Loebsack Fights to Fix Unfair Loophole in Homebuyer Tax Credit

Loebsack Fights to Fix Unfair Loophole in Homebuyer Tax Credit

Bill Would Make Iowa Married Couple Eligible to Receive Tax Credit

Washington, DC – March 10, 2010 – (RealEstateRama) — Congressman Loebsack sent a letter today to Speaker of the House Nancy Pelosi urging her to bring legislation to the floor that will ensure Iowans are not barred from tax credits due to requirements that penalize married couples. The issue was brought to his attention after a married couple in Iowa found that they were ineligible for the expanded First-Time Homebuyer Tax Credit due a loophole that requires both spouses to meet the same criteria.

“The purpose of these tax credits is to help homebuyers – pure and simple,” said Congressman Loebsack. “These loopholes must be removed, and Iowans seeking to purchase homes should be eligible for tax credits that will help them achieve the dream of home ownership, not bar them.”

This issue was raised when a married couple from Iowa’s Second District came to Congressman Loebsack’s office seeking assistance. They were trying to access tax relief through the expanded First-Time Homebuyer Tax Credit, which is available to homebuyers who have owned, or who previously owned, a home for five out of eight consecutive years.

However, as this couple soon discovered, there is a roadblock to accessing the tax credit. For a married couple to qualify for the credit, both spouses must meet the criteria. Unfortunately, that provision excludes newly married couples and even couples who have been married many years but live separately.

Congressman Loebsack is an original co-sponsor of a bill that would change the law so that only one spouse has to meet the tax credit’s residency and occupancy requirements to qualify for the tax credit. In addition, he has written a letter to the Speaker of the House urging her to quickly bring legislation to a vote to remedy this situation.

Individuals and couples must buy a home by the end of April to qualify for the credit and can file an addendum to their 2010 taxes through the end of the year to receive it. The full text of the letter is below.

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The Honorable Nancy Pelosi
Speaker of the House
H-232 The Capitol
Washington, DC 20515

Dear Speaker Pelosi:

I write today to share with you a concern that was brought to me by a married couple in my District.  When Congress enacted the expanded First-Time Homebuyer Tax Credit, we did so with the intention of providing much-needed assistance to potential homebuyers and in order to stimulate the housing market.  As you know, the expanded credit is available to homebuyers who have owned, or who previously owned, a home for five out of eight consecutive years prior to purchasing a new primary residence.

However, my constituents alerted me to a roadblock in that credit.  For a married couple to qualify for the credit, both spouses must have owned, and lived in, the same previous principal residence for five consecutive years.  What my constituents found is that if one spouse hasn’t lived in the same principal residence for those five years and therefore has different eligibility for the credit, neither spouse is eligible to receive any assistance from the homebuyer tax credit.

This is an alarming omission from a tax credit that was supposed to assist homebuyers, not put up roadblocks to their dreams of homeownership.  It is also representative of a worrisome trend of the tax code working against married couples.  I therefore respectfully urge you to expeditiously bring legislation to the Floor that would fix this loophole in the expanded Homebuyer Tax Credit.

I would gladly discuss the concerns I have heard from my constituents with you further and work with you to remedy this unfortunate situation.

Thank you for your attention to this important matter.

Sincerely,

Dave Loebsack
Member of Congress

Contact:
Sabrina Siddiqui 202-226-6476

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