June 29, 2010
June 7, 2010
New home tax credit extended, Kentucky residents get another year
By Chris Otts • cotts@courier-journal.com • June 6, 2010
Kentucky residents have until the end of the year, instead of July 25, to get a credit worth up to $5,000 off their state income taxes for buying a newly constructed home.
The credit was extended as part of the new state budget passed by the General Assembly on May 28.
The credit has been available since July 26, 2009, but it has been overshadowed by more generous federal housing tax credits that offered up to $8,000 for first-time buyers and $6,500 for repeat buyers.
Because the federal deals ended April 30, it was important to give Kentucky's credit more time, said Chuck Kavanaugh, the executive vice president of the Home Builders Association of Louisville, in a news release.
Kentucky originally had a $25million cap on the credits, but home buyers have claimed nowhere near that amount. As of June 1, $5.2million has been obligated, according to the state Department of Revenue's website.
With the extension, lawmakers reduced the cap to $15 million. Indiana has no such housing credit.
Home buyers who qualified for both the federal credit and Kentucky's credit likely took the federal credit because it was larger and because it gave them money back if they owed less than the amount of the credit. They couldn't claim both.
Supporters of Kentucky's credit say that besides boosting the housing market, it will create construction jobs.
Figures from April, the latest month available, show that the state has lost 17,000 construction jobs -- almost 20 percent -- since the recession began in December 2007, according to the Bureau of Labor Statistics.
Each new home creates the equivalent of three full-time jobs for a year, the home builders group says.
But critics of the credit have pointed out that only those making almost $90,000 a year can take full advantage of it. And they say those who have gotten the tax break probably would have bought a new house anyway.
Russ Lohan, who works in the Louisville office of Market Graphics, a research company that tracks new home construction, has called the credit "a waste of money."
Reporter Chris Otts can be reached at (502) 582-4589.
Kentucky residents have until the end of the year, instead of July 25, to get a credit worth up to $5,000 off their state income taxes for buying a newly constructed home.
The credit was extended as part of the new state budget passed by the General Assembly on May 28.
The credit has been available since July 26, 2009, but it has been overshadowed by more generous federal housing tax credits that offered up to $8,000 for first-time buyers and $6,500 for repeat buyers.
Because the federal deals ended April 30, it was important to give Kentucky's credit more time, said Chuck Kavanaugh, the executive vice president of the Home Builders Association of Louisville, in a news release.
Kentucky originally had a $25million cap on the credits, but home buyers have claimed nowhere near that amount. As of June 1, $5.2million has been obligated, according to the state Department of Revenue's website.
With the extension, lawmakers reduced the cap to $15 million. Indiana has no such housing credit.
Home buyers who qualified for both the federal credit and Kentucky's credit likely took the federal credit because it was larger and because it gave them money back if they owed less than the amount of the credit. They couldn't claim both.
Supporters of Kentucky's credit say that besides boosting the housing market, it will create construction jobs.
Figures from April, the latest month available, show that the state has lost 17,000 construction jobs -- almost 20 percent -- since the recession began in December 2007, according to the Bureau of Labor Statistics.
Each new home creates the equivalent of three full-time jobs for a year, the home builders group says.
But critics of the credit have pointed out that only those making almost $90,000 a year can take full advantage of it. And they say those who have gotten the tax break probably would have bought a new house anyway.
Russ Lohan, who works in the Louisville office of Market Graphics, a research company that tracks new home construction, has called the credit "a waste of money."
Reporter Chris Otts can be reached at (502) 582-4589.
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