Problems that began with the subprime mortgage crisis and housing slump, over two years ago, spread far beyond the housing sector and trickled into other areas of our nation’s vast economy.  Companies began shedding jobs at an alarming rate.  And, at the same time, consumer confidence and spending was falling, while costs associated with food, health care, and college were rising. 

          Fortunately, Federal Reserve Chairman Ben Bernanke indicated recently that the recession is likely over.  But, because he also suggested that it will take some time to get our economy back on track, we should anticipate that unemployment, bankruptcies, and foreclosures will continue to rise in the coming year.  While borrowers and lenders in our country must certainly bear a great deal of responsibility when it comes to the housing crisis, the government can and must provide real solutions to help shore up the housing market.

          Toward that end, Congress has approved a number of measures to get our housing market back on track, including H.R. 1, the American Recovery and Reinvestment Act.  Under the Recovery Act, qualifying first-time homebuyers who purchase a home between January 1, 2009, and November 30, 2009, can qualify for a tax credit of up to $8,000, or 10 percent of the price of the home, whichever is less.  Unlike a similar tax credit included in last year’s housing bill, this credit does not have to be repaid to the government unless the purchaser sells the house or the house ceases to become her or his primary residence within a three year period.

          The tax credit is still available to first-time homebuyers, but given the amount of time necessary for house hunting and for closing on a new home, those looking to utilize the tax credit should be actively looking now.  Once first-time homebuyers have purchased a home, they should claim the credit using IRS Form 5405 with their 2009 federal income tax return.   
     
          More information about the tax credit enacted under the Recovery Act, as well as the $7,500 tax credit approved in 2008, is available online by visiting irs.gov/recovery.  By calling, 1-800-829-1040 first-time homebuyers may speak directly to IRS customer service representatives.

          The tax credits have helped to stimulate housing demand and stabilize home prices, but more time is needed for the credits to maximize their impact on homebuyers and our housing market.  So, I have cosponsored legislation to extend the first-time homebuyer tax credit from November 30, 2009 to December 24, 2010.  And, recently, I cosponsored H.R. 3590, the Service Members Home Ownership Tax Act of 2009, to ensure service members can take advantage of the first-time homebuyer tax credit when they are deployed overseas during the three year period during which the law requires a homeowner to remain in her or his primary residence.  While both measures are pending in the House Ways and Means Committee, I am hopeful that Congress will consider them in the days ahead. 

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