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Home buyer tax credit extension update; House Passes Bill…On to President for approval

Dennis Norman

Dennis Norman

UPDATE 11/06/09 5:14 p.m. – Thanks to Denis T who was commenting on this post, click here to go to the IRS site with information on the new tax credits.

UPDATE 11/06/09 1:00 p.m. – I just heard that a short while ago President Obama signed the bill into law.  IT’S OFFICIAL!  So if you are in the market for a home .. Go For It!


UPDATE 11/06/09 9:20 a.m. – Still waiting for President to sign bill…However there have been a ton of inquiries from existing homeowners that are either already under contract to buy a home or getting ready to do so that want to know when the new credit is effective….My opinion (for what its worth) was that the bill goes into effect when the President signs it and after that date is when existing home owners are eligible…Other question is whether the date of purchase is based upon the contract date or closing (settlement) date..My guess was that it was the settlement or closing date because in the new bill you are required to submit the closing statement with your tax return but not the contract.  For both issues I was just basing this on my interpretation and was looking for an interpretation of it from someone smarter than me..I found it…just a few minutes ago the National Association of Realtors sent out an email with a link to some FAQ’s on the new credit – included in the FAQ’s was the following question addressing this issue…looks like NAR’s take is the same as mine, let’s hope we’re right:

 

Question: I am an existing homeowner. On October 25, 2009, I signed a contract to purchase a new home. I have lived in my current home for more than 5 consecutive years and am within the new income limits. I will go to settlement on November 20. If President Obama has signed the bill by the time I go to settlement, will I qualify for the new $6500 tax credit?

Answer: Yes. The existing homeowner credit goes into effect for purchases after the date of enactment (when the bill is signed). There is no reference to the date of contract for the new credit. The provision looks solely to the date of purchase, which is generally the date of settlement.

UPDATE 11/05 5:35 pm – The National Association of REALTORS has prepared an outline that shows the difference between the original tax credit and the new extended and expanded tax credit. I think it is pretty helpful and includes effective dates of the changes. Many of the effective dates are based upon when President Obama signs the bill which may be tomorrow. Click here for NAR outline.

According to Fix Housing First the House of Representatives has just passed the extension and expansion of the home buyer tax credit by a vote of 403-12. Now it goes on to the President for his signature which is expected today or tomorrow.

To read the section of H.R. 3548 that contains the details concerning the first-time home-buyer tax credit click here.

If you care to read the entire bill click here.

I’ll keep you posted as I learn more…

Below is a recap of provisions in the amendment from the National Association of REALTORS(R):

  • Credit available for purchases before May 1, 2010. Prospective purchasers with binding contracts in place as of April 30, 2010 will be allowed an additional 60 days to complete the transaction.
  • Credit remains at $8000 for first-time purchasers. No change to definition of first-time purchaser.
  • New $6500 tax credit for repeat buyers who purchase between December 1, 2009 and May 1, 2010. Repeat buyers must have lived in their homes consecutively for 5 of the previous 8 years.
  • Income limits are expanded to $125,000 on a single return and $225,000 on a joint return. Current law $20,000 phase-out retained.
  • New anti-fraud limitations are imposed.
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3 comments to Home buyer tax credit extension update; House Passes Bill…On to President for approval