Credit

The IRS has published an updated version of Form 5405 as well as the instructions for home buyers using it to claim the recently extended $8,000 first-time home buyer tax credit and the newly-enacted $6,500 repeat home buyer tax credit.

Updates to the form include the extended purchase date window — tax credit-qualified homes must be under contract prior to May 1 and close before July 1. Although the revised Form 5405 still references the “First-Time Homebuyer Credit,” it is also intended to be used by repeat home buyers, who must have lived in a single principal residence for five of the last eight years prior to purchase of the tax credit-qualified home.

In addition to updating Form 5405, the IRS is also requiring additional documentation for home buyers who claim the credit for purchases after Nov. 6, 2009. Home buyers must now provide a copy of the HUD-1 form or, in cases where a HUD-1 form is not used, a certificate of occupancy for a newly constructed home. For purchases taking place after April 30, a copy of the signed sales contract must also be supplied.

For the expanded $6,500 repeat buyer tax credit, home buyers are also being required to attach one of the following for five consecutive years of the eight-year period to demonstrate that they meet the repeat buyer qualifications: a Form 1098 reporting mortgage interest, a property tax statement or home insurance records.

The extended and expanded tax credit, which was enacted in November, is expected to spur 180,000 additional home sales and create 211,000 jobs, according to NAHB estimates.

Legislation is not expected to extend the credit beyond its current expiration at the end of April.

Tax Credit Claimants Cannot E-File

Due to the new documentation requirements, home buyers claiming either the $8,000 first-time home buyer tax credit or the $6,500 repeat buyer tax credit cannot e-file. Because of this, taxpayers should be prepared to wait at least 12 to 16 weeks to receive their refunds.

More information about the new documentation requirements can be found on NAHB’s consumer tax credit Web site, www.federalhousingtaxcredit.com.

One Remaining Issue

An outstanding issue with the new documentation requirements for the tax credit can arise for many custom home buyers in areas where a certificate of occupancy may not be issued. In such situations, the required documents for Form 5405 may not be available for the home buyer to successfully claim the credit.

NAHB had previously recommended to the Department of the Treasury and the Internal Revenue Service that a statement from the builder indicating a completed home acquisition and reporting the sale price should be used when the HUD-1 and the certificate of occupancy are not available. NAHB repeated this recommendation last week to Treasury staff members, and noted this problem in BNA Daily Tax Report, a technical journal on tax issues.

NBN will provide updates as additional information becomes available. And more information about the new documentation requirements can be found on NAHB’s consumer tax credit Web site, www.federalhousingtaxcredit.com.

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Senate Health Care Bill Threatens Home Building Industry

12/21/2009 - December 21, 2009 - In a rush to pass a massive health care overhaul before Christmas, Senate Democrats have included a last-minute provision targeting the construction industry that is certain to derail the fragile housing recovery and threaten the solvency of countless small home building firms.

In order to find the 60 votes needed to pass health care reform, a provision was slipped into the health care bill that unfairly targets small construction industry firms by mandating that they provide health insurance if they employ more than five workers. That is the same mandate required for big businesses. Meanwhile, all other small businesses – with the exception of the construction industry -- would be exempt from providing mandatory health coverage if they employ 50 workers or less.

“This narrow provision is an unprecedented assault on the construction industry and unjustly targets an industry trying to keep its doors open during the worst housing downturn since the Great Depression,” said NAHB Chairman Joe Robson, a home builder from Tulsa, Okla. “If this provision were to be enacted into law, it would prove to be catastrophic for the home building industry. In short, this is a true jobs killer. Thousands of small builder firms struggling to stay afloat could go under. We strongly urge the Senate to reconsider and pull this onerous provision that threatens the viability of small home builders across the nation

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A Major Victory on Home Buyer Tax Credit and NOLs

11/12/2009 - Joe Robson, 2009 NAHB Chairman

In a major victory for NAHB that will boost the fledgling housing recovery and help struggling business owners nationwide, Congress today approved legislation that will extend the first-time home buyer tax credit beyond its Nov. 30 deadline and expand it to a wider group of home buyers. The bill also provides relief to cash-strapped home builders by providing broader tax benefits for businesses with net operating losses (NOLs).

The legislation, which will be signed into law shortly by President Obama, will extend the $8,000 credit for first-time home buyers for sales contracts entered into by April 30, 2010 and closed by June 30. Further, it has been expanded to include a new $6,500 credit for owners of existing homes who are purchasing a new primary residence. An existing home owner can claim the $6,500 tax credit if they have been residing in their primary residence for five consecutive years out of the last eight.

In more good news, the income eligibility limits to claim the full credit amount for both groups of home buyers have been raised from $75,000 for single taxpayers and $150,000 for married taxpayers filing a joint return to $125,000 for individuals and $225,000 for married couples. NAHB’s consumer-oriented Web site, www.federalhousingtaxcredit.com, will provide complete details on the enhanced home buyer tax credit after the bill is signed into law by the President.

For NOLs, the new law will allow all businesses -- regardless of size -- with operating losses in 2008 or 2009, not both, to claim refunds on taxes paid up to five years ago. Businesses can offset 100% of taxable income with NOLs carried back in years one through four and offset 50% of income in year five. Small businesses with less than $15 million in gross receipts would be able to claim a five-year carryback for 2008 losses under the American Recovery and Reinvestment Act and for 2009 losses under the new law. The new net operating loss provisions will throw a lifeline to struggling businesses, allowing them to continue making payrolls, paying business loans and otherwise keep their doors open until the economic recovery takes hold.

Last Action on the Home Buyer Tax Credit

Even as Congress neared completion on the legislation, proponents made it perfectly clear that the home buyer tax credit would not be extended when it expires next year. Sen. Johnny Isakson (R-Ga.), a long-time champion of the home buyer tax credit, said: "This is the last extension of the home buyer tax credit. Tax credits like this only work by creating the sense of urgency to take advantage of it, and to bring the market back."

On the floor of the Senate, Finance Committee Chairman Max Baucus (D-Mont.) said that, “It’s important that this tax credit does not become a permanent fixture in the tax code. Our amendment would end the credit on April 30 of next year. This extension would get us through the winter – traditionally the worst season for real estate. Our amendment would jump-start the housing market as it enters the summer months of 2010.” Baucus added that the seven-month extension of the tax credit would be “long enough to encourage home buyers to buy homes, but it’s short enough to remain fiscally responsible.”

A Federation-Wide Effort

This legislation is the result of months of determined effort by the entire NAHB federation. This summer, NAHB instituted a “Revive Housing, Restore America” campaign calling on Congress to extend the home buyer tax credit’s Nov. 30 expiration date and expand its eligibility to more buyers, to provide net operating loss carryback relief for all businesses, and to urge regulators to resolve credit and appraisal problems that have been hampering a housing recovery.

In the interim, NAHB has worked tirelessly to make this a reality. On the legislative and grassroots front, our lobbyists have been in continuous contact with House and Senate congressional leaders and encouraging action on several fronts to achieve our housing priorities. We have testified before Congress on several occasions on the need for lawmakers to act quickly on the tax credit and our other housing priorities and warned lawmakers that a failure to act quickly could derail the fragile housing recovery even before it has time to take hold.

During key stages of the campaign, we activated our grassroots network to meet with their lawmakers when they were in their home districts and to visit them on Capitol Hill. We have inundated congressional offices with more than 10,000 e-mails and 1,500 phone calls urging senators and representatives from both parties to extend and expand the home buyer tax credit to create jobs, spur home sales, reduce foreclosures, stabilize home values and push housing and the economy to higher ground.

NAHB’s Economics and Housing Policy experts crunched the numbers and estimated the economic impacts of the proposals. This information, particularly the number of jobs and home sales created by extending and enhancing the home buyer tax credit, was circulated among lawmakers and quoted widely in the media. It made a compelling argument for our case.

A Housing Coalition Second to None

To help get this vital legislation across the finish line, NAHB worked with the National Association of Realtors and Mortgage Bankers Association during the past few months to form the most powerful coalition to speak for our industry. Our joint lobbying, grassroots and public relations efforts were heard loud and clear by Washington policymakers.

Appearing at the same Senate Banking Committee hearing, our three organizations brought different perspectives in testifying on the urgent need to take action on the home buyer tax credit. We also sent a joint letter to the Obama Administration calling for the tax credit to be extended and made available to all purchasers of a principal residence.

On the public relations front, NAHB and the National Association of Realtors recently ran a full-page ad in the Wall Street Journal and USA Today calling on Congress to extend and expand the home buyer tax credit to create jobs and put America back to work. To bolster this message to Congress, NAHB, the Realtors and the Mortgage Bankers Association for the past several weeks ran a series of joint advertisements in the Capitol Hill publications Roll Call, Politico, CQ Weekly, the National Journal and The Hill with the message, “Congress: Don’t Let America’s Real Estate Recovery Expire.”

Local Builders Lend Their Voices to Our Effort

To further increase public awareness on our housing priorities, NAHB during the past several weeks conducted several regional teleconferences with builders across the nation to generate media attention for our campaign goals. Builders provided perspectives on their individual housing markets and the urgent need for congressional action on the home buyer tax credit and other important housing initiatives. EOs, HBA presidents and other builder constituents across the country utilized NAHB’s resources at www.nahb.org/ReviveHousingNow, a one-stop site that contains information to call or e-mail your members of Congress, print ads, op-ed letters for use in local newspapers and more.

Our national media outreach has also been quite successful. NAHB CEO Jerry Howard conducted a New York media tour in mid-September, where he discussed the need to extend the home buyer tax credit with reporters at the Wall Street Journal, the New York Times and CNN/Money. He delivered the same message in interviews with Fox Business News and Bloomberg Television. Other major media outlets in recent weeks have reported on NAHB’s housing priorities, including CNBC, U.S. News & World Report, MarketWatch, AP, Reuters, The Today Show, The Washington Post, the Chicago Tribune and the Baltimore Sun.

Across the nation, 16 op-eds in 11 states were published in favor of NAHB’s position on extending the tax credit, including nine that were placed by local HBAs. Our locals proved very adept at promoting media coverage to push our campaign goals. A prime example was a YouTube video by the HBA of Kansas, which has attracted a great deal of attention on the Web and was sent by the HBA to their representatives in Congress.

NAHB Public Affairs has worked diligently to promote the tax credit to consumers. Our Web site at www.federalhousingtaxcredit.com, which provides detailed information on the tax credit compiled by the NAHB Economics and Housing Policy team, has attracted five million visits so far, and we’ve charted thousands of followers on Twitter, FaceBook and YouTube combined. To further generate public interest, NAHB created a consumer-focused Web site at www.ReviveHousingNow.com to urge potential buyers to contact their lawmakers and ask them to extend the home buyer tax credit.

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Lawmaker Look at Home Buyer Tax Credit to Spur Jobs

10/20/2009 - Lawmakers Look at Home Buyer Tax Credit to Spur Jobs

Facing mounting concerns over the bleak outlook for jobs, more lawmakers on Capitol Hill last week showed interest in extending and possibly expanding the $8,000 first-time home buyer tax credit that is set to expire on Nov. 30.

However, political observers at NAHB cautioned that renewing the popular credit is still far from a done deal, with a number of lawmakers reluctant to act unless Congress imposes offsetting tax increases or spending cuts.

“After Senate Majority Leader Harry Reid (D-Nev.) and House Speaker Nancy Pelosi (D-Calif.) expressed a willingness for Congress to move on the tax credit, we have seen encouraging developments in recent days,” said NAHB Chairman Joe Robson.

“With rising unemployment a top concern among lawmakers,” Robson said that House Democratic leaders were planning to convene a forum of economic experts during the week of Oct. 19 to discuss how to spur job creation and economic growth. “The home buyer tax credit proposal is expected to be in the mix,” he said.

Meanwhile, Sens. Johnny Isakson (R-Ga.) and Christopher Dodd (D-Conn.) were planning to offer an amendment extending and expanding the credit to a House-passed bill that would extend unemployment insurance benefits. Though it is unclear if the Senate will act on this proposal, NAHB will be urging senators to approve the amendment if it comes up for a vote.

The Isakson-Dodd proposal would extend the credit to June 30, 2010 and expand it to a wider circle of principal home buyers. It would also double the current income eligibility phase-outs to $150,000 for single taxpayers and $300,000 for married taxpayers filing a joint return.

Reporting on the Isakson-Dodd plan, the Associated Press cited NAHB statistics that extending the credit for one year and expanding it to all buyers of a principal residence would spur 383,000 additional home sales, create more than 347,000 jobs and generate $16.1 billion in wages and salaries and $12.1 billion in business income.

Jobs a Top Voter Concern

Unemployment rose last month to 9.8% and economists have been warning that it could exceed 10% even as the economy tentatively begins to generate growth. Over the longer term, it could take years to replace the six million jobs that have been lost during the recession, including one million in residential construction and related fields.

At a time when the White House and Congress have been largely preoccupied with overhauling the nation’s healthcare system, jobs have quickly emerged as a top issue among voters.

Eighty-one percent of the registered voters surveyed by Hart Research Associates between Sept. 21 and 23 for the Economic Policy Institute said that the Obama Administration still needs to do more to deal with the loss of jobs.

The survey found that because the pain of the recession has struck so close to home, Americans strongly support continuing government action to address unemployment.

Fifty-seven percent of those polled said they were close to someone who has been laid off, 61% reported that someone close to them has had their hours or pay cut and 44% of all households have experienced one or the other during the past year.

Of those participating in the Hart research poll, 83% saw unemployment as a big problem today, and 61% said that unemployment would remain a major challenge a year from now.

In their analysis of the impact of NAHB’s proposal to use the home buyer tax credit to strengthen housing demand and promote economic recovery, economists at the association noted that the increased home purchases generated by the proposal would help soak up the excess supply of unsold homes and push prices back in a positive direction.

While the last few months have seen encouraging signs that the housing market is stabilizing from its most severe downturn in many generations, foreclosures remain a serious threat to the momentum that the housing market needs to move forward.

“The economic stimulus created by established households moving into new homes, and the added construction necessary to answer demand where there is no excess supply, generate the jobs, wages, salaries and business income and the tax revenues” resulting from a tax credit extension, the NAHB economists wrote. “As well, these economic impact estimates do not include the larger macroeconomic benefits that would result from the stabilization of housing prices and the housing market in general.”

Exploring some current attitudes toward the housing market, Fallon Research & Communications on Oct. 14 said that, “Americans seem to be acutely attuned to the inexorable relationship between the housing industry and the national economy.” Forty-five percent of those polled in the Fallon survey said that the real estate industry and housing market are very important to the national economy, and another 48% agreed that they are somewhat important.

Economist John Burns, of John Burns Real Estate Consulting, who appeared at NAHB’s spring board meeting in Washington on a panel of experts discussing the housing outlook, noted that creation of the housing tax credit is among the steps taken by the government that can be credited with halting a further decline in housing demand this year.

“Demand needs to continue to be stimulated to bring down supply, particularly while the country continues to lose jobs,” Burns said. “Without continued government intervention, home prices will plummet, banks and the GSEs will continue to lose money and the economy has virtually no chance of increasing overall employment in 2010.”

Revive Housing, Restore America

Through its “Revive Housing, Restore America” campaign, NAHB is continuing to urge lawmakers to address housing priorities.

To participate in this ongoing grassroots effort, builder constituents should visit www.nahb.org/ReviveHousingNow. This one-stop site contains information on calling and e-mailing members of Congress, as well as talking points, banners for Web pages, print ads, op-ed letters that can be sent to local newspapers, and more.

To generate public interest in the campaign, NAHB’s consumer-focused Web site at www.ReviveHousingNow.com asks potential buyers to contact their lawmakers and urge them to extend the home buyer tax credit.

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HOUSING STARTS AND PERMITS POST GAINS IN MAY

6/16/2009 - Nationwide housing starts rebounded in May from record lows in the previous month, posting a 17.2 percent gain to a seasonally adjusted annual rate of 532,000 units, according to U.S. Commerce Department figures released today. While driven largely by a double-digit gain in the volatile multifamily sector, the uptick also reflected a substantial gain on the single-family side and applied consistently to all regions of the country.

"Having drawn down standing inventories to very thin levels over the past year, some home builders are now carefully replenishing their supplies in response to demand from smart buyers who are taking advantage of low interest rates and prices," said Joe Robson, chairman of the National Association of Home Builders (NAHB) and a home builder from Tulsa, Okla.

Taken from the NAHB press. For more on this, visit their website: (http://www.nahb.org/news_details.aspx?sectionID=0&newsID=9365)

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ENHANCING THE HOME BUYER TAX CREDIT STATEMENT

6/11/2009 - The following statement was issued by Joe Robson, chairman of the National Association of Home Builders (NAHB), in regard to enhancing the home buyer tax credit:

The National Association of Home Builders supports the Business Roundtable's efforts to promote policies that will stimulate housing demand. NAHB looks forward to working with all interested parties in the business community, on Capitol Hill and in the Obama Administration to foster new ideas and policies that will help to get housing and the economy back on track, particularly at a time when the recovery is facing a number of significant challenges.

Due to expire at the end of November, the current $8,000 first-time home buyer tax credit has proved to be an effective policy targeted toward a specific demographic group that is showing tangible results. Enhancing this credit would help to stoke the economic engine at a key point in our recovery.

When the debate begins in earnest, we look forward to working with Congress to consider all appropriate tax measures to restore the health of housing and the nation's economy.

*This was taken from the NAHB press. For more information, visit their website: (http://www.nahb.org/news_details.aspx?sectionID=0&newsID=9336)

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Multifamily Builder Confidence Up From Record Lows

5/26/2009 - Rents Remain Depressed, but Interest from Prospective Renters and Buyers Rises

Recent hints of optimism in the housing industry appear to have spread to the multifamily sector, according to the first quarter of 2009 results of the Multifamily Rental Market Index (MRMI) and the Multifamily Condo Market Index (MCMI), released today by the National Association of Home Builders (NAHB).

"Multifamily builders are beginning to see slight improvement in the current market for new rental and for-sale units, and anticipate even better times in the next six months," said David Crowe, NAHB's chief economist. "The components of the index measuring customer interest rose significantly; the index level of calls from prospective renters rose 14 points, to 50.9, and the index reflecting traffic in prospective condo buyers jumped 25 points."

* Taken from NAHB Press. For more on this, visit their website: (http://www.nahb.org/news_details.aspx?sectionID=0&newsID=9259)

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