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Home buyer tax credit extended by Congress

By: 30 June 2010 22 Comments

This just in — the tax credit for first-time and repeat home buyers has been extended by Congress, according to this Associated Press (AP) article.

The legislation will now go before President Barack Obama for approval. Assuming he signs the legislation and it becomes law, buyers sweating the June 30 deadline to close on homes and receive a credit can relax a bit — they will have an extra three months to finalize their purchases.

We’ve had one home buyer tax credit or another since 2008. The credit was modified and extended once and then again in November.

Under the terms of the most recent tax credit, first time and repeat buyers were required to get a home under contract before May 1 and then close on it before July 1. Qualified first time buyers could claim up to $8,000 while repeat buyers were to receive up to $6,500 — quite an incentive to purchase a house.

Ah, but some people have had trouble closing in time. The National Association of Realtors (NAR) has estimated that up to 180,000 Americans, in fact, were in danger of missing out on the credit unless they were given more time to close on their homes. The NAR estimates that 2,090 Arkansans were in that particular boat.

Why haven’t people been able to close on their homes prior to July 1? It seems that banks were hit with a lot of mortgage applications from people rushing to beat the deadline — just the thing to delay closings.

On Tuesday, the House of Representatives passed HR 5623 — a bill extending the deadline to Sept. 30. Bear in mind, the extension will only apply to qualified buyers who purchased homes prior to May 1.

The bill passed the House by a vote of 409-5 and then moved on to the Senate. Ah, but a problem popped up — the Senate bill was attached to a bill that would extend unemployment benefits and cost $33.9 billion.

The unemployment bill has met with resistance, thus threatening to derail the last-minute passage of the tax credit extension that the NAR and a lot of homeowners have been demanding for at least a week. The Senate passed the extension by unanimous consent, this stripping it from the unemployment legislation.

Stay tuned — we’ll have more information when it’s available.

Update! According to this Bloomberg article, Obama will sign the extension into law. The National Association of Realtors agrees and says that there will be no gap between the original June 30 deadline and the date Obama signs the legislation into law (i.e., the bill will apply retroactively to cover any buyers who might close after the original deadline has run but before the bill becomes law).

Another update! The IRS reports that Obama has, indeed, signed the tax credit into law. Yes — it’s official.

About: Ethan C. Nobles:
Benton resident. Rogue journalist. Recovering attorney. Email = Ethan@FirstArkansasNews.net.

22 Comments »

  • shawny said:

    They need to mke it available for all first time home buyers ,just have closng Sept 30.th but it shouldnt just b for people under contract since April 30th. Should b for all contracts frm time tax credit started as long as they close by the deadline they still should qualify .It’s only fair ..

  • Ethan C. Nobles (author) said:

    Shawny — bear in mind that first-time buyers had two years to take advantage of a credit. Considering the “save a buck” attitude in Washington these days, it’s almost surprising that Congress extended the closing deadline for the credit that expired in April.

  • Sue Ann Kelly said:

    I have a question about this, hope someone here can help because I’m not finding the information anywhere. We applied to a lender for a home mortgage in December of 2009. Through no fault of our own, and an astounding amount of incompetence and carelessness on the part of that lender, we have been unable to close. Our binding contract is dated well before the April 30th deadline. Will we qualify for this extended closing date if we were to apply and close with a different lender? Or, do we have to stay with the first lender through closing in order to qualify for the credit?

    Thank you so much for any help!

  • Tonyo said:

    I would like to know where you exactly got this from?? I have looked on the New York Times Web Site and found nothing of the kind on there. I am looking for this credit to pass as much as the next person. I do not need a hoax or spam info to get my hopes up only to be dashed tomorrow. So please explain your EXACT source..

    Thanks in advance.

    Cheers!!!!

    Tonyo

  • Ethan C. Nobles (author) said:

    Tonyo — got that from the Associated Press. The link is in the first paragraph of the post…

  • Ethan C. Nobles (author) said:

    Sue Ann — bear in mind that any analysis will be mere guesswork unless you consult with a lender, accountant or someone else who deals regularly with the complexities of the tax credit.

    That said, bear in mind that the law requires qualified buyers to do two things — get a home under contract before May 1 and close on it prior to July 1 (or Sept. 30 if Obama signs this into law). So, you may well qualify for a credit if the extension is made law.

    Again, check with a professional who deals with these things to be absolutely sure.

  • adam said:

    SUE ANN Kelly: You can switch lenders but be sure to have an addendum to the purchase agreement stating that you are switching lenders and that all other terms in the agreement are to stay the same and I would include a new closing date. So yes you can still get the tax credit.

  • jessica said:

    Ok. Am I reading this correctly? Does this still have to be signed by the President? If so, he can still reject this tomorrow? Banks stopped working on this when they heard that it was being extended. It will cause a lot of people who thought they had time to be very upset. Just wondering.

  • Ethan C. Nobles (author) said:

    That’s right — Obama can veto it. There have been no indications that he will do so, but that could happen.

  • Jett said:

    OK. We have a contract, dated prior to April 30, 2010, and we are waiting for the bank to give us the loan (jumping through the last hoops with the underwriters now). Does this mean that we will qualify for the tax credit if Obama signs this bill tomorrow?

  • Ethan C. Nobles (author) said:

    Jett — Yes, that’s exactly what it means. Good news, huh?

  • Robert Neice said:

    YES…..you can change lenders as long as you close before the “NEW” deadline of 09/30/2010…and if you need a lender please email me @ robertn@merchantshomeloan.com we are a mortgage bank and can get your deal done.

  • Dave said:

    For all… Those who have had loan apps in and have not closed within a month need to take a look at their bank, or broker. Short sales and foreclosures are an exception… People who have not been able to qualify (yes, many of you) please keep the mouths shut. I’m a mortgage banker. I closed 3 deals today, on the initial deadline. Was it fun? Absolutely not. Was it done? Yes. Not to mention the plenty of purchases made and closed prior to today (well yesterday.) It all comes down to the deadline was approaching, out beloved Govt did nothing short of create chaos. This could have been extended a month ago. But why? I’ll leave it at that.

  • Dave said:

    And to all the comments about switching lenders and having to ammend the purchase agreement for that reason, (lol) sure! I’m licensed in 4 states including Illinois, who holds the strictest lending guidelines in the Country. You can have 3, or as many as you like, mortgage apps in without any sort of amended PA. Unless it’s FHA, of course. For all those in the Biz, it’s obvious. Point made easy… The economic growth due to the $8,000 credit is of no concern to our Legistators. People of you haven’t closed, shame on you. Too funny, unfortunately.

  • Dave said:

    Oh… And maybe check out… http://Www.federalhousingtaxcredit.com or.org if you all like. It sucks, I know.

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