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).
The first-time homebuyers tax credit is something I’ve written on extensively since it was first introduced back in February as part of the Stimulus Package. In it’s current incarnation, it is slated to expire on November 30 of this year (2009 for those that may be reading years from now”¦)
In order to be eligible for the (up to) $8,000 tax credit, you must CLOSE on a home buy November 30. Which given how long it takes these days to get financing and everything squared away, you’d better be under contract to purchase a home by October 15 ”“ yes, that’s 10 days away. You might be able to get a transaction closed in 30 days (under contract by October 30) but that’s risky.
Today, White House Press Secretary Robert Gibbs mentioned potentially extending the tax credit a few times in his daily press briefing. The complete transcript of that briefing is here. Below are the pertinent segments surrounding the home buyer tax credit, and the potential extension of it:
Question: Swapping to a different topic. The President said on Friday that the administration is looking at all measures to boost employment. What are some of those measures that we don’t already know about?
MR. GIBBS: Well, I think what the President — some of the things the President is talking about there — obviously there are a number of ideas that have been implemented that are coming to a legislative end, whether it is — that have helped the economy, whether it is extending certain unemployment benefits, whether we’re looking at the notion of extending some of the COBRA benefits. There’s tax credits like first-time homebuyers that have helped the economy. All of those are — certainly we’ve been working on for — with Congress for quite some time.
Question: On the additional measures — you know, the COBRA, the extending unemployment tax, the home buyer — which one do you think has been most effective in terms of stimulus and creating jobs?
MR. GIBBS: Hans, I’m not an economist. Obviously, I think in terms of — as I said to Athena, I think when you’ve lost your job, making sure that you have health care is tremendously important. I think if you’ve lost your job having extended and enhanced unemployment benefits are tremendously important. Obviously, there has been quite a bit of success in the first-time homebuyer’s tax credit. And I think overall, the recovery plan has had a great and positive impact on our economy.
Question: But extending these things, you don’t consider that a second stimulus?
MR. GIBBS: No.
Question: Why not, though, if they were in the first stimulus package — some of these things were included and then and you extend them, why is that not a stealth second stimulus?
MR. GIBBS: I appreciate the connotation. These are programs that are designed to help people that have lost their jobs. And I don’t think we would consider continuing a program for people that lost their jobs to be something other than just extending the current program.
Question: But the homebuyer tax credit in the first stimulus package, you guys extending it outside of the — it wouldn’t be a second stimulus?
MR. GIBBS: Again, decisions on this haven’t been made. I just was simply talking about what people had been discussing with Congress, and programs that are soon going to meet legislative deadlines.
Question: All those things, you would not consider that a second stimulus?
MR. GIBBS: Despite the — I’m sure you’d want to scurry off and write that we were planning a second stimulus, but that would be wrong. (Laughter.)
Question: Not particularly, but —
Question: What would you call it, Robert?
MR. GIBBS: What would I call what?
Question: These ideas, the extensions.
MR. GIBBS: Extensions. I thought your term was good.
Question: For how long?
MR. GIBBS: I don’t have —
Question: 2010 seems to be the idea that’s most —
MR. GIBBS: I think that’s certainly part that’s being bandied around in Congress, but I have not seen the particular proposals.
My take on what this means”¦
Keep in mind that like Press Secretary Gibbs, I’m not an economist. More importantly, I’m not a political analyst, and I last took a civics class thirty-something years ago.
Some “traditional” media outlets are reporting that Mr. Gibbs is indicating that President Obama and the White House support extending the homebuyer tax credit. I’m not convinced that “working with Congress” means the Administration is throwing its full support to extending the credit. As I’ve written here, there are numerous bills in both the House and Senate that propose extending and even enhancing the tax credit. Nothing I read in Mr. Gibbs statements to the press really say what the White House supports.
Heck, unless I’m misinterpreting the statement, “I have not seen the particular proposals”, Mr. Gibbs is indicating he isn’t aware of exactly what is currently on the table. (Obviously Press Secretary Gibbs is not reading Phoenix Real Estate Guy on a regular basis, or he’d know exactly what bills are in the loop and where they stand”¦ that’s a joke. Sort of.)
I don’t quite understand how extending unemployment insurance, COBRA benefits and the home buyer tax credit boosts employment. Extending UI and COBRA helps those that lose a job ”“ few if any of whom would be in a position to buy a home. All of these items were a part of the original Stimulus Bill and I can see how extending any or all of them might be considered by some to be a second “stealth” stimulus.
But that’s all semantics. With regard to the home buyer’s tax credit the bottom line is this:
It is currently slated to end November 30. Obviously there is some support to extend the credit, and to a lesser degree expand the credit. It is likely political suicide for a Representative, Senator or the President to come right out and say, “the tax credit should not be extended”. But, it’s not entirely implausible for every one of the extension / expansion bills to die in Committee (where they all currently reside). Nor is it implausible for an extension or expansion to be worked out.
Who knows what will happen. If you are interested in purchasing a home and getting the tax credit you basically have two options:
1) Get under contract SOON.
2) Wait, and gamble the tax credit gets extended.
Will the tax credit be extended / expanded?
Beats the heck out of me. My gut instinct is telling me it will be extended but not expanded.
Do not however make any sort of purchasing go/no go decision based on my speculation. I could be completely wrong. It’s happened before.
What we are advising clients
Yes, $8,000 is a lot of money. But buying a home solely to take advantage of the tax credit is a bad idea. That $8K is going to be spent long before your tenure in the home is up. If you want to buy a home, great, go for it. But buy the right home that fits your needs. Don’t buy just for the tax credit. If you are in a position to buy a home, and get it closed before the November 30 deadline, then by all means take the tax credit. Just don’t push a major purchasing decision based on a tax credit.