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Another homebuyer tax credit extension?

By Kay Bell · Bankrate.com
Friday, June 11, 2010
Posted: 2 pm ET

Congress, specifically the Senate, is looking at extending the first-time (and others) homebuyer credit yet again.

Say it ain't so!

OK, it's not a total extension. The latest proposal would be to give prospective buyers who had a contract in hand by April 30 until Sept. 30 to close on the sale. In case you forgot, the current closing deadline to qualify for the $8,000 tax credit is just a few weeks away, June 30.

This latest tax extension proposal comes from Georgia Sen. Johnny Isakson. The Republican lawmaker was a real estate professional before going to Washington, D.C. He wants to add the homebuyer provision to the the American Jobs and Closing Tax Loopholes Act of 2010.

That awkwardly named bill is more commonly known as the tax extender measure. It's the legislation needed to put some tax breaks that expired at the end of 2009 -- such as the popular deductions for state and local sales taxes, tuition and fees, educators' out-of-pocket classroom expenses and the ability of some homeowners to deduct a portion of property taxes without itemizing -- back on the tax books.

The big problem with the entenders is the House and Senate are at odds at how to pay for resurrecting the expired tax breaks.

Isakson's proposal wouldn't produce any unexpected costs since it would apply to those folks who already had a sales contract in hand on April 30. Still, some folks (including me) say it's time to just let this tax break fade away and allow the housing market to right itself on its own.

But Isakson has some unexpected help in his latest homebuyer credit effort. Joining him is Democratic Majority Leader Harry Reid. Yep, finally some, albeit minimal, bipartisanship on Capitol Hill.

Why the aid from the loyal opposition? Reid represents Nevada, a state hit particularly hard by the real estate downturn.

Reid's also facing this November what many political pundits are calling the toughest re-election battle sort of his legislative career.

Not that I'm overly cynical, but helping out Nevadans who are trying to get a tax break, not to mention pleasing the powerful housing lobby, just weeks before voters go to the polls probably wouldn't hurt Reid's chances.

Will the credit be extended? Who knows. Congress has a bad habit of waiting until the very last minute to do anything and even if June 30 passes, lawmakers could make any homebuyer credit changes retroactive.

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7 Comments
Kay Bell
July 01, 2010 at 1:45 am

Dee, the credit is for first-time buyers at the $8,000 maximum level and for qualifying repeat buyers a credit of up to $6,500 as long as in addition to meeting the prior homeownerhip rules, they buy another home (i.e., had a contract in force) between Nov. 7, 2009 and April 30, 2010.

Dee
June 30, 2010 at 7:33 pm

Is this 8000 tax credit for first time home buyers only?

OrlandoMagic
June 18, 2010 at 9:44 am

I am in the same boat. I had my contract in place by Dec 2009. At that time, I imagined I would probably be moving in by April or May but its almost end of June and the construction hasn't started yet! And I was told recently that there is a possibility it wont even start in 2010. If I hadn't like the house as much as I do, I would have walked away by now.

joan quattrocchi
June 14, 2010 at 9:52 pm

lets try to work together and jump start a new USA
What about a new mortgage, called starting over in america

There are many people who had to file for bankruptcy, put have clear-up credit working as a w-2 why the wait of two years and
if you had a forclosuer it becomes three years.

The Underwritters look down on you and ever though you meet the
FHA guide lines the UW don't want to approve the loan for you.
We need to help the little people get started again thank you

sam
June 12, 2010 at 1:18 am

sounds gooooood to me! :) i can't be the only one who decided to take advantage of this tax break & build a house only to be screwed by a no good contractor & set back even further by constant rain for the past 1.5 years, even through winter. after all the hurdles we've had to jump through to get to this point, it would be nice to get the 5G back in taxes. if the contract deadline of 4/30/10 is still in tact, what difference does it make?

David
June 11, 2010 at 10:26 pm

This is just a waste of time. I am currently in the process of buying my first home. Unfortunately I was not able to have a contract before april 30th because I hadnt found the house I wanted. BUT I will be closing before June 30th. According to everything I read I dont get a credit. How does someone have a contract in april but not close until september? How does this bill help anyone?

Andre Ranieri
June 11, 2010 at 9:07 pm

Kay,

I couldn't disagree with you more.

My wife and I signed a contract to build a house in Pasco, WA in March 2010, but it has been almost impossible to get our builder, subcontractors, mortgage officers, appraisers and city inspectors to work in a timely manner because everyone is so crushed with trying to meet the June 30th tax credit deadline.

Watching nothing happen on our house, day after day, despite daily phone calls has been frustrating to the extreme. Despite our daily pushing and prodding of our builder, our house isn't scheduled to close until early to mid July - effectively denying us the tax credit that was our main incentive to buy in the first place.

Sens. Isakson and Reid's proposed extension of the tax credit is only targeted to people whose houses were already in the pipeline in the first place, who would have qualified with the spirit of the tax break had their home purchases been completed on time.

Thanks,

Andre Ranieri