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Lawmakers offer homebuyers a tax credit
by Nigel Roberts
Those searching for a new home would have just a few months to cash in on a tax credit if Gov. Sonny Perdue signs a piece of legislation intended to stimulate the housing market.
The Homebuyer’s Tax Credit bill, HB 261, enjoyed bipartisan support in both legislative houses and passed without much opposition on April 3. The bill offers homebuyers a tax credit in the amount of either $1,800 or 1.2 percent of the purchase price of the house (whichever is less).
Lawmakers sent the bill to Perdue on April 14, and it now awaits his signature. If he signs it, as he’s expected to do, homebuyers would have six months to purchase a single-family home or a condominium as their primary residence. There are caveats attached, such as the home has to have been on the market prior to passage of the tax credit law. The idea is not to spur new construction but to move houses already on the market.
Although the measure sailed through the legislature, it faced stiff criticism. Originally, the bill called for a $3,600 state income tax credit, which opponents said would worsen the state’s economic situation.
Sen. Nan Orrock (D – Atlanta) led the opposition on the Senate floor. In a speech she said, “When we’re talking about balancing the budget that has a $1.5 billion cut to state agencies, how can we then argue that we should pass this bill, which adds another $166 million to our shortfall? In this budget year it would cost $110 million. Folks, we’re digging the hole deeper.”
But supporters countered that it would have a positive effect on the economy. Sen. Chip Pearson (R – Dawsonville), who sponsored the bill in the Senate, insisted that the measure “is a true stimulus” because homebuyers have a short period of time to take advantage of the tax credit. “This will not be available next year or the year after that,” he said. Pearson added that since credits are spread out, it’s unlikely that the state’s treasury will take “a huge hit at one time.”
Signing the Homebuyer’s Tax Credit bill and HB 481 (a controversial $2,400 tax credit to businesses that includes a capital gains tax break) would cost the state about $60 million in fiscal year 2010 and hundreds of millions more in following years, according to the Georgia Budget and Policy Institute (GBPI), a nonprofit economic think tank.
“These bills devote millions of dollars to activity that will occur regardless of government intervention,” said Sarah Beth Gehl, GBPI deputy director. “They also keep millions of dollars from important services that won’t be offered to Georgians who need them, such as meals on wheels and care for Georgians with developmental disabilities, as well as to services that make our state strong, like the education system.”
Alan Essig, GBPI’s executive director, said that until now Perdue has been “a good and reliable steward of Georgia’s budget.” He said Perdue is “the last chance Georgia has to prevent worsening the impending deficit.”
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