An Avenue to New Jobs
The National Association of Home Builders (NAHB) is presently lobbying Congress to extend the $8,000 first-time home buyer tax credit for an additional year. Currently, it ends later this year.
To gain a better understanding, here are some details. This program is for first-time home buyers who purchase homes between January 1 and December 1. To qualify the purchaser, or his/her spouse, may not have owned a residence during the three years prior to the purchase. The tax credit does not have to be repaid if the buyer occupies the home for three years or more.
However, if the property is sold during the three-year period, the credit will be recouped on the sale. When purchasing a home, the tax credit is for 10 percent of the purchase price of the home, with a maximum of $8,000. The settlement has to occur before December 1.
Each home buyer’s tax credit is determined by two factors. First is the price of the home – the credit is equal to 10% of the purchase price of the home, up to $8,000. Second is the buyer's income. Single buyers with incomes up to $75,000 and married couples with incomes up to $150,000 may receive the maximum tax credit. Buyers should work closely with their accountants and financial planners to see if this program makes sense for them.
The numbers as to how many first-time homebuyers have used this tax credit are not in yet, but this reflects a significant savings. Buyers are able to have some net to fall back on with this money.
Therefore, doesn’t it make sense that the government continues this program into next year? What would the benefits be? According to NAHB Chairman Joe Robson: “If Congress acts to extend the tax credit program, it would spur 383,000 additional home sales, including 80,000 housing starts, and [create] nearly 350,000 jobs over the coming year.”
Wouldn’t this be an excellent way to create new jobs and continue efforts to stimulate the economy? We still face an unemployment rate that is nearing double-digits. We as a nation need to do all we can to focus on the housing sector if we are to recover from our current economic distress.
We should do our best to lobby Congress and get them to support this extension.
Speaking of job creations, the Maryland Department of Business and Economic Development (DBED) is continuing to offer their Job Creation Tax Credit. This program provides income tax credits to businesses that create new jobs to encourage them to expand or relocate to Maryland.
The credit is for 2.5% of the annual wages for all new full-time jobs that would be created, up to $1,000 per job. This percentage is increased to 5% (and a limit of $1,500) if the jobs are in a priority funding zone like the federal empowerment or state enterprise zone. The total amount of credit that can be earned by a qualified business cannot exceed $1 million per year.
In order for a business to qualify, the business must first notify DBED of their intent. Next, the business must be certified as a qualified business by submitting and application to DBED. The business must meet a minimum of 60 new, full-time jobs at the new facility within a 24-month period. If the business creates the jobs within a priority funding area, that minimum is reduced to 25; outside the area, the requirement can be reduced to 30 if that total annual salary of the new employees exceeds $2.89 million. These new positions must be filled for 12 months.
The business can be research and development, biotechnology, manufacturing, transportation, communication, or some such industry that is listed on the DBED web site. This Job Creation Tax Credit remains in effect until January 1, 2014, subject to extension by the General Assembly.
As a county, we can, and should, promote this tax credit, and lobby our representatives for an extension on the $8,000 First-Time Homebuyer Tax Credit. Neither of these programs are corporate welfare. These are legitimate avenues to create jobs in our county. We need more jobs here, so that our county residents can not only live here, but also work here.