Extend home buyer credit, but cut it

That's the latest word from Capitol Hill on the continuation of the first-time home buyer credit.

Actually, it's the latest word from Air Force One. No, it's not the Prez talking, but Democratic Sen. Bill Nelson of Florida, who was on the plane with Obama en route to Jacksonville.

Nelson told reporters that the extension could be completed as early as this week as part of the Senate's deliberation of unemployment benefits legislation.

But along with continuing the home buyer tax break through 2010 (it's scheduled to end in just over a month), the credit would be gradually reduced.

According to a Nelson aide, first-time home buyers who close before April 1, 2010, would get the full $8,000. After that date, the credit would be reduced by $2,000 in each successive quarter until
expiring at the end of the year.

Everyone's unhappy: Yep, once again, Capitol Hill sure knows how to make everyone unhappy.

The real estate lobbyists industry wanted an extension and expansion, not only of the dollar amount, but also of the pool of possible home buyers, not just first-timers.

Taxpayers who aren't able to get into their first house by the April deadline will be irked.

And even the IRS will be ticked off.

By phasing out the credit based on arbitrary dates (I'm sure the phaseout was constructed to deal with budgetary concerns), taxpayers are going to be confused and end up making mistakes.

Or as has already happened, they'll try to get around the restrictions. OK, in plain English, they'll cheat.

That means the tax agency will have its work cut out for it yet again to make sure that such honest errors and dishonest tax break efforts don't happen.

Good luck, once again, with that, IRS.

Related posts:

• H.R. 3901 aims to halt home buyer fraud
• $10 billion paid out in home buyer claims,
  but how many were bogus?
• First-time home buyer credit testimony
• Home buyer credit crystal ball gazing
• Home buyer credit cheats beware