Home Buyers Could Get More Time For Tax Credit

Home buyers could get more time for tax credit

First-time home buyers looking to land an $8,000 federal income tax credit may have a little more time to close on their purchases if a Senate amendment unveiled Thursday makes it into law. As it stands now, home buyers must have signed contracts by April 30 and must close the deal by June 30. They could be eligible for an $8,000 tax credit if they are first-time buyers or a $6,500 credit if they owned and lived in their previous home for five of the last eight years. The closing deadline, however, could be pushed back to Sept. 30 under an amendment offered by Senate Majority Leader Harry Reid, D-Nev., Sen. Johnny Isakson, R-Ga., and Sen. Chris Dodd, D-Conn. The senators said they want to make sure banks have time to process the transactions — especially short-sales, which is a more involved process. It remains to be seen, however, whether the amendment will go anywhere. It is part of a controversial jobs and tax bill that may be radically changed before the Senate approves it. Lawmakers are not scheduled to vote on the bill until next week at the earliest.

Extend Home Closing Deadline For Tax Credit: Senator Reid

“You may recall on Tuesday we all discussed the home buyer tax credit, and specifically how many potential buyers rushed in to sign contracts by the April 30th deadline but wouldn’t make it to the June 30th closing deadline. Now Senate Majority leader Harry Reid (D-Nev.) is offering an amendment to the American Jobs and Closing Tax Loopholes Act of 2010, to extend the closing deadline to September 30th. Again, no new buying opportunities here, just a longer period to close. I spoke with Senator Reid’s office after the announcement, and spokesman Jim Manley said their chief concern, especially in their home state of foreclosure-ridden Nevada, is timing to complete short sales. That’s where the bank allows the troubled borrower to sell for less than the value of the mortgage. Here’s Manley’s full explanation: “The Realtor’s believe there will be a lot of home buyers who will not be able to meet the June 30 deadline through no fault of their own.

There are a lot of transactions that need to be closed which is overwhelming the system. And many of the homes that are being bought are short sales which require the sellers lending institution to agree to take accept less than full payment on the outstanding mortgage. The financial institutions are taking a very long time to come to that decision and the home buyer is helpless to move the process along. This amendment gives those home buyers an additional three months to close the transaction.”

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