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Oct. 23, 2009
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REAL ESTATE: Give Nevada credit, would you?

State tops nation in seeking break for first-time homebuyers

By JOHN G. EDWARDS
LAS VEGAS REVIEW-JOURNAL
More Info
WHAT’S A 4-YEAR-OLD DOING BUYING A HOUSE?

WASHINGTON — The rush to implement a tax credit for first-time homebuyers opened the program up to potential fraud by people who hadn’t bought a home or already owned one, Congress was told Thursday.

J. Russell George, Treasury Inspector General for Tax Administration, questioned the eligibility of some 100,000 claims out of the 1.5 million who have sought to take advantage of the $8,000 tax credit incorporated in the economic stimulus package enacted last February.

He said claimants include those who could possibly be illegal immigrants and that 580 people seeking the first-time homebuyer credit were under the age of 18. The youngest taxpayers receiving the credit were 4 years old, his office said.

George and an Internal Revenue Service official testifying before a House Ways and Means Committee subcommittee stressed that many of the questioned claims may eventually be found to be legitimate after further examination.

But the hearing raised concerns as Congress considers whether to extend, or even expand, the popular program that is set to expire at the end of November.


Sarah Orenich stands in front of what she hopes to be her first home, located in the 7500 block of Grassy Bank Street in Las Vegas. October 21, 2009. The tax credits for first-time home buyers are driving many home sales in Las Vegas. Sarah asked that the house number not be listed or shown.
Photo by Duane Prokop.

Real estate broker Forrest Barbee believes the free market generally works best without government interference. But he can't dispute that a tax credit for first-time homebuyers is doing what it was meant to: spur home sales.

"I just can't fight the evidence," Barbee said.

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    • The evidence comes from the Internal Revenue Service, which says that 20,222 Nevada first-time homebuyers have applied for the tax credit of up to $8,000 for the tax year 2008 as of Sept. 18.

    "That's a third of all the sales, new and resale, for that one-year period. That's a pretty sizable number," said Barbee, corporate broker at Prudential Americana Realty and a director of the Greater Las Vegas Association of Realtors.

    "It certainly suggests to me that an awful lot of people are taking advantage of this tax credit," Barbee said.

    Underlining the point, the General Accountability Office on Thursday reported that Nevada had the highest number of taxpayers seeking the tax credit, followed by Utah and Arizona.

    Most of the Nevada taxpayers taking the credit bought homes last year and applied for a $7,500 tax credit signed into law by President Bush, IRS spokesman Raphael Tulino said. That law gave first-time buyers 15 years to repay the $7,500 without interest.

    A smaller portion of the people counted by the IRS bought a home this year and have filed amended returns to take the more generous $8,000 tax credit off their 2008 tax return, he said. President Obama signed the law with the higher tax credit. Taxpayers can keep the $8,000 tax credit if they keep the house as their main residence for three years.

    Barbee assumes that most of the first-time homebuyers this year will take the tax credit on their 2009 tax return, rather than file amended returns for 2008.

    No one knows how many first-time buyers took advantage of the tax credit this year, but analysts suggest the number may be big enough to boost the state's stalled economy.

    Jason Unger, 32, a single flight attendant who bought a home through Prudential Americana Realty, hasn't filed for a tax credit yet but plans to take the tax credit on his 2009 return.

    "The $8,000 tax credit was definitely a motivator for me to buy a house," Unger said.

    He paid $128,000 for a foreclosed four-bedroom, 21/2-bath single family house near the South Point. The same house would have sold for about $350,000 a couple of years ago, he said

    Unger intends to use some of the tax credit for improvements, such as a swimming pool or hot tub and new flooring.

    Sarah Orenich, 28, and her long-time boyfriend, J.R. Medenwaldt, have put money in escrow for a house and hope to get the $8,000 tax credit with the added benefit of a low-rate mortgage and low price for the house.

    "This is the perfect time for a first-time homebuyer to get into the market," said Orenich, a brokerage administrator at Prudential Americana Realty.

    They agreed to pay $140,000 for a three-bedroom, 21/2-bath bath home built in 2004 near Jones Boulevard and the Las Vegas Beltway.

    Barbee believes the tax credit programs may have provided key support to housing sales in Southern Nevada last year when consumer confidence was lower.

    "It kept housing going, and the market would have been worse without (the tax credit)," agreed Realtor Don Wiemer of Sellstate NRES. However, "for everybody that bought a house only for (the tax credit), I think there are five people buying because the price got so low," Wiemer said.

    Another official agreed.

    "Our sense is that (the tax credit) hasn't really been that big of a factor," said Bradley Beal, chief executive officer of Nevada Federal Credit Union.

    Nov. 30 is the deadline for the $8,000 tax credit for buying a home, but Senate Majority Leader Harry Reid, D-Nev., co-sponsored a bill that would extend the tax credit for six months.

    Contact reporter John G. Edwards at jedwards@reviewjournal.com or 702-383-0420.

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    Too_many_Socialists wrote on October 23, 2009 09:02 PM: Real estate broker Forrest Barbee believes the free market generally works best without government interference. But ...

    .. government interference works best when I make a buck on it.


    Hitman wrote on October 23, 2009 11:16 AM: Tom- I agree with you. Help should go to those who actually LOST MONEY. This would help avoid more foreclosure and thus, real estate prices. Our Government has not provided any INCENTIVE to the "good people" who Lost Money. They give incentives to Acorn to give money to prostitutes or unqualified people (commuity reinvestment act). Trickle-up economics is BULL!


    Did she get the house? wrote on October 23, 2009 11:13 AM: I wonder if Sarah Orenich got the house. I bet not...


    Hitman wrote on October 23, 2009 11:12 AM: Common sense- I agree. As I always say: "when someone gets something for FREE, they make someone else a SLAVE." The question becomes, WHO ends up paying for freebies in society? Usually, some responsible, white Conservative (sucker) down the line.


    What House for First Time Home Buyers wrote on October 23, 2009 11:07 AM: My husband and I have been trying to buy our 1st house last 12 months now. We are constantly getting bought out buy cash offers. Most of the houses are getting bought up buy investors which all they are going to do is rent them out or sell them when the market goes up. We even offered $40,000 more than the listing price and we still dont get the houses, the banks take offeres less than what we offer because they are cash not FHA loans. The banks arent lending out, too lazy to deal with paper work, holding onto houses to create a false supply and demand, and etc. They dont even call you back to let you know if you have the house or not. You have to hunt them down and leave several messages. There is a great Youtube Video on how to buy a bank owned home: http://www.youtube.com/watch?v=SM7oWKgCVo4


    Tom wrote on October 23, 2009 10:01 AM: This is a bad program. It is giving help to those who do not need the help. People who did not own a home where not hurt by the housing crisis and are actually benefiting from it. The Congress should be giving an $8,000 tax credit to the home owners to help them keep their homes rebuild some equity and prevent the foreclosures that are destroying home values for everyone.


    Ken wrote on October 23, 2009 08:52 AM: Whether you believe in government control or not, we, as a nation, are broke. Tax revenues continue to drop and Congress continues to fund programs that we cannot pay for without having to go hat-in-hand to our Chinese masters.

    You people that are crying for more and more handouts from Washington are bankrupting your children's futures. Most of you could care less as long as it means your being able to get what you want.



    Doofus wrote on October 23, 2009 07:51 AM: Las Vegas was Gound Zero for speculation, hype, flippers and mortgage fraud. I bet you my stimulus check that majority of these tax credit buyers involve fraud and abuse of the program! GLVAR is up to their greedy necks in this latest fiasco!


    Common Sense wrote on October 23, 2009 07:48 AM: "I just can't fight the evidence,"

    Yes, genius, if the government steals money from some people then gives it to others, those other folks will do what the government wants.

    Shocking, isn't it?

    Meanwhile, people like Angel have to tighten their belts to pay their own bills, then tighten a bit more to pay other people's bills. All so that politicians can create another bubble that (they hope) won't burst until after they're out of office.


    BHO wrote on October 23, 2009 06:19 AM: Thank you Mr. Taxpayer for everything. Especially " Angel" for biting the bullet and staying at work overtime paying his taxes.


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