Stimulus Home-Buying Break Flunks Fairness Test

Congress has stirred up a hornet's nest with a minor provision tucked away in the massive economic stimulus package that's on track to be passed this month.

Congress has stirred up a hornet's nest with a minor provision tucked away in the massive economic stimulus package that's on track to be passed this month. The provision seems simple enough: Take a law passed last year that provides a tax credit of up to $7,500 to first-time home buyers and strip out the part that says the credit must be paid back to the federal government over 15 years. Without the easing, the "credit" is essentially a no-interest federal loan. Thus the juicier credit would theoretically spur even more first-time home purchases.

Problem is, the home buyer credit applies to purchases after April 8, 2008, and before July 1, 2009, while the easing was written to cover only folks who bought a home during the first six months of this year. So under the proposal in the stimulus package, if you purchased your home before Jan. 1, you still have to pay back the credit. Score one for the procrastinators.

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Senior Tax Editor, the Kiplinger letters