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Homebuyer tax credit might be extended today — maybe

By Holden Lewis · Bankrate.com
Wednesday, June 30, 2010
Posted: 11 am ET

An extension of the homebuyer tax credit could be passed and signed into law today. It's not a sure thing, because now the ball is in the court of a dysfunctional Senate.

Yesterday, the House passed a three-month extension of the deadline to close on the loan in order to qualify for the homebuyer tax credit. According to the Associated Press, the Senate might vote on the tax credit extension today. Maybe.

Read Kay Bell's take on the homebuyer tax credit horror show.

The homebuyer tax credit allows qualified homebuyers to subtract up to $8,000 from their federal income tax bill. To qualify for the credit, the home had to be under purchase contract by April 30. Right now, the law requires the loan to close by the end of the day today.

The House voted yesterday to extend the closing deadline three months, to Sept. 30. The tax credit extension is paired, in the same bill, with another extension of unemployment benefits for the long-term jobless.

Most Senate Republicans oppose extension of unemployment benefits without cutting the federal budget by an equal amount elsewhere. So the Senate would have to pass the bill with few or no Republican votes. As I said, that's not a sure thing.

The bankers and Realtors favor the extension, and I suspect that their lobbyists are giving senators a vigorous talking-to today. Even if the extension isn't passed today, it probably will be passed sometime this summer and will be retroactive, so homebuyers won't be cheated out of the tax credit if they close on their home loans sometime in July.

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12 Comments
Kurt
June 30, 2010 at 3:24 pm

Still waiting for my tax credit, too. Two months after submitting 2009 return, IRS requested addtional home purchase documentation

Ben
June 30, 2010 at 2:34 pm

It is time to stop the mindless piling on of debt. Lobbyists will go on urging congress for more pork barrel. Unfortunately it will be the bond vigilantes who will bring discipline to the US like they are doing now in Greece. I for one prefer the mortgage interest deductibility to go. When renters can't get that why should their taxes support a wasteful activity. Canada, Australia do not provide this and have home ownership rates higher than the US.

Jerry Pope
June 30, 2010 at 2:26 pm

IRS is in no hurry to pay. I filled my taxes in Feb, attached closing docs as required. Received notice that they wanted proof that we lived at the address. Send in copies of driver's license,
bank statements etc they wrote, showing current address as the one claiming the credit for. Keep getting one month continuances from IRS. May never get the credit.

Holden Lewis
June 30, 2010 at 2:18 pm

I know how you feel. At the beginning of 1986, two weeks after I graduated from college with student loan debt, the law suddenly changed, and taxpayers no longer could deduct student loan (or auto loan) interest from their taxes. Millions of Baby Boomers had taken advantage of this tax break, which helped them pay off student loans and buy cars.

I paid off my student loan eventually. Then I married a grad student, and we eventually paid off her student loans.

And guess what? Yep -- a couple of months after we paid off her student loans, Congress decided to restore the tax deductibility of student loan interest.

It's generational warfare. The Baby Boomers got theirs, and the Baby Boomers made sure that their kids got the deduction. But to hell with the Generation Jones folks born in the 1960s. We didn't matter.

Never expect tax policy to treat people fairly based on when they do certain things. You'll always end up screwed because you did something too early or too late.

John
June 30, 2010 at 1:49 pm

I purchased a home last year in August - NO CREDIT (I had to buy as my old house had been flooded twice in less than a year). I really felt snafu'd when I went to file taxes and realized I had missed out on the credit.

Bev Fulmore
June 30, 2010 at 1:42 pm

Please, no more government manipulation of housing.

Ralph
June 30, 2010 at 1:01 pm

Thats true Scott.

They tied the banning internet gaming bill to the port security bill a few years back, they couldn't ban gaming otherwise. Oh, and Bill Frist had some special interests in American casinos.

John Harris
June 30, 2010 at 12:46 pm

I purchased a vacation home in 2005; I want to get a tax credit as well. The Government owes this to me and I am entitled to it! I insist that the Congress make this tax credit retro-active to the beginning of 2005 and that the President sign it into law immediately.

Scott Adie
June 30, 2010 at 11:49 am

The manipulation of bills amended to other bills to leverage opposition into voting for bills their constituents don't approve of is horrendous. It is a huge problem with our so-called 'representative' form of government. The tax credit extension is amended to the jobless benefits extension. If you oppose the unfunded jobless benefits extension, you kill the already funded home buyers tax credit. Regardless of how you feel about either bill, this is a travesty of how our government fails to function.