Tax Credit Extension?
ByBy Larry Hotz, Senior Editor
The tax credit has helped first time homes sell fast in the Denver real estate market.
The tax credit for first-time homebuyers is set to expire on November 30. That means anyone who wants to take the $8,000 offered by the government needs to be under contract to purchase a home by early to mid-October.
Starter homes under $300,000 have been the most active segment in the Denver real estate market due to the free government money. Up to 40% are first-time buyers. But, will this unbelievable homebuyer tax credit be extended? Six bills have been introduced in the Congress over the last several months to do that. None of them have yet been referred out of Committee. Everyone seems to be waiting for the President’s opinion.
Recent comments he has made, as well as those made by his Secretary of the Treasury, imply that the recession is ending and that stimulus programs, such as The First-Time Homebuyers Credit, need to be phased out so that the government can stop its excessive spending. When specifically asked the administration’s position on The Credit, the Secretary of Treasury has said that it is under consideration.
It’s a little surprising to notice that most of the sponsors and co-sponsors of these six bills are Republicans. A few influential and Democrats have also cosponsored bills including Harry Reid of Nevada. Then again, Nevada is one of the states suffering most from the real estate downturn.
Most of these bills would extend the tax credit by approximately 6 months and leave the amount at $8,000. The most recent bill to be introduced, Senate Bill 1668, has been offered by Senator Johnny Isakson (R–GA). He was the Senator who first proposed a $15,000 tax credit for all homebuyers earlier this year. That proposal was reduced to the $8000 and modified to include only first time homebuyer before it passed into law as part of the stimulus bill. The Senator is also a sponsor of another one of the six bills before Congress that would provide a $15,000 tax credit for all homebuyers.
By offering this more scaled down version in this new bill, perhaps the Senator senses the original bill he sponsored doesn’t have much chance of being passed. After all, there is a sense in voters that the government can’t keep spending money indefinitely. Or, maybe he’s noticed what I mentioned earlier. Most of these sponsors and cosponsors of these bills are Republicans. Most Democrats seem to be waiting for a signal from the White House.
The President has already stated that he leaning against a second stimulus package but has yet to specifically rule out an extension of the First-Time Homebuyers Credit.
So what does all this mean for homebuyers considering a first home? It means don’t count on an extension of the $8,000 tax credit for first-time homebuyers. It could happen. It might not. Buyers still have plenty of time to begin looking for a home. Just make sure it is placed under contract by the middle of October to allow plenty of time for lenders to process the avalanche of loans that is expected. This could be the last chance for homebuyers to collect free money from the government in the form of the $8,000 tax credit.
You’re right, everyone is waiting for the President’s opinion. This may not be on his front burner. I think he is pretty wrapped up with health care reform right now and is trying not to lose support for that by making any other decisions that may cause controversy.
From what I have seen, the first time buyers have slowed down in activity. I don’t know if they are waiting on the sidelines for a bigger stimulus, or there are just too few qualified first time buyers.
I am not sure an extension will be much help without expanding the program. If they allowed everyone to get the credit, then that could really get things going again. The next couple of months should be very interesting.
A survey of buyers from the National Association of Realtors says that almost 40% of all buyers identified themselves as first time homebuyers. That is huge. It’s one reason NAR is urging it’s Realtor-members to contact their Congressmen and lobby for an extension of the tax credit.
If the tax credit does go way, demand for homes will sink fast. How much? Non one really knows. But, I hope we don’t find out. I don’t like the sound of the phrase “double-dip”.
He needs to hurry up and act. We need to know something to keep this moving. I would like it to be expanded and extented
I need this to be extended – I was laid off from December 2008 to March 2009 and it took me time to get everything on tract again, including re-saving for a small down payment. I was lucky I kept my bills from every being late but it took funds that I had saved. I am 50 years old and this credit extended could ensure I have something to live in when I retire.
Well,we have been in the market since March 09.One of our offers got accepted and went to Escrow.Unfortunately,it came out of escrow in July this year.
Since then,we saw numerous properties and made ten separate offers.One of these got accepted but still stuck with the bank.
Not in escrow yet.God knows when.
I am sure that many folks are in the same boat and like ourselves would like to see the tax credit extended.
Hoping for the best
My husband and I were in escrow, then the inspection went badly. We are going to look at homes this weekend, and hope that we will still be able to take advantage of the tax credit.
It should definitely be extended. We are not out of the recession completely.Hopefully everything goes in favor of the consumers.There is very less time left so the Government has to decide fast and positve.
i myself have been trying to buy a home to get the 8,000 tax credit and i hope that it does get extended too. because i had to find a different home to attempt to buy because the progress of the first home (which was a short sale) was going no where. the second home is a forcloser and so far everything is going good. only problem that i’m having now is that they’ve set my closing date to be on 1 dec… one day after the tax credit.. and i’m trying and hoping that everything gets done prior to this.. it’s like they put these programs out there and even though you make meet the criteria… it’s always something there to hold up the process like…the bank, escrow, ratified contracts being signned, and bah…bah…bah.. cause i can go on for day!! so to all the readers out there.. don’t get your hope uo too high with it getting extended, that way you won’t stress about it.. you can’t miss something you never have. but it you do get it.. apply it to the principle of the home…or better yet eliminate some of your other bills..like your truck note.. credit card payments.. and focus on your house note..”but don’t us it to buy x-mas gifts” or to put yourself in debt!
I would like to see this extended once I found out about this tax credit I needed toime to get my credit corrected and in position … now that I have everything where I want it I have ran out of time … 6 months would be great !!!
I think it is a crime to only allow 1st time home buyers the credit. I sold my townhome and lost all my equity ($30000) and at closing to sell my house i wrote a check for another $1000. I have a good job, some savings, but am a victim of the housing market tanking. Therefore if it is extended i think that all home buyers should get teh tax credit, or maybe atleast if you sold your house for less than the origianl price you bought it for. Also another condition is the amoutn of the house you are buying. We are buying a home that cost 120k more than the one we sold, isn’t that going to stimulate the economy?
I’ve been included in taxes for longer then I care to acknowledge, both on the personal side (all my employed life history!!) and from a legal standpoint since passing the bar and following up on tax law. I’ve offered a lot of advice and corrected a lot of wrongs, and I must say that what you’ve put up makes perfect sense. Please continue the good work – the more individuals know the better they’ll be equipped to handle with the tax man, and that’s what it’s all about.