Would a $15k tax break to buy a house really do anything?

[Dangerosa]

@Tastes_of_Chocolate

But what’s the benefit in just moving houses around? Is the economy better because you have a house 3 blocks over? It was to many people in houses they couldn’t afford that started this land slide. How does making it easier for people to buy more houses help? Wouldn’t we be much better off making sure that those in houses don’t default? If we can stabilize that, the empty houses will eventually be filled (as long as we don’t encourage another bout of over building).

Would it make more sense to increase the existing tax break on all mortgages?

Because moving money around creates a multiplier effect. We would have put more money into the economy - commissions, movers, some light construction - than the house itself.

Also, in the case of the house we were looking at, the family that owned it had moved out of state for a better career opportunity. A stagnant housing market discourages people from taking advantage of opportunities that help create economic growth. They weren’t interested in staying in the house - they needed it to sell.

Also, some people are in too much house for their income - they need to sell it to keep from defaulting. And banks are sitting on foreclosure inventory - they need to sell those homes. But in order to sell, the market has to be moving. Keeping them from defaulting is a little like me doing my third graders homework for her. It really isn’t doing them (or me) any favors. This isn’t EVERYONE - some people do need just a little hand right now, and there are programs out there for them as well.

(The house did sell - for about 70% of its initial list price - about two months after we didn’t buy it - after a year on the market).

[DrDeth]

@Xema

Hmmm. I’m thinking about proposing to my neighbor that we sell each other our houses for, say, $150k each. We could then sell them back again - lots of fun.

There will be anti-churning rules and even if not the IRS can disallow any transaction done simply for tax reasons.

Then again, the closing costs would eat up most of the money, anyway.

[Algorithm]

@Tastes_of_Chocolate

But what’s the benefit in just moving houses around? Is the economy better because you have a house 3 blocks over? It was to many people in houses they couldn’t afford that started this land slide. How does making it easier for people to buy more houses help? Wouldn’t we be much better off making sure that those in houses don’t default? If we can stabilize that, the empty houses will eventually be filled (as long as we don’t encourage another bout of over building).

Would it make more sense to increase the existing tax break on all mortgages?

This isn’t going to put more people in to loans they can’t afford. Credit is really tight right now, so the only people who can get loans are those who can truly afford them. A tax break won’t have the banks handing money out to people that probably can’t pay them back. What it will do is incentivize eligible buyers to make purchases, which would be a welcome change given market conditions at the moment.

[Gangster_Octopus]

Nice, because I am planning on buying a…oh wait, I bought a house this last year. With my own money as a down payment.

Not that I necessarily oppose this (or approve of it) or think I should get grandfathered in in some way. I am just sighing at the timing.

[Airbeck]

Well, just to be clear, you get this during your tax calculations and processing after you buya house. You don’t get money up front to use as your down payment. I’m about to buy a house, so I’m obviously hoping this goes through, but I am not relying on it for my down payment. What it will do, though, is it will help to pay off other debt and with other things that one needs for a new house. It isn’t making it possible for me to buy a house, it’s making it a little more attractive so I’m more likely to do it. That is the point, not to make those that can’t afford a house able to buy one, but rather to make those that are thinking about buying, but may be apprehensive about the market, more likely to do so, which will help the housing market.