Homebuyer Tax Credits to Cost Federal Government $22B

The three versions of the homebuyer tax credit are expected to result in revenue losses to the federal government of about $22 billion, according to estimates from the ""Government Accountability Office"":http://www.gao.gov (GAO).

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Looking at Internal Revenue Service (IRS) filings through July 3, homebuyers so far have claimed $23.5 billion under the housing stimulus provisions.

The first bill passed by Congress back in 2008, the Housing and Economic Recovery Act, provided first-time homebuyers a refundable credit up to $7,500. These taxpayers must repay the credit over 15 years beginning in the 2011 filing season. The GAO reports about 1 million Americans have claimed $7.3 billion in interest-free loans under the Housing Act.

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The American Recovery and Reinvestment Act of 2009 expanded the credit for first-time buyers to $8,000 and waived the loan-repayment stipulation. These buyers are required to repay the credit only if the home is resold or ceases to be their primary residence within three years. About 1.7 million homebuyers have claimed about $12.1 billion under the Recovery Act. This represents half of all claims, making it the most frequently used version of the homebuyer tax credit, according to the GAO report.

The Worker, Homeownership, and Business Assistance Act of 2009 extended the time frame in which homebuyers could claim the above version of the credit from November 30, 2009, to April 30, 2010. It also opened up the program to existing homeowners, allowing them to claim a tax credit up to $6,500 for the purchase of a new residence. Nearly 600,000 claimed about $4.1 billion under the Assistance Act. Of these, close to 400,000 used the first-time homebuyer option and nearly 200,000 claimed the existing homeowner option.

The ""GAO's analysis of IRS data"":http://www.gao.gov/new.items/d101025r.pdf found that California, the most populous state in the country, ranked first with the most homebuyer tax credit dollars claimed -- $2.76 billion so far, to be exact. Nevada ranked first in the amount of homebuyer tax credits claimed per resident.

Rumors have begun to swirl that the administration might ""bring back the homebuyer tax credit"":http://dsnews.comarticles/will-administration-bring-back-homebuyer-tax-credit-2010-08-30, but officials say it will take a few more months of market data before they can determine if another stimulus is needed.