What Builder Tax Break?
Homebuilders Get Breaks From Congress
Thursday April 3, 11:32 am ET
By Alan Zibel, AP Business Writer Builders, Mortgage Companies Get Additions, Subtractions They Asked for in Senate Housing Deal WASHINGTON (AP) -- Homebuilders and the mortgage industry are emerging as big victors in a bipartisan agreement reached by Senate leaders on legislation designed to limit the housing crisis.
The $15 billion Foreclosure Prevention Act of 2008, expected to be debated Thursday afternoon on the Senate floor, is drawing fire from critics who say it would do little to actually prevent foreclosures. The bill contains a $6 billion emergency tax break that would let companies use losses from 2008 and 2009 to offset profits earned over the previous four years, instead of the usual two-year timeframe.
Is this really a builder break or another bank bailout? Remember, in order to actually get a dime back from the government, land must actually be sold and not simply impaired. What a deal, let's lose a buck so we can get back $0.35 cents. Even casinos give better returns.
Further, many HBs already extinguished the 2005 benefits with losses in 2007 leaving only 2004 to be harvested this year. Get ready for the mother of all liquidation sales. You would almost think that the government is intentionally trying to drive down the real world prices of Real Estate incentivizing sales at losses. Amazing.....who thinks this nonsense up?
Not only that, many public HBs are very leveraged. They are on a very short leash with the banks. Any sale of land will likely lower book value even after the rebate, potentially forcing the HB to turn over every dime to the bank. Those few builders with strong balance sheets will not be affected.
Something strange is happening to our country. The government is letting us down. The analysts are outright lying. The government agencies supposed to provide oversight seem to be sleeping. We are spending Trillions foolishly while our citizens are loosing jobs and loosing homes in record numbers. The cost for everything is going through the roof while we are told there is no inflation.
As long as income keeps declining, the defaults and bankruptcies will keep rising.....unless of course you are a protected bank.