Isakson pushes home buyer tax credit

ATLANTA --- Legislation giving tax breaks to people who buy new houses or those in foreclosure could have softened the blow of the financial crisis had it passed when introduced in January, says its sponsor, Sen. Johnny Isakson.

The Georgia Republican's bill drew co-sponsors from nearly one quarter of the Senate but never got a hearing in committee. The senator intends to push harder for it next year or if Congress convenes after the election.

"The fundamentals that have caused this current economic difficulty probably were not preventable," he said during an interview. "But, if in January of this year, we had passed what I introduced, you would have had nine months of people incentivized to buy vacant houses, (and) the severity of the real-estate recession and its impact on banking would have been significantly reduced."

He rejected any new proposal to send a second round of stimulus checks, arguing that people would merely save the money.

"What we do need is an incentive for people to return to the housing market," he said.

Mr. Isakson drew from his three decades as an executive with a large Atlanta real-estate firm when he drafted the proposal. A similar proposal during the 1974 recession helped clear out two-thirds of the excess housing inventory within a year, he said.

Mr. Isakson's bill would grant a $5,000 tax credit for each of the next three years to individuals who buy a new or existing house in foreclosure. The program would cost the government $11.4 billion.

Georgia State University professor of real estate Karen Gibler predicted the measure could be the final nudge for someone who was already considering a home purchase. It would also make new homes and foreclosures more attractive than those offered by someone looking to sell their residence.

But she's doubtful that it would significantly bring many individual purchasers into the market.

"Our problem is with the lending side," Ms. Gibler said. "If they can't find mortgage money in today's market, they still won't buy."

Reach Walter Jones at (404) 589-8424 or walter.jones@morris.com.