Buy a Foreclosure, Get a $7,000 Tax Break

[BryanS]

Isakson is pitching an idea to his colleagues in Congress: a $15,000 tax credit to anyone who agrees to buy a [foreclosed] home. Congressional budget analysts project the program would cost $14 billion over the next few years. But Isakson said the credits are well worth the hefty price tag. "If we can convince buyers to come back to the marketplace and buy these houses, then the houses aren't vacant. It's replaced by an owner-occupant, who is there making payments on a loan and helping all of the other houses around."

http://www.wsbtv.com/news/15575616/detail.html

This has made its way through the Senate. Now headed to the House.

This is a $14B bailout that any of us could take advantage of! ... except... that the tax credit incentive will only artificially inflate foreclosure property values, distorting the true market value of these properties. So much for the free market!

Good idea? Bad idea?

EDIT: Was reduced from 15K to 7K...

Edited April 4, 2008 by BryanS

[Mr. Chenevert]

That will raise the price of a foreclosed home, which would make it less attractive when comparing to other homes that are not foreclosed.

[BryanS]

Looks like instead of a $15,000 credit over three years, it is now a single-year, $7,000 credit...

The outlines of the measure suggested that the two sides had succeeded, at least for the moment, in maintaining a spirit of collaboration. Republicans had sought a larger tax credit of $15,000, to be credited over three years, for buyers of foreclosed properties but were apparently willing to settle for a $7,000 single-year credit.

http://www.sfgate.com/cgi-bin/article.cgi?...3/MN4FVUOIN.DTL

Result is still the same: prices of foreclosed homes, in bad shape, will creep up to non-foreclosure prices... but because those homes are in bad shape - they may still lose out/not sell, because other properties will be in better condition... Low price and bad condition are what sell foreclosures. This new incentive disturbs that critical balance.

[crunchtastic]

http://bigpicture.typepad.com/comments/200...it-housing.html

Detroit is apparently a buyer's market. If the bill passes, well.....

[BryanS]

http://bigpicture.typepad.com/comments/200...it-housing.html

Detroit is apparently a buyer's market. If the bill passes, well.....

Interesting. They have houses for sell - $500. OK... So that 7K tax credit would allow me to buy 14 of these houses, free and clear... key word... "FREE." You could buy them, take a 2-week trip to Detroit - tear down the places, then turn around and sell the lots - probably for a profit! It must be really bad up there.

[crunchtastic]

Interesting. They have houses for sell - $500. OK... So that 7K tax credit would allow me to buy 14 of these houses, free and clear... key word... "FREE." You could buy them, take a 2-week trip to Detroit - tear down the places, then turn around and sell the lots - probably for a profit! It must be really bad up there.

mmmmm....2 week trip to Detroit. Seriously, if it weren't for the fact that people were already squatting in, or setting fire to these houses, it might be worth consideration.

[musicman]

Interesting. They have houses for sell - $500. OK... So that 7K tax credit would allow me to buy 14 of these houses, free and clear... key word... "FREE." You could buy them, take a 2-week trip to Detroit - tear down the places, then turn around and sell the lots - probably for a profit! It must be really bad up there.

if they can't afford houses, do you think they'll buy an empty lot?

[sunsets]

You people have never been to Detroit, have you? Most of the city is abandoned, and it's pretty much accepted that one should never, ever, stop for a red light at night.

[BryanS]

You people have never been to Detroit, have you? Most of the city is abandoned, and it's pretty much accepted that one should never, ever, stop for a red light at night.

That's why all that should be left is the land. A clean slate. To start over (some day). $100. Doesn't that sound tempting? For just the lot? Buy now... sell later. Like 10 years from now. Can't we say, in this case, that there is only one way to go? When you're starting at basically 0 in real estate terms...