U.S. lawmakers are touting a home-buyer tax credit in a high-profile housing bill before Congress, but critics say it may do little to help consumers amid the mortgage crisis.

The tax credit would allow qualified home buyers to subtract the credit amount from their income taxes when they buy a home, but it requires them to pay it back over 15 years. It resembles an interest-free loan that must be repaid to the government.

The credit is part of the Housing and Economic Recovery Act, a huge package of legislation that includes a refinancing program aimed at rescuing hundreds of thousands of homeowners facing foreclosure. Housing advocates say it has a good chance of passing this summer because of increasing concerns about U.S. foreclosures.

To be eligible for the credit, a home buyer must not have owned a principal residence for the past three years. Individuals may credit the lesser of $8,000 or 10% of the price paid for the home against tax owed in the year of the purchase. (The figure for married people filing separately is $4,000.) In the second year after the purchase, they must start adding the credit amount back into taxes paid. This is done incrementally over 15 years.

Len Burman, a senior fellow at the Urban Institute and director of the Tax Policy Center, said he is "not a huge fan" of the credit. He called it "just another complicated thing for people to deal with on their tax returns," and said he doesn't think it will have a huge impact on the housing market.

The credit begins to phase out for single individuals at $75,000 of adjusted gross income, and at $150,000 for married couples filing jointly.

Sen. Benjamin Cardin (D., Md.), who sponsored an earlier bill that contained a version of the credit, called the measure targeted, timely and temporary. He said that the credit would encourage people who want to buy a first home but are worried about doing so amid declining property values, and that it will "help to stimulate the economy in the sector that triggered our economic downturn."

--Martin Vaughan contributed to this article.

Write to Arden Dale at arden.dale@dowjones.com

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