Washington, DC--Congressman Eliot Engel (D-NY-17) introduced legislation to fix inequities in the Homebuyers Tax Credit by providing equal treatment for married couples. Under current law, married partners may be ineligible for the credits unless both qualify for the same tax credit, either first time homebuyer or long time homebuyer. Rep. Engel’s legislation would amend the laws to loosen the restrictions and provide fairness for these couples.

The American Recovery and Reinvestment Act provided first-time homebuyers with a fully-refundable tax credit of 10 percent of their home purchase price, up to $8,000. Also, in November 2009, the Worker, Homeownership and Business Assistance Act extended the credit and created a similar long-time homebuyers tax credit, up to $6,500.

“These tax credits are great ideas and have been very successful – helping over 1.4 million people nationwide to buy homes. However, many married couples, often newlyweds, have been unjustly excluded from the credits. In those cases, the couples are ineligible to qualify unless both qualify for the same credit. This is unfair, as the married couple should not be penalized simply for getting married; as the credits would have been an option had they remained single. This simply doesn’t make much sense,” said Rep. Engel.

The legislation would allow married couples to be eligible for either tax credit, at half the amount, which they would have qualified for if single. Some provisions include:

• If one spouse was eligible, but other was not, then the couple would be eligible for up to one-half of the applicable credit. This is similar to the IRS provision allowing married couples filing taxes separately to claim one-half of the tax credit when the eligible spouse is above the income restrictions
• If one spouse is eligible as a first-time home buyer, but the other as a long-time resident homebuyer, the couple would be eligible for the lesser of the two credits (long-time).
• If both would have been eligible for the long-time credit if they were single, then the couple would be allowed to receive the credit even if they did not qualify for owning the same home.

“The intention of Congress in passing these homebuyer credits was to spur homeownership and to ease the financial burden on families when the purchase a home. I do not believe Congress wanted to exclude couples based on technicalities. By fixing this so-called ‘marriage penalty,’ Congress will provide a further boost to the recovering real estate economy and reflect the importance of marriage as a cornerstone to our society,” added Rep. Engel.

The legislation, H.R. 4701, is supported by the National Homebuyers Association and the National Association of Exclusive Buyer Agents. The bill is currently awaiting action by the House Ways and Means Committee.