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Senate panel backs tax credit for Missouri homebuyers

Thursday, February 12, 2009 | 9:52 a.m. CST; updated 5:00 p.m. CST, Thursday, February 12, 2009

JEFFERSON CITY — Missouri homebuyers could get a $1,000 tax break under a proposal endorsed Wednesday by a Senate committee as a means of helping a hurting housing market.

The homebuyer tax credit was added to a job-creation bill backed by Democratic Gov. Jay Nixon that already has passed the House and is on track for Senate consideration as soon as next week.

The roughly $100 million package of incentives is targeted primarily at businesses willing to locate or expand in Missouri. But the homebuyer tax break amended into the bill would go directly to consumers.

It's intended to relieve a glut of houses caused by foreclosures, tight credit and a general reluctance by some consumers to make big purchases because of the economic uncertainty.

"I believe there are willing buyers and there are certainly willing sellers out there," said Sen. Tom Dempsey, R-St. Charles. "I'm trying to create an incentive that encourages people to make their decisions sooner rather than later."

Dempsey's proposed tax break would apply only for homes bought during a short time. The eligibility window would open the day the governor signs the bill into law and close at the end of 2009. The homebuyer tax credits would be capped at $4 million statewide and would be awarded on a first-come basis as people file their returns for the 2009 tax year.

Nixon spokesman Scott Holste said the governor was reserving judgment on the proposed homebuyer tax break.

"We believe it's an intriguing idea, but we want to look at it more closely," Holste said. "Obviously, we're very happy that this bill has been passed out of committee in a quick and bipartisan fashion."

Members of the Senate Jobs, Economic Development and Local Government Committee added the homebuyer tax break to legislation despite the objection of committee chairman Sen. John Griesheimer, R-Washington.

"This bill is a jobs bill. It is not an open-ended tax credit bill," said Griesheimer, expressing doubt that the homebuyer tax break would lead to the creation of jobs.

But Dempsey suggested it could sustain jobs. Although the tax break would go to the homebuyer, anything that could spur the sale of more homes could help sustain homebuilders and real estate agents whose businesses are struggling, he said.

As endorsed by the Senate committee, the legislation also would impose new restrictions on a popular tax credit awarded to developers who renovate historic buildings. The tax credit currently is an entitlement for anyone who meets the criteria, making it difficult for the state to control how much tax revenue it forgoes under the program.

Senate committee members had discussed imposing an annual cap on the amount of historic tax credits. In response, several developers testified Wednesday that a cap would essentially kill the program, because few people could start redevelopment projects without knowing for certain that they would get the tax breaks upon completion.

The committee instead endorsed a provision that would lower the state income tax credit to 20 percent — instead of the current 25 percent — of the cost of redeveloping buildings located in historic districts or listed on the National Register of Historic Places.

Griesheimer said some restrictions on tax credits likely will be necessary as part of the job-creation bill to appease some senators' concerns about the proliferation of tax credits.

"This is not a slam dunk on the Senate floor," Griesheimer said. "Trying to keep this bill moving forward is going to be tough."

Nixon has said he wants lawmakers to give final approval to a job-creation bill by their mid-March break.

 


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