Home Builders Net More Than $2.6B From Tax Break in Stimulus Law

The home-building industry scored a big win last year when Congress voted to double the tax credit for new home buyers and extend the break until next month. But that's not the only legislative move that's leaving smiles on home builders' faces.

(Photo: USDA)

A tax break included in the Obama administration's stimulus law is helping pad their profit margins to the tune of at least $2.6 billion, the Wall Street Journal reports today:

The tax benefit at issue is formally called the "net operating loss carry-back." In practice, it allows corporations to apply operating losses from the past five years to their current tax filings, putting many in line for significant refunds.

Some of the home builders reaping the benefits of the "carry-back" played a central role in the cheap mortgage-fueled housing boom that collapsed during last year's financial crisis. KB Home was accused of defrauding home buyers alongside now-defunct Countrywide in a recent class action lawsuit.

In 2003, at the height of the boom, Lennar sought to build a new South Florida housing development within land slated for Everglades restoration. The project was killed years later after environmental groups rebelled.

One potential loser in the wake of the stimulus is smaller home-building firms, some of whom view the "carry-back" and other business tax breaks as a federal handout to their bigger counterparts. As one small builder told the AP last month: