US Lawmakers Vote To Expand Homebuyers Tax Credit

by Leroy Baker, Tax-News.com, New York

09 October 2009

With unanimous bipartisan support, the US House of Representatives on October 8 passed the Service Members Home Ownership Tax Act of 2009, which would make certain changes to the tax code to improve how certain provisions included in the Recovery Act apply to US military and foreign service personnel and intelligence employees.

“This bill makes sure that the brave men and women who put their lives on the line every day get to enjoy the same benefits as every other American who benefits from their service,” said Ways and Means Committee Chairman Charles B. Rangel.

“By extending the first-time homebuyer tax credit for service members overseas, we give these families more time to utilize the benefit, while also helping our economy continue its recovery. I thank my colleagues for supporting this important legislation and look forward to working with the Senate to deliver this bill to President Obama for his signature,” the New York Democrat added.

The legislation would ensure that certain payments under the Department of Defense Housing Assistance Program are exempt from tax. The bill would also extend for one year the deadline for utilizing the first-time homebuyer credit for qualifying service members, meaning that service members who are stationed overseas can take full advantage of the credit when they return. The credit is currently scheduled to expire on November 30, 2009.

Finally, the bill would also ensure that service members will not have to repay the first-time home buyer credit if they are called up for service and forced to sell their home within three years of purchasing.

According to Rangel, the legislation will not add to the deficit because it is offset by a revenue-raiser that will increase the penalty for failure to file a partnership or S corporation return by USD21 to USD110 for taxable years beginning after 2010. This is expected to raise USD327m over ten years.

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