Homebuyer Tax Credit Poised For 3-Month Extension

First-time homebuyers looking to snag the up to $8,000 income tax credit that expires today could get a reprieve. If you already signed the purchase contract by April 30th but haven’t closed yet, you will have 3-months to seal the deal, if a bill passed by Congress yesterday makes it through the Senate, which it seems it will.

Congress approved the measure 409 to 5. A similar bill was introduced in the Senate Tuesday. Majority Leader Harry Reid, D-Nev, said it “should be passed swiftly.”

Here’s info on how to qualify for and claim the tax credit.

House approves homebuyer tax credit extension [CNNMoney]

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  1. Loias supports harsher punishments against corporations says:

    This doesn’t spur the economy in an way – it’s for people who have already agreed to buy a house, it doesn’t encourage anyone else to do so.

    What a waste.

    • macdude22 says:

      Yes but a lot of people tried to buy houses to get the tax credit and the glut of applicants is now making the banking process slow as molasses. We signed our purchase contract in the middle of February but didn’t close until Mid-April. It was stuck in underwriting for a month and a half. A process we were told takes maybe 48 hours. I mean we did this thing by the book, saved money, got pre-approved. The banks are super overloaded right now. I’m ok with extending this because these people were buying on the expectation they would close in enough time to get in on the credit (in most cases, I know some people and realtors, and banks are colluding to try and fudge the paperwork too)

      • Loias supports harsher punishments against corporations says:

        The credit gave like 60-90 days (I can’t remember exactly how much) from signing to closing. Most homes close within 30 days of signing. Closing on a Froclosed home might take the full 90 days. They gave plenty of time.

        • macdude22 says:

          Not right now, the banks are super overloaded. People aren’t closing for months after signing the purchase contract. Took us 2 months, we got pre-approved, everything was supposed to be a slam dunk. All of a sudden it’s held up in “underwriting” and nobody could tell us what the problem was. I hear it’s worse now than it was for us a couple months ago.

    • ColHapablap says:

      Yeah, I thought the same thing. They’re just giving free money to people who were buying houses already. Seems pretty pointless, unless they’re trying to boost the slumping “new appliances and 3D TVs” market.

      • ColHapablap says:

        Actually, nevermind, it’s not even intended to spur the economy — just to give a little breathing room to people who are already under contract but may not meet the original close-by date on account of the slow banking process.

    • Jack Handy Manny says:

      Extending this is good. You shouldn’t lose out because banks can’t keep up. It would have probably led to a lot of deals falling through if the tax credit expired.

      I’m just glad they didn’t extend the entire credit (still being able to qualify if you write an offer today). We can’t keep propping up a slumping housing market. It’ll come back naturally. That may be a long time but it will come back.

  2. UlimaLibizzle says:

    The Homebuyer’s credit is actually hurting me, because I placed a home on the market as it was expiring. Apparently everyone who was thinking about buying a house has already done so, leaving me selling to a market with no buyers.

    Ugh.

    (I should probably blame the government, but I actually think they did the right thing here, and I’m just unlucky with my timing.)

    • GuJiaXian says:

      I’m in the same boat as you.

    • pot_roast says:

      What we’ve noticed in our area is that while people are buying brand new homes, nobody is buying the pre-existing homes that happen to be 1-2yrs old. People aren’t snapping up the foreclosures. They’re opting to buy the brand new homes at the cheaper prices. So we’re still sitting on a bunch of empty houses and watching subdivisions sprawl…

      • Loias supports harsher punishments against corporations says:

        That’s pretty stupid of them really. A 1-2 year old home will have depreciated from “out of box” status, and usually have all the kinks of out it (or at least the kinks are known so you can choose wisely). A buyer would be better off, financially, to buying a 1-2 year old and still get the tax credit.

      • esc27 says:

        When I was house hunting, I intended to buy a nice used house, do some painting, etc. But compared to when I found new, quality homes (with nice features such as granite, tile, wood, etc.) for about least $20 less per square foot used just didn’t make sense. Yes new houses have their problems (I’ve had several) but surely not $20,000+ dollars worth of trouble.

    • tiatrack says:

      We just got a solid offer on our house over the weekend, and our 4 year old house was on the market just over a month. Things are slow, but if you price it right there are buyers still.

  3. nbs2 says:

    I’m curious to know how the back end of the credit is going to work. Is the three year mark going to be calculated from the closing date or the recordation date? For us, that was a two month difference – which may come into play when we get ready to sell our house.

  4. ColHapablap says:

    Actually, the summary is incorrect: “If you’ve already signed the papers on the home by today but haven’t closed yet, you will have 3-months to seal the deal…”

    The original deal was that you had to have a contract by April 30 and close on the home by June 30 (today). They’re simply extending the “close-by” date by 3 months, but the original contract date is still the same.

    • CTXSi says:

      Agreed. This is a misleading summary from Consumerist. All this is doing is “extending the extension” for people that had contracts prior to April 30 but haven’t closed yet. You cannot go out and get a house under contract today and still receive the credit (which the Consumerist summary incorrectly implies)

  5. TuxthePenguin says:

    Hooray! More interference in the market! Isn’t insanity doing the same thing again and again, expecting a different result?

    Lets see… Cash for Clunkers – drew sales from the future into the present to “boost” the market, only to have drop “unexpectedly” once it ended.

    Expired Homebuyers’ Credit – drew sales from the future into the present to “boost” the market, only to have it drop “unexpected” once it ended.

    … now come on people. Maybe I would support a “phasing out”. Make the “credit” drop by 1k each month until it is fully expired.

    But no, I don’t really even like that. Let the bleepin’ market adjust down to the reality of the situation. It might be painful, but all this will do is kick the can down the road a few more months.

    • rpm773 says:

      I think this modification to the program only affects people who had already signed on property by April 30, but who have not closed yet for whatever reason. I know that if I had acted in April on the hopes of receiving the $8K credit, and was in jeopardy of losing it because I hadn’t closed yet, I’d be pretty disappointed.

      While I agree in spirit with what you’re saying about such things, it’s not really the focus of this particular legislation.

      • Commenter24 says:

        so you support legislation designed to make sure people aren’t “disappointed?” Seems like a worthy goal for Congress…

        • rpm773 says:

          No, and I didn’t say that.

          As this only affects people who had already signed on a house within the original period of the program but whom have not been able to close, an adjustment to the legislation makes sense.

          • Commenter24 says:

            I disagree. The people know what the requirements were and they weren’t met. Maybe it’s not their fault, but that was a risk the buyers should have accounted for.

            • legwork says:

              If the banks weren’t taking so incredibly long to process the loans then this wouldn’t have been needed. This isn’t a buyer problem, it’s one of banking overload in a system where they are no longer just rubber-stamping everything that flies across their desks.

    • PunditGuy says:

      There was nothing unexpected about the drop in car sales. The idea is that the economy will be better in the future, so you’re borrowing some of the future car sales to make things better today. The future economy should be able to handle it.

      This is why it’s important for stimulus to happen now. You want deficit reduction? Nothing will reduce the deficit faster than having a growing economy. The government should save when times are good and spend when times are bad. The Republican solution appears to be “spend when we’re in power and save when we’re not.”

      • nova3930 says:

        Except nothing they’re doing fits that mold. The economy is not magically going to jump and run in a couple months time such that it can handle the drop.

        Running a 30 day $ for clunkers or 3 month homebuy credit is only going to shift sales from a period that will be little if any better than now.

        We’re at the point we may as well be piling money up on the White House lawn and burning it for all the good the spending is doing…

      • nbs2 says:

        The problem is one of understanding. When the programs first were announced, my gut reaction was one of disgust. I couldn’t understand why the government was handing out money like this. I still have some issues – the destruction of functional vehicles, the marriage penalty on the home buying program – but once I thought about the programs as a smoothing of the ramp up to full burn, things made more sense.

      • TuxthePenguin says:

        Oh, if you go and look back, you’d see the terms “surprising” or “unexpected”. Hell, all bad news is now “unexpected” or some synonym.

        There are better was to stimulate. The problem with things like this is that it is targeted to one sector. Which is good when you’re trying to stimulate one sector.

        But we need far-reaching, broad stimulus. The quickest and easiest way to do that is through an across-the-board tax cut. The best one to target – payroll tax. Instantly give employee a raise. Now, maybe that doesn’t help the unemployed, so maybe switch it so any net new hires are exempted from employer-side payroll tax for the next three years.

        And I’m sick of the “Republicans spent too!!!1!One” argument. Yes, they did spend. But they did not spend at anywhere near this level. Its the difference of going 75 in a 70 and going 100 in a 70. You might be okay with one but not the other.

        • PunditGuy says:

          First of all, tax cuts are no kind of panacea. And a tax incentive to hire people makes no kind of sense, since there’s no demand for products to support the hiring.

          As for the “anywhere near this level” argument, please don’t let facts get in your way. In January of 2009 (about two weeks before Obama’s inauguration), the CBO released its estimate for the 2009 budget deficit: $1.2 trillion. That’s fully under Bush’s policies, and before Obama was able to do a damn thing. Actual 2009 deficit: $1.4 trillion. If you want to blame Obama for $200 billion in spending, that’s fine.

          http://www.cbo.gov/ftpdocs/99xx/doc9957/01-07-Outlook.pdf

    • Baelzar says:

      All they are doing….with the stimulus, the homebuyer credit, the clunker cash, the unemployment cash…is ONCE AGAIN setting up another bubble.

      The Stimulus Bubble.

      Eventually, all of the money’s gonna run out, and we’re all going to feel the pain of a serious correction.

  6. Aking0667 says:

    With wages remaining static and costs going up how is anyone in the lower middle and below class brackets going to afford one in the first place? This just seems like a ploy to entice people to buy so the government can charge them property taxes.

  7. djwetmouse says:

    Me and my wife put in an offer for a house in December. It was a short sale and it was in the contract that the deal had to close by April 30th as that was end date of the original credit. We did everything we needed to (shelling out a lot of money for inspections and appraisals) but the seller was not able to close. The extension happened and me and my wife decided to continue with purchase figuring the seller could get their paperwork together by June, it is June 30th and now it will take a minor miracle to close today. If the credit isn’t extended we will just cut our loses as the at this point the tax credit was the only thing keeping us going. After this it will take a year or more to raise the money necessary to go home shopping again.Did that make any sense? Just Venting I guess!

    • djwetmouse says:

      Okay it won’t really take a year to raise the money but as our current landlord wants us out by August we will have to find a new apartment, and I would assume a new year long lease.

    • macdude22 says:

      Yes it does make sense. We were stuck in banking limbo and our closing was pushed back 2 months. For a while it was looking like the bank wasn’t going to approve the loan because the house couldn’t be “appraised” because there were so few home sales. After we’d spend half our money on inspections and fees and all sorts of crap. We wouldn’t have been able to buy for another year either.

      We were pre-approved, down payment, the works. Was supposed to be a slam dunk and it was a nightmare. Mostly I think the bank was overwhelmed with applicants and was behind on processing. And it’s worse now. I’m ok with extending the closing deadline.

    • Baelzar says:

      This must be the most amazing house ever built!

      There aren’t ANY other houses that fit the bill in your area?

  8. thewildboo says:

    Your summary is incorrect. You still have to have signed the purchase contract by April 30. They’re just extending the original closing deadline, which was today. For a minute there, you had me excited, since we signed our contract earlier this month.

  9. Matt Park says:

    I’m in the boat where I signed a short sale contract in march and have been getting jerked around by the bank (Suntrust = terrible) even now and forseeably into July. I agree that the tax credit was artificially inflating the market, but since I paid (signed a contract for) a price inflated by the tax credit, it’s only right that I get it. …if and when the deal closes.

  10. catskyfire says:

    Curious, did they ever revise the first one? The first round was technically a loan, to be paid back in increments after 5 years. The later versions were just “free” money.

  11. HogwartsProfessor says:

    I know someone who is dealing with this trying to sell a home; hopefully this will help get it closed out and finished.

  12. Dallas_shopper says:

    So let me get this straight; people like me who bought last summer and were popped by the income limit are still waiting for our checks but people who procrastinated and waited until the last minute are getting an extension; AND they are getting more money because the income limit was raised (not retroactively) in November of last year?

    Sorry, but that SUCKS. You snooze you lose.

    • consumerfan says:

      Except they didn’t snooze. They contracted to sell their houses by April 30th. Then there was a rush for those people to close by June 30th.

      The consumers did their bit and now Congress is letting the private sector off the hook. Sounds like America to me!

  13. TripleTimeStep says:

    I’m glad this is going through. I live in Nashville and there’s a story in the paper today about buyers whose process was disrupted by the flooding. They’re having to get new appraisals or wait on approval to purchase flood insurance (which still may not come through in time), which is delaying closings. This doesn’t give money to anyone who wasn’t already eligible; it’s just allowing people already in the process to complete it, which I think is fair.

  14. azzy says:

    Wait, seriously?! We sold our home just before this expired, and are closing on the new one in two weeks – missing out on the credit.

    We’re one of the lucky ones who don’t absolutely need this, but we did have to take on some extra debt when selling our old house. If the government wants to give me free money to pay that off I won’t complain!

  15. ryan says:

    I’m wondering how many people that applied, or were thinking about applying, for the homebuyer tax credit actually decided to file a tax extension because they couldn’t get their papers completed and/or purchase the home in time. Why could this be significant? Well, it’s important to note that they probably did this because tax extensions aren’t due until October 15th & this gives them extra time with the homebuyer tax credit. If you think about dates, extending the closing date to September 30th, & even beyond, makes a lot of sense from a tax perspective.

  16. Draygonia says:

    Thought about buying a house, now I think about being a spiteful consumer and telling the agents to screw themselves and that I don’t want a house unless the government gives me 8k towards a place to live.

    No lie, I feel that way now.

  17. JenS says:

    Great in theory. What they DON”T tell you until tax time is that you are automatically inelegable for the credit if one partner owns a property and you are married less than 5 years. Unless you co-habitated without marriage for a while.

    My husband bought a condo 5 years before we married. Because I did not live there 5 years, only the 3.5 years we were married, he dosen’t count for the credit