Lately, the residential real estate market has been perking up. A key driver has been a juicy tax break: the first-time home buyer's tax credit, which comes to $8,000. No doubt, this can make a big difference when making the decision to purchase a home.In fact, about 1.4 million taxpayers have filed returns to take advantage of the benefit.
This should be a good thing, right? Well, whenever there is a significant tax break, expect a good amount of cheats to get a piece of the action (especially during hard economic times).
According to a report from the Treasury Inspector General for Tax Administration, it looks like 19,000 people filed tax returns -- claiming the credit -- even though they did not purchase a home. Some of the cases are actually comical, such as a four-year old who purchased his first home.
Interestingly enough, there is evidence that 74,000 other returns could be shams.
Now, the tax break expires at the end of November. But Congress is working hard to extend it (there is quite a bit of pressure from lobbyists). There is even talk about adding to the benefit, such as by doubling the credit to $16,000 and making it available to more taxpayers.
However, if Congress really wants to make this a solid program, it needs to put some safeguards in the system. Perhaps, at a minimum, a taxpayer should at least provide proof -- from a third party -- that a home was purchased. Is this too much to ask, especially since taxpayers will be on the hook for billions of dollars for this program?
Tom Taulli is the author of various books, including The Complete M&A Handbook
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Reader Comments (Page 1 of 1)
10-25-2009 @ 5:18AM
RWLappraisals said...
O.K. Real estate is down 30% minium, give or take for location. The tax credit should be 30%.
Also this 30% credit can be sold.The buyers have 1 year to sell the credit. Now the home investor has 3 things going for them. 1. The value of the home. 2. An intangible asset (Tax Credit, with value!) that can be sold. And lastly a roof over there heads.
Rick Linhart
Certified Appraiser, Ohio