U.S. Rep. Gary Ackerman (D-Bayside) announced plans last week to introduce a bill he claims would assist in clearing the inventory of more than 3 million unsold existing homes while creating jobs in order to spur the economy.
The congressman’s office said the proposed legislation, entitled the Homestead: Act 2, is modeled after the Homestead Act of 1862, through which Congress gave settlers 160 acres to have as a homestead.
Citing the housing market as a leading drag on the country’s economic recovery, Ackerman proposes offering down-payment assistance to homebuyers and providing tax exemptions for those purchasing homes as rental properties.
The act would offer the first 2 million creditworthy borrowers a matching subsidy of up to $20,000 for a down payment to eligible single-family homebuyers. This down-payment subsidy would be a loan, one-fifth of which would be forgiven in each of the first five years of owner-occupancy.
It would also provide a 10-year tax exemption on rental income for the first 1 million individual homebuyers who purchase existing single-family homes as rental properties in an attempt to further stimulate the real estate market.
Ackerman’s office claims spurring the market would result in more than a million workers being productive again.
“Clearly, Homestead: Act 2 would help to eliminate quickly the overhang glut of the housing market, putting 2 million owners in homes and inspire the purchase of an additional 1 million homes by investors who will rent them out and enjoy tax-free rental income for 10 years,” Ackerman wrote in a statement. “This would clear the way for new housing starts and put millions of Americans back to work.”
To help alleviate the cost of these programs, Ackerman said the bill would use revenue that would result from reducing the corporate tax U.S. companies pay to bring home capital they hold offshore.
Prior to the end of the congressional session, reports surfaced that U.S. Sen. Chuck Schumer (D-N.Y.) supported a holiday that would reduce to 10 percent the tax companies pay to repatriate these funds.
Ackerman estimates this idle capital to be $1.2 trillion. Tax revenue from the first $500 billion would be leveraged for the act’s programs.
“It would incentivize corporations to bring their cash cheaply back into the United States. In addition, the newly emancipated billions would further spur the economy. Everybody wins,” he wrote.
Ackerman said he plans to introduce the bill when Congress returns from its August recess.