The Home Buying Tax Credit costs what? On the day President Obama signed the extension of the home buying tax credit, Rasmussen Reports released the results of a poll today saying that 57% favor the $8,000 tax credit for 1st time home buyers but when they hear that it will cost an additional $10b+, support falls to 42%. The provision that expands it to existing homeowners and for those with higher incomes than the original threshold is supported by just 29% of those polled with 57% against it. With the homebuilders ETF down 11.5% since the mid Sept high, the law of diminishing returns may becoming evident as those who wanted to take advantage of the credit mostly did so already. The benefits of the tax credit will filter into the spring (must sign contract by April 30th) which is the busiest part of the home buying selling season following the slowest being the winter. According to the bill, “the credit applies to the purchase of a principal residence before July 1, 2010 by any taxpayer who enters into a written binding contract before May 1, 2010, to close on the purchase of a principal residence before July 1, 2010.” Make no mistake that heading into the 2010 elections, both sides of the aisle will come up with plenty of “jumpstart the economy” programs that will have a variety of price tags.
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