In an effort to jumpstart the sagging housing market, Rep. Gary Ackerman (D-NY) plans to introduce legislation after the August recess that would provide up to $20,000 to nearly two million prospective home owners. Not since the Homestead Act of 1862 has a piece of legislation had the potential to make millions of Americans home owners while shoring up a housing glut that continues to weigh down the recovery.
The bill would offer two key enticements: the $20,000 matching down payment to creditworthy borrowers and a 10-year tax exemption on rental income to one million investors who purchase single-family homes as rental properties. Structured as a loan, the $20,000 down payment would be forgiven over a five-year period, provided the buyer continued to live in the house.
As the number of foreclosed homes grows, relief for home owners can’t come soon enough, Ackerman says. “This would clear the way for new housing starts, and put millions of Americans back to work,” he said in a statement.
To pay for the legislation, Ackerman proposes a corporate tax holiday on repatriated earnings, dropping the rate to 10% from 35%, which he contends would entice companies to invest in the U.S. rather than overseas, thus significantly increasing the pool of taxable income. “The newly emancipated billions would further spur the economy,” Ackerman said. “Everybody wins.”
Coming at a time when House Republicans are strongly opposing any legislation with even a whiff of new spending, the likelihood that a new stimulus like this would pass the House are slim to none. However, the proposed tax holiday offers conservative House members something to wrap their arms around.
If it finds traction in the House, do you think Ackerman’s bill is the panacea the housing market has been waiting for?