Home buyer tax credit Archives - The Phoenix Real Estate Guy

Will the Homebuyer Tax Credit Return? Should it?

August 30, 2010 By Jay Thompson

It’s starting to sound like, “The Song that Never Ends””¦

On Sunday, HUD Secretary Shaun Donovan implied on an interview with CNN’s Ed Henry that the Obama administration that the $8,000 home buyer tax credit could be revived.

From the transcript:

HENRY: Let’s end on two quick points. First of all, along the lines of this debate, there are some critics saying the federal government can’t keep up the intervention to try to prop up the industry much longer. Along those lines, you mention the $8,000 first-time home buyer credit expired a couple of months ago. Many people believe that’s why some of the housing numbers were so bad this past week. Is that housing credit now dead? Or does the administration think you should try to revive it to try to prop this industry up?

DONOVAN: Look, Ed, I think it’s too early to say after one month of numbers whether the tax credit will be revived or not. All I can tell you is that we are watching very carefully. I talked earlier about new tools that we will be launching in the coming weeks, and we are going to be focused like a laser on where the housing market is moving going forward, and we are going to go everywhere we can to make sure this market stabilizes and recovers.

When having tax issues, try to visit the website here for some great help options. Will the property tax credit return? Who knows. But it’s not beyond the realm of possibility”

Should it be revived? Did the tax credit really help the housing industry, or did it just pull in buyers that would have bought anyway? I have already looked for a firm that provides property tax services that is willing to have an interview with me, and I will be asking one of their experts these questions. Personally, I believe we need to give the market time to correct, but I would also love to hear the insight of people much better versed in this than me.

As I wrote on May 1st in, Home Buyer Tax Credit: So long, and thanks for all the fish, and in June 2009’s, How the Government can Fix the “Foreclosure Crisis”, I feel that the government ”“ and We the People ”“ need to understand that housing market will correct itself. Will we like it? Will it be pretty? We’ll have to wait and see.

Here’s an article from CNBC (courtesy of @MortgageProBlog) where the author seems to agree with me. She went the extra step to contact HUD spokesperson who responded: “No news here…there are no discussions underway to revive the credit.” Granted, there are no discussions yet, but anything can happen in D.C. — especially in an election year — and some politicos are already weighing in that reviving the credit may be a good idea…

Hat tip to Inman News on the Donovan interview (this article will slip behind Inman’s pay wall tonight).

Homebuyer Tax Credit Extended: Closing deadline now Sept 30.

July 2, 2010 By Jay Thompson

Lots of things happening in D. C. this morning…

Homebuyers Assistance and Improvement Act of 2010 (H.R. 5623)

This morning (Friday, July 2, 2010), President Obama signed into law the Homebuyers Assistance and Improvement Act of 2010. (Source: Whitehouse.gov)

Home buyers who were under contract to purchase a home on or before April 30 now have until September 30 to close on the transaction and qualify for the homebuyer tax credit.

This three month extension to complete the home purchase will, according to the National Association of Realtors (NAR), allow approximately 180,000 eligible home buyers to receive the tax credit. Assuming of course they meet all the other criteria and close by September 30.

There are almost two dozen articles on our little real estate blog about the homebuyer tax credit. Maybe (hopefully) this will be the last one. Perhaps we should start a pool to guess when the cries for yet another extension start up? I can assure you there will be home purchase contracts, particularly on short sales, that still won’t be closed by the new September 30 deadline. My guess is come Sept 1, there will be calls for an extension to the extended extension date. At some point,the government has to let this thing end.

For now, those that missed the original closing deadline of June 30 can relax. You’ve got until September 30 to get your home purchase closed.

National Flood Insurance Program Extension Act of 2010 also signed into law

In other real estate legislation news, the President also signed H.R. 5569, the National Flood Insurance Program Extension Act of 2010, into law. This law retroactively reauthorizes the Federal Emergency Management Agency (FEMA) to enter into new contracts for flood insurance under the National Flood Insurance Program (NFIP) through September 30, 2010. The NFIP ended on June 1, stalling many home purchase transactions. The extension is retroactive and any new flood insurance policies or renewals and waiting periods are effective from the date of application.

I would love to hear your thoughts the extensions for the tax credit and flood insurance program. Good? Bad? Indifferent? Let us know in the comments!

Bill to Extend Homebuyers Tax Credit Closing Deadline Dies

June 25, 2010 By Jay Thompson

If you arrived here via a search engine, please pay careful attention to the date of publication.
There are dozens of articles on this site about the Home Buyer Tax Credit. You can see them all here.
For the most recent news about the Home Buyer Tax credit, please see this article (July 2, 2010).

UPDATE – July 2: This morning President Obama signed into law H.R. 5623, the “Homebuyers Assistance and Improvement Act of 2010”. This extends the homebuyer tax credit closing date to September 30, 2010. (You must have been under contract to purchase a home by April 30. This extension does NOT change that date). Source: Whitehouse.gov

UPDATE June 30, 2010 On June 29, the HOUSE passed H.R.5623, which would extend the home buyer tax credit closing deadline to September 30. You still have to have been under contract by April 30. Late on June 30, the Senate passed the bill. It is now on its way to the President’s desk for his signature, which is expected soon. We’ll update when that happens.

H.R. 4213 ”“ the bill that had an amendment to change the closing deadline for the homebuyer tax credit from June 30 to September 30, 2010 appears to be dead.

Last night the Senate failed for the third and final time to pass the American Jobs and Closing Tax Loopholes Act, which had numerous amendments attached to it, including one to extend the $8000 / $6500 first time / repeat home buyer tax credit.

A vote of 57 ”“ 41 failed to reach the 60 votes required to end a filibuster, effectively killing the bill.

There might be other versions proposed at some point, but for now, if you are eligible for the tax credit and were under contract to purchase a home by April 30, that transaction must be closed by June 30 in order to qualify for the tax credit.

My guess, and we’re talking pure speculation here, is the unemployment extension provisions of this bill will be “spun off” into a separate bill. What will happen with the homebuyer tax credit closing extension? I won’t even hazard a guess… Congress could, in theory, pass something with a retroactive date to extend the credit. Or, the credit deadline could go on as planned. Who knows…

Mainstream Media reports:

Associated Press: Republicans kill Senate jobless aid measure

Forbes: Tax Extenders Bill Is Dead But Not For Harry Reid’s Lack Of Effort

Bankrate.com: Tax breaks, homebuyer credit on hold

The Blogiverse:

Virginia Association of Realtors: Homebuyer tax credit closing deadline extension

Senate Amendment to Extend Home Buyer Tax Credit Deadline

June 11, 2010 By Jay Thompson

UPDATE June 25, 2010: The bill this extension amendment was attached to died in the Senate last night. Story here.

UPDATE June 16, 2010 – Today the Senate passed this amendment to extend the closing date deadline of the Home Buyer Tax Credit to September 30, 2010. (You still had to be under contract by April 30). The vote was 60-37. The entire bill the amendment is attached to has not yet passed the Senate. The House passed the bill previously. Once the BILL passes the Senate, the differences between the House and Senate versions must be reconciled, then the House votes on the reconciled bill and then, and only then, it would be delivered to the President to sign into law.

Original Post: The current incarnation of the Home Buyer Tax credit requires contracts accepted before April 30, 2010 to close escrow by June 30, 2010 in order for the purchaser to claim a tax credit of up to $8,000 (or up to $6,500 for non-first time home buyers).

Yesterday, Senators Harry Reid of Nevada, Johnny Isaakson of Georgia, and Chris Dodd of Connecticut introduced an amendment to the American Jobs and Closing Tax Loopholes Act of 2010 (H.R.4213) that, if passed, would extend that closing deadline to September 30, 2010.

This amendment does NOT change the fact that you had to be under contract by April 30 to claim the tax credit. It just changes the date the transaction must be closed by in order to claim the credit. Apparently the Senators have realized something any agent marginally versed in real estate sales could have told them ”“ many real estate transactions, especially short sales, take more than two months to close.

H.R.4213 has already passed the House, and has wide support in the Senate. Once all the amendments (including this one) are hashed out and attached, the House and Senate versions would have to be reconciled and then sent to the President for signature.

Given the level of support for the main thrust of the bill (extending Unemployment Insurance, extending a scheduled 21.2% cut in Medicare reimbursement to doctors, and creating jobs) my guess is this will pass and the Home Buyer Tax Credit closing deadline will be extended to September 30.

But we’re talking politics and Washington, so anything can happen”¦ Someday, maybe, hopefully, they’ll let the damn thing just die.

Home Buyer Tax Credit: So long, and thanks for all the fish

May 1, 2010 By Jay Thompson

Finally, after over two years of existence, the federal homebuyer tax credit is no more.

Expiring last night at midnight, what started as a $7500 “credit” that was in reality an interest-free loan (it had to be paid back), then became an $8,000 fully refundable true tax credit, which was extended and modified yet again to include non-first time buyers, the home buyer tax credit offered by the federal government is no more.

Yes, if you were under contract to purchase a home by midnight on April 30, and you close on the purchase by midnight June 30, you may be eligible for the tax credit.

But with the exception of certain people in the military and other federal employees stationed overseas, there will be no more people eligible to claim the tax credit.

This will be my 24th article on the tax credit, and hopefully my last unless Arizona pulls a bone-head move like California and offers a state-level tax credit program.

Yeah, I call it bone-headed for a state with budget woes the size of California’s to spend $200 million to continue to muck about in a free market. If Arizona were to go that route, while we’re in the midst of laying off teachers, cutting protective services and more, then heads should roll out the capital doors.

The 23 previous articles here have been viewed over 178,000 times and generated 862 comments. That’s almost 400 page views a day since I started writing about the tax credit in February 2009.

Obviously interest has been high.

Personally, I’m glad it’s over. I’ve never been a fan of the government trying to prop up a free market. While we have had several clients qualify for the tax credit, none that I’m aware of bought a home because of the credit.

And that is a good thing.

In my opinion, about all the tax credit did was pull in sales that would have occurred in the near future. So we wound up robbing Peter to pay Paul. Yeah sure, a few people somewhere bought a home that they wouldn’t have (which was a bad idea), thereby (in theory) “stimulating” the housing market ”“ but at what cost?

I just re-read an article I wrote in June 2009, How the Government can Fix the “Foreclosure Crisis”, where I state the government needs to stop trying to fix the real estate market and let the laws and dynamics of a free market economy play out.

Call me crazy, but I’m sticking by that opinion, and the end of the tax credit is a big step toward letting the market adjust ”“ on its own.