$8000 Tax Credit Update

first-time-home-buyer-tax-creditThe deadline for qualifying for the $8000 tax credit for first time home buyers is rapidly approaching. By “deadline”, I mean both the date the credit actually expires, November 30th, and the date that you should be under contract to buy that new home by, which for all intents and purposes is this Friday, October 16th. Incidentally, there are many who say that you should have been under contract already if you hope you close on your home by November 30th, but since real estate is local and not all circumstances are equal, we’ll go with the 16th, as we outlined in a previous post. (Technically, a near perfect closing, where the buyer pays cash, does no inspections and no unforeseen problems arise in the transaction, COULD take place in 30 days or less, but those are few and far between.)

No News is NOT Good News…

As of this writing, there has been no indication from any source, inside the government or outside, that the tax credit will be extended in one of the currently existing formats: for just first timers or for all buyers; at the current $8000 level or at an expanded $15,000 level; or just for the remainder of the year or for another 3, 6, 9 or 12 months. In fact, there has been much chatter in many circles that the best course of action would be to just let the credit die a quiet death and allow the market to correct itself naturally. So, this tax credit will, at least for the time being, remain in limbo.

(UPDATE 11/6/09: The $8000 Tax Credit appears to be headed for passage, but it has NOT been signed by President Obama yet. He is expected to sign it today and we will be publishing another blog post when this happens to update you on the new terms of the credit.)

Support Our Troops…

There is, however, another tax credit passed through the House of Representatives that will extend the tax credit for American service members. HR 3590, sponsored by Rep. Charles Rangel, D-NY, extends for one year, to December 1, 2010, the deadline for taking advantage of the $8,000 first-time home buyer credit for qualifying service members, so that certain service members stationed overseas can take advantage of the credit when they return home. It would also ensure that service members will not have to repay the first-time home buyer credit if they are ordered to deploy to a different location and, as a result, forced to sell their home within three years of buying it. Additionally, the bill would ensure that certain payments are tax-exempt under the Defense Housing Assistance Program (HAP), which assists military personnel selling a home that has declined in value.

The bill passed unanimously in the House and now goes to the Senate for a vote, where it is expected to pass with ease. So, unless something drastic happens in the Senate, it looks like if you’re in the military you’re golden for at least another year. The rest of you first time home buyers…not so much. Your time is just about up, and unless Congress takes action on one of the existing bills to extend and/or expand the current bill, the housing market may take a noticeable dip over the next few weeks.

Whatever is decided, they need to do it quickly. Keeping everyone in suspense is not likely to do anyone any good.

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