Senate Approves Extension of First Time Homebuyer Tax Credit-Will and Should it Be Extended?

[Update 6/30/10]- The Senate passed the extension of the home buyer tax credit late Wednesday, effectively extending the Home buyer tax credit deadline for closing on a home until September 30th, 2010, for those who have already signed a contract by April 30th but not yet closed, once it is signed by the President. So those who were under contract by the April 30th deadline will have an extra 3 months to close on the transaction and still qualify for the credit. (Source: NYT article).

[Update 6/29/10]- Last week, the senate failed to pass (due to a Senate filibuster) the American Jobs and Closing Tax Loopholes Act of 2010, putting the 1st time home buyer tax credit extension for those who were under contract by the deadline of April 30th but have not closed yet (original deadline is still June 30th, 2010) in jeopardy.

However, today (6/29/10), the House of Representatives passed H.R. 5623, the Homebuyers Assistance and Improvement Act of 2010, trying again to extend the deadline to September 30th, 2010. The bill will be taken up by the Senate and signed into law by the President to go into effect.

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(Original post)

The Senate voted to extend the closing deadline for the first time homebuyer tax credit this past week, hoping to give those who have signed a contract but not yet closed on their home purchase an additional 90 days to complete the closing. The amendment filed by Sen. Harry Reid, to the American Jobs and Closing Tax Loopholes Act of 2010 passed the Senate on Wednesday. The bill still needs approval of the House of Representatives and the President’s signature before it becomes effective, though.

According to Reid:

“Because of this program’s popularity and the time it takes to complete transactions such as short sales, I led the effort today to extend the closing deadline for this tax credit through September of this year — allowing lenders more time to clear a backlog of 180,000 potential home buyers nationwide,” said Senate Majority Leader Harry Reid, in a news release after the amendment passed in the Senate this week.

To qualify for the credit, buyers had to be under contract for a purchase by April 30. But under current law they only have until June 30 to close on the sale. Supposedly, many people are having trouble getting their home purchases completed in a timely fashion as many lenders  are experiencing a backlog, and the 90 day extension would give them until the end of September to work through any issues and complete the closing on their home.

I’m sure that many people see this as another attempt to “prop up” the housing market, which, after the qualification period ended on April 30th, saw a drop of over 10% in May, with a month to month drop of single family home construction of over 17% ,  according to this article. But, in this case, if the person qualified by the April 30th deadline, most of the delays are likely out of their hands, and I don’t really see it as a bad thing- although many will argue it’s just extending another government handout.

What are your thoughts- should people who have a contract to buy a house and met the April 30th deadline be given extra time to close and still receive the 1st time home buyer tax credit?

Similar Posts:

• $6500 Tax Credit for Existing Homeowners Who Purchase New Home Signed into Law, Not Retroactive, $8000 New Homebuyer Credit Extended
• A Look at the $8000 First Time Home Buyer Tax Credit for 2009
• Not Going to Finish Your Taxes by April 15th?- How to File For An Extension
• Time for Homebuyer’s Tax Credit Running Out, Will it be Extended?

Tagged as: $6500 tax credit, $8000 tax credit, American Jobs and Closing Tax Loopholes Act of 2010, H.R. 5623, homebuyer tax credit extension, Homebuyers Assistance and Improvement Act of 2010, homeowner tax credit

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