Home Builders May Get Break
SOURCE: Wall Street Journal Online
A bipartisan provision unveiled Wednesday by Senate leaders would allow companies, including builders, to apply current losses to taxes paid four years ago, instead of the current two-year carry-back. That would help builders in particular because they can apply losses against the big profits they earned during the housing boom.
Some builders feel that the tax benefit will help them by preventing companies from rushing to sell off land at big discounts so that they can apply the losses to profits from two years ago. They feel that these fire sales are helping to drive down the property values and contributing to the number of foreclosures that are taking place. The National Association of Home Builders also said that the carry-back could prevent small builders from going out of business.
This carry-back is being proposed as part of a legislative package which is aimed at the housing market. It may also help other industries like banks and financial-service firms. They may also be able to apply the measure to the losses that they may experience in 2008 and 2009.
One of the most recent examples of builders unloading properties for a huge discount is Centex Corp and their sale of 8500 home sites. These were sold at 30% of their book value which has allowed the company to reap a $294 million tax refund. The carry-back legislation should help to stem this type of contribution to the falling prices.
WSJ Subscriber only report »
A bipartisan provision unveiled Wednesday by Senate leaders would allow companies, including builders, to apply current losses to taxes paid four years ago, instead of the current two-year carry-back. That would help builders in particular because they can apply losses against the big profits they earned during the housing boom.
Some builders feel that the tax benefit will help them by preventing companies from rushing to sell off land at big discounts so that they can apply the losses to profits from two years ago. They feel that these fire sales are helping to drive down the property values and contributing to the number of foreclosures that are taking place. The National Association of Home Builders also said that the carry-back could prevent small builders from going out of business.
This carry-back is being proposed as part of a legislative package which is aimed at the housing market. It may also help other industries like banks and financial-service firms. They may also be able to apply the measure to the losses that they may experience in 2008 and 2009.
One of the most recent examples of builders unloading properties for a huge discount is Centex Corp and their sale of 8500 home sites. These were sold at 30% of their book value which has allowed the company to reap a $294 million tax refund. The carry-back legislation should help to stem this type of contribution to the falling prices.
WSJ Subscriber only report »
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