Home Builders Tax Break: Big Builders May Use it to Squash Little Builders

by Alex Stenback on February 11, 2009

Part of the stimulus package will apparently include a huge chunk of corporate welfare for the Homebuilders, reports the Wall Street Journal: 

The provision would allow corporations to use recent tax losses to offset taxable profits earned in the past five years. Typically, companies can carry back such losses only two years.
the nation’s 13 largest builders will reap $2.4 billion in tax refunds this year under the current law, which is more cash than Zelman expects them to generate from selling homes and land.

This, of course, benefits the giant, publicly traded homebuilder more than the smaller regional or local homebuilders, and many are rightly up in arms:

small builders worry that large competitors will be able to move the high-cost land off their balance sheet, file for a tax refund and then buy the land back at a cheaper cost. It is more difficult for small builders to liquidate land because they have debt tied to the properties. Large builders are financed with debt that typically isn’t secured by land.

“I take real offense that my government is handing these big boys money to put me out of business,” said Tom Woods, owner of TE Woods Homes, which builds in the Kansas City area.

· Tax Break Divides Large, Small Builders [WSJ]

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