Colorado congressman: Housing tax credit is working
DENVER, Colorado ” A Colorado congressman says an $8,000 tax credit for first-time homebuyers approved by Congress in this year’s stimulus package is starting to work and may be extended beyond Dec. 1.
Democratic Rep. Ed Perlmutter said Tuesday he has been getting calls already from homebuilders seeking an extension to the tax credit, which Congress approved earlier this year to rouse a stalled housing market.
Perlmutter is a member of the House Financial Services Committee, which sets federal housing policy. The congressman was careful not to endorse extending the homebuyer tax credit, but he said an extension will be discussed in the House and that there are signals the tax cut may be stimulating demand.
“We’re already seeing a little bit of an uptick in our housing market. It seems to be working,” Perlmutter said.
Nationally, the clobbered housing market is showing signs of life. Existing home sales rose 5.1 percent in February, the largest increase in nearly six years. Sales of new homes rose 4.7 percent that month from January’s record low.
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Perlmutter talked about the homeowner tax credit as Colorado announced it will join other states in “fronting” the federal tax credit. That is, some first-time homebuyers who don’t have money for a down payment can borrow an interest-free sum from the state and then repay it with the federal tax credit they receive next year.
Colorado housing officials announced that first-time homebuyers could apply for up to $6,000 for a down payment and closing costs, with interest waived until the homebuyers receive their federal tax credit. Similar programs have been started in New Mexico, Missouri, Ohio and other states.
Perlmutter said the national housing uptick means members of Congress are likely to consider serious talk about extending the credit beyond Dec. 1, when it expires.
“The question is how quickly things get moving,” Perlmutter said. “Because of course we want to get the economy going, but we’re also operating at a deficit.”
Colorado’s program ” called JumpStart ” will allow first-time homebuyers who make less than 115 percent of their town’s median income to receive up to $6,000 interest-free from the state.
Homebuyers could use that money for a down payment or closing costs, and it wouldn’t have to be repaid until the middle of next year, after they’ve presumably gotten the federal tax credit. Homeowners who didn’t repay the $6,000 by June 30 of next year would be charged interest on the loan.
Colorado housing authorities estimated about 1,250 families would use the interest-free loan this year.
Perlmutter, a second-term congressman from Denver’s suburbs, is a lawyer who specialized in bankruptcies and other commercial litigation before joining the House.
On the Net:
About the federal tax credit: http://www.federalhousingtaxcredit.com
Colorado’s JumpStart loans: