More Time to Qualify for the Home Buyer Credit
As we forecast, the U.S. Senate has joined the House of Representatives in okaying legislation to extend the closing-date deadline for the home buyer tax credits to September 30, 2010. The new law means that tens of thousands of home buyers who were in jeopardy of losing the valuable tax credits if they had not closed the deal by midnight June 30 have been granted a reprieve.
To qualify for the new home buyer tax credit -- worth up to $8,000 for first-time buyers and up to $6,500 for long-time residents of their previous homes -- buyers had to sign a binding contract by April 30. Before this last minute change in the law, they also had to close on the deal by midnight June 30 (see FAQs on the Home Buyer Tax Credits).
The problem was, according to the National Association of Realtors, as many as 180,000 buyers who met the April 30 deadline for buying are still waiting to close. This is a particular problem for folks buying foreclosed properties; the complexities of such deals simply take more time. NAR president Vicki Golder, of Tucson, Ariz., says these buyers are “at the mercy of a work-flow jam with lenders” that could cost them the credit. (For estimates of how many buyers are in jeopardy of forfeiting the credit, see below.)
The new law extends the closing date deadline to September 30. This will not open the door to new purchasers. The April 30 date for signed contracts remains the same. The change simply gives buyers more time to get the deal done and pocket the $6,500 or $8,000 credit. (Buyers who meet the new deadline can claim the credit on an amended 2009 tax return to get their cash faster than waiting to claim the break on the 2010 return filed next spring. See A Second Chance at Tax Savings to learn more.)
State by state estimates of at-risk home buyers.
The National Association of Realtors has come up with these estimates of the number of home buyers in each state who were in jeopardy of missing out on the new home buyer credit through no fault of their own. They bought on time but lenders and appraisers simply couldn’t get the deal closed by June 30.
Alabama, 2,590; Alaska, 830; Arizona, 5,440; Arkansas, 2,090; California, 17,700; Colorado, 3,390; Connecticut, 1,770; Delaware, 400; District of Columbia, 300; Florida, 14,830; Georgia, 6,270; Hawaii, 710; Idaho, 1,270; Illinois, 7,030; Indiana, 3,560; Iowa, 2, 030; Kansas, 1,840; Kentucky, 2,540; Louisiana,1,800; Maine, 840; Maryland, 2,630; Massachusetts, 3,930; Michigan, 6,470; Minnesota, 3,760; Mississippi, 1,530; Missouri, 3,600; Montana, 760; Nebraska, 1,110; Nevada, 3,800; New Hampshire, 690; New Jersey, 4,300; New Mexico, 1,160; New York, 9,190; North Carolina, 4,890; North Dakota, 460; Ohio, 8,510; Oklahoma, 2,760; Oregon, 2,090; Pennsylvania, 5,830; Rhode Island, 500; South Carolina, 2,460; South Dakota, 500; Tennessee, 3,910; Texas, 15,340; Utah, 1,130; Vermont, 400; Virginia, 3,890; Washington, 3,190; West Virginia, 940; Wisconsin, 2,690; and Wyoming, 390.