Well simply put- It is a Tax Credit which means you have to have a tax liability of $25,000 in order to fully take advantage of this tax credit! So if you normally get a tax return at the end of the year; most likely you will not be able to take advantage. You should ask your Tax accountant or preparer for more details on your qualifications or restructuring needs.
It sounds amazing but it really doesn’t impact most consumer. The number sounds massive but the way these large numbers play a role to consumers is through the Companies building the homes. Generally The companies can take huge tax write offs in Tax incentive fundings (TIF) such as these with a caveat of offering housing to a certain spectrum of consumers. This is in efforts to decrease the housing cost impact for certain consumers who would otherwise not qualify for a mortgage.
This is proposed as a $40billion incentive to happen within the first 365 days of her office if she is elected as POTUS. The $25,000 tax credit to consumers of home buying age is actually closer to $75 billion according to Bloomberg so where is the $35billion difference? No one knows. Referencing Bloombergs report on this, they actually ask a very important question and one that everyone should be asking regardless of party affiliation. The questions is: “If we have this money available; where is it and why isn’t it being used when our current rates are/were 7-8% with soaring home prices? Harris’s plan does not layout where the funds will be coming from, but like everything else, taking from one pot of money to add to another pot is just “moving” the problem from one to another.
In theory, making statements of incentivizing potential home buyers to actually buy homes is a great idea as it bestows ownership, pride, and the root of the American dream. The actual act of following through with this in its full intent is the difficult part. The Executive branch can make and offer policy suggestions but budgeting constraints will still need to pass through the House and into the Senate to be passed. There are also numerous of budgetary meetings and house committees that will be enacted to handle this legislation proposition.
Although Affordable housing is one of the most critical platforms as we speak, we need to look at the root of the issue and how it started to begin with. The Fed Chair has caused most, if not all, of these issue or at least had a hand in. Jumping prime rates, removing the tac incentives, capital constraints, etc. all in doom and gloom of averting a recession has caused one the worst double dip recessions in history. With Unemployment at its all time high, gross GDP through the roof, and our national debt soaring over $30trillion and a failing consumer index is and was not the solution.
Harris’s plan is a good plan in theory but is it a viable plan? Our opinion is that it is just words and the plan which requires monetary stimulation is weak. If we had the money to avoid this crisis then why were we not using it for our taxpayers since 2020? Regardless of your views- numbers do not lie. During a Pandemic and shut downs, we had overwhelming activity in the housing market and consumer index funding. Consumer buying goods were up and even during the pandemic and shutdowns we still had a lower national unemployment rate. Housing interest rates were 2.5% and allowed a huge windfall for both buyers and sellers and housing was at its best. A traditional consumer was able to obtain a home at 2.5-3% and allowed them to qualify for a home. Todays rates of 7% requires a buyers income to qualify for a $250,000 home to be $1200+ more a month in disposable income for their ratio’s. That is more than 2 weeks of income for most consumers when they are already living paycheck to paycheck.