UPDATE II: Tax Credit Closing Deadline

The tax credit closing deadline was extended to September 30.  Extending the tax credit closing deadline will help provide additional stability to real estate markets across the nation.

The passage of H.R. 5623, the Homebuyer Assistance and Improvement Act, applies the homebuyer tax credit closing deadline extension only to homebuyers who have ratified contracts in place as of April 30, 2010, but could not close before June 30. The legislation is designed to create a seamless extension of the new closing deadline for eligible transactions to September 30. There will be no gap between June 30 and the date the president signs the bill into law.

UPDATE: Federal Homebuyer Tax Credit Contract Deadline

Over the past week, confusion has grown regarding the closing deadline for the federal homebuyer tax credit.  Various news organizations and blogs have reported on a 60-37 vote by the U.S. Senate to extend the deadline to close from June 30 to September 30 for those buyers who were under contract by April 30.  Some of these reports did not accurately convey what has happened.

Nothing in the law has changed yet; the closing deadline for the homebuyer tax credit remains June 30.

Home Buyer Tax Credit Extension Available for Some

As the existing home buyer tax credit winds down, many are wondering if there will be another extension.  The current tax credit applies to those buyers who are under contract by April 30th and close no later than June 30th.

As of now, the only extension has been granted to certain members of the military, the foreign service and the intelligence community.

For qualified service members who are ordered on a period of official extended duty, the tax credit dates are extended for one year. The purchase contract must be dated by April 30, 2011 and closed by June 30, 2011.

In Case You Haven’t Heard…

Congress has passed new legislation that not only extends the first-time home buyer tax credit of up to $8,000, but also offers up to a $6,500 credit to buyers who already own homes.   
 
Who qualifies for the extended tax credit?  Both first-time homebuyers and current homeowners who are under contract between November 7, 2009 and April 30, 2010 and promptly close on the property by no later than June 30, 2010 are eligible.  Current homeowners who have lived in the home being sold or vacated, as a principal residence for five consecutive years within the last eight qualify.   To qualify as a “first-time home buyer” the purchaser or his/her spouse may not have owned a residence during the three years prior to the purchase.  
 
The amount of each home buyer’s tax credit is determined by two additional factors:
The price of the home and the buyer’s income.  Under the extended home buyer tax credit, credit is only awarded on homes purchased up to a sales price of  $800,000.  Single home buyer’s incomes up to $125,000 and married couples with incomes up to $225,000—may receive the maximum tax credit.  These income limits have changed from the 2009 First-Time Home Buyer Tax Credit limits.

Questions About The $8,000 Homebuyer Tax Credit?

The American Recovery and Reinvestment Act of 2009 authorizes a tax credit of up to $8,000 for qualified first-time homebuyers purchasing a principal residence on or after January 1, 2009 and before December 1, 2009.  Below are the answers to some of the most common questions regarding the tax credit:

Who is eligible to claim the tax credit?
First-time homebuyers purchasing any kind of home—new or resale—are eligible for the tax credit.

What is the definition of a first-time homebuyer?
A “first-time home buyer” is a buyer who has not owned a principal residence during the three-year period prior to the purchase. For married taxpayers, neither spouse can have owned a property within a three-year period.

A Little Holiday Cheer from the IRS

First-time homebuyers should begin planning now to take advantage of a new tax credit included in the recently enacted Housing and Economic Recovery Act of 2008.

Available for a limited time only, the credit:

· Applies to home purchases after April 8, 2008 and before July 1, 2009

· Reduces the taxpayer’s tax bill or increases his or her refund, dollar for dollar.  Is fully refundable, meaning that  the credit will be paid out to eligible taxpayers, even if they owe no tax or the credit is more than the tax that  they owe.