Last month I wrote about how many people were in danger of being left out in the cold with their first time homebuyer or current owner homebuyer tax credits. Because of the large number of homes being purchased, and the slow pace that many banks were taking on homes being bought that were short sales and foreclosures, many people who would have otherwise qualified were in real danger of missing out on the tax credit.
Homebuyer Tax Credit Extended
A week or so ago the President signed into law H.R.5623 – Homebuyer Assistance and Improvement Act of 2010. What this law has done is effectively extend the closing deadline for those who were already under contract by the original tax credit contract deadline of April 30th. They will now have until September 30th to close on the purchase of their home (instead of June 30th).
From investors.com
The U.S. Congress has approved a bill extending the closing deadline for homebuyers trying to take advantage of a popular tax credit. Homebuyers with contracts signed by April 30 who failed to go to closing by the June 30 deadline will now have until September 30 to finish the purchases. The House of Representatives approved the bill Tuesday, Congress approved it Wednesday, and it now goes to President Barack Obama for his signature.
The $8,000 tax credit for first-time homebuyers and $6,500 credit for others purchasing a new primary residence was a highly popular temporary measure by the Obama administration to jump start home sales during the economic recession.
Real estate agents said thousands of homebuyers would miss the June 30 deadline because banks and settlement offices were struggling to deal with the volume of people rushing to close on their deals.
“In addition to helping thousands of families experience the American dream, this successful and popular program provides a much needed boost to Nevada’s housing market and economy,” Senate Majority Leader Harry Reid said in a statement.
Reid, a Democrat, faces a tough re-election fight in Nevada, where the U.S. foreclosure crisis is most pronounced.
The Senate acted separately on the tax credit extension after another bill that included both the homebuyers measure and an extension of jobless benefits for the long-term unemployed was blocked by Republicans.
The jobless aid bill fell one vote short of the 60 needed to overcome procedural hurdles in the 100-member Senate. Republicans objected to the $34 billion cost of the bill.
I know the passage of this bill will make a lot of people happy, many who commented on my previous posts. For many of them they played by the rules, bought a house only because of the tax credit fully expecting to have enough time to close. When the banks didn’t respond fast enough, they could have been left out in the cold. Now, they’ll have a second chance at getting the deal done.
What do you think of the tax credit extension for those already under contract? Will it help you to receive your tax credit? Do you think it is just a further waste of taxpayer money? Tell us your thoughts in the comments.
I think there should be a permanent tax credit extension followed by a permanent tax increase on income levels that this tax credit extension benefits. Makes perfect sense!
heh.. of course. Raise everyone’s rates by $8,000, and give them all a $8,000 credit. perfect.
Indeed! That’s more fair that giving credits to certain buyers under an artificial income cap, and then raise taxes on higher income earners who get no benefit from the credit!
Agreed. In my opinion the tax credits have for the most part artificially propped up prices to a degree, and propped up the market longer than it should have been – delaying another real estate bottom. We’ll see.
This tax credit has been and always will be a vote buying scheme that, in the end, benefits only home builders, mortgage brokers, and Realtors. Many believe we are headed for a second dip in residential real estate values. That’s when new these new homebuyers will start complaining that they are underwater.
Yeah, all these stimulus plans, tax credits, tax increases/etc are all going to come back to haunt us I think- and they didn’t really do what they were advertised to do – help the economy rebound. Now we’re saddled with tons of extra debt AND an economy that’s going south.
I think it’s reasonable to extend the credit deadline for transactions that are already in the pipeline, especially on the ones that involve short sales. A lot of deals now are just taking longer to close.
But it wouldn’t surprise me even a little if the full credit were restored, either at the tail end of this run (if there ever is an end to it) or in response to a future slow down. That really is where the philosophical and political debates will be. My guess is that the longer they keep this one alive, the greater the chance of restoring or enhancing it.
Once a government program, always a government program! As soon as one is put in place, a whole constituency builds around it that “can’t live without it”.
I’m looking to buy my first home so that is really exciting news for me. And given where I currently am in life – I think it’s a great idea.
This news may be extremely beneficial to me considering I am thinking of buying a home in the near future, but at the same time, I have to agree with Mr. Go To, it’s purely a way to buy votes. I hate how our government has an ulterior motive behind just about EVERYTHING they do nowadays.
If you haven’t already gone under contract to buy a house, this news won’t matter to you as this is only an extension for those who put in a contract by 4/30/2010. Now if they were to extend the credit completely to open it up to new people, that would be news for people still house hunting. Whether it’s a good idea or not, that’s a whole other story. :)
Ahhh ok I see. Man what a bummer! Oh well, that was just a little side perk, now is still such an excellent time to buy!
I think this is great. I know of so many homebuyers that had contracts and were going to miss the deadline. This was of no fault of their own. Just the process with short sales and foreclosures these days is still slow. It’s only fair that they are able to benefit from the credit and given more time to allow for their loan to close.
Does the extended deadline apply to people who have a contract after April 30th?
I’m afraid that it doesn’t. Sorry.