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IPFS News Link • TAXES: Federal

The Expensive Home Buyer Tax Credit

• Wall St. Pit
One of the more interesting numbers to come out yesterday was the cost per marginal homeowner of the $8000 first time homebuyer tax credit. It’s a rather astounding $43,000. That’s what it costs to lure those that wouldn’t have bought into the market.With regards to the tax credit, what really matters is the cost per additional home sold. And as I pointed out earlier today, even using the NAR numbers, the cost per additional home sold is $43.4 thousand. Here is the math: 1.9 million buyers qualify for the credit (the NAR estimates between 1.8 and 2.0 million) = $15.2 billion. The NAR estimates the tax credit resulted in 350 thousand additional purchases. So divide $15.2 billion by 350 thousand = $43,000 per additional home. And the numbers will get worse if the program is extended. This is not a trivial point as what’s at stake here is once again a government program that picks winners and then uses the fisc to subsidize those so chosen. The goal of jump starting a particularly impo

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