Homebuyer Tax Credit Closing Deadline Finally Extended
Late Wednesday night the Senate followed the lead of the House ofrnRepresentatives and voted to extend the closing deadline for the popular homebuyer taxrncredit that was scheduled to expire yesterday at midnight. Once President Obama signs the Homebuyer Assistance and Improvement Act of 2010, which he is expected to do next week, homebuyers will have until September 30 tornclose on their home purchase and still qualify for the tax credit (as long as they signed their sales contract by April 30, 2010). </p
The federal tax credit was part of the American Recovery andrnReinvestment Act signed into law in February 2009. The $8,000 credit was available to first timernbuyers who purchased a house after January 1, 2009 and was originally scheduledrnto expire on November 30, 2009. Therncredit was seen to have stimulated home sales, especially in the lower pricernranges, and in November Congress extended it through April 30 and added arn$6,500 tax credit for non-first-time buyers. </p
The National Association of Realtors® (NAR) had pushed hardrnfor the extension claiming that 180,000 potential buyers who were holdingrnsigned contracts would be denied the credit under existing rules. Otherrnestimates put the number of eligible pending sales as high as 200,000. Mortgage requirements are slowing some traditionalrnclosings, but buyers who are purchasing bank owned real estate or short salesrnoften find themselves involved in an extremely lengthy process. One mortgage originator said that even thernslightest change in paperwork such as a repair required after an inspection orrnappraisal can take weeks for approval because of the number of signaturesrnneeded from the bank or mortgage servicer. </p
The extension was originally defeated in the Senate last week because it was attached, as an amendment, to a bill which contained an extension ofrnunemployment insurance. The extension however managed to pass both thernHouse and the Senate last night as a free standingrnbill.</p
HR 5623 also contains additional provisions torntighten the rules to prevent tax credit fraud. ThernInspector General for Tax Administration in the Treasury Department saidrnearlier this month that his office had found substantial fraud in the program. This included claims that were paid on housesrnpurchased before the program started and for houses actually owned by someonernelse. The Inspector General also foundrnthat some 1,300 prison inmates, some serving life terms, had claimed andrnreceived more than $9 million in credits. rnThe new legislation will allow the IRS to disclose tax returnrninformation to prison administrators.
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