The current $8,000 tax credit for first time home buyers is set to expire in approximately a month. Since then, there has been a rush for buyers to find a home and close before the December 1st, 2009 deadline.
In a related CNBC interview, several industry experts discuss whether extending the tax credit is a good idea and some details of some of the bills currently in Congress.
Finding information of the current bills being proposed to Congress isn’t the easiest thing to find. Kudos to Jay Thompson from www.phoenixrealestateguy.com who posted details of the bills last June.
Here are some details of the 6 proposals currently being discussed in Washington as mentioned in his blog. 5 were discussed in a post in June and the 6th on a blog posted last month.
Here is an excerpt from Jay’s June blog post:
Currently there are FIVE bills flitting about Washington, D.C. that would, assuming they are signed into law, either extend or expand the currently existing $8,000 homebuyer tax credit due to end on December 1, 2009.
Senator Johnny Isakson (R-GA) introduced Senate Bill S1230 – the Home Buyer Tax Credit Act of 2009 – on June 10. Senator Isakson created the original $15,000 homebuyer tax credit that morphed into the current $8,000 first-time homebuyer tax credit that became law when the Stimulus Bill was passed. This bill proposes a non-refundable tax credit up to $15,000, that can be split equally over two years, for all primary residence purchases – not just purchases by first time home buyers. The bill has been referred to the Senate Finance Committee for further debate. It has 12 cosponsors, notably including Senator Chris Dodd (D-CT), the Senate Banking Committee Chairman. It would expire one year after enactment.
Representative Kenny Marchant (R-TX) introduced House Bill HR 2619 on May 21. This proposes to extend the existing $8,000 tax credit to July 1, 2010 and adds provisions for a tax credit of up to $3,000 for homeowners who refinance. This bill has been referred to the House Ways & Means Committee for further debate. There are currently no cosponsors.
Representative Eddie Bernice Johnson (D-TX) introduced HR 2606 – the Home Buying Credit Expansion Act – on May 21. This bill proposes to remove the first-time homebuyer requirement (allowing all principle residence purchases to qualify for a tax credit) as well as extends the bill through Jan 1, 2010. It has one cosponsor (Rep Timothy Bishop D-NY) and has been referred to the House Ways & means Committee.
Representative Howard Coble (R-NC) introduced HR 2801 – the Home Ownership Move the Economy (HOME) Act – on June 10. From the Department of Redundancy Department, this bill appears virtually identical to Rep Johnson’s in that it opens the tax credit up to all primary residence purchases and extends the credit to Jan 1, 2011. It has no cosponsors yet and has also been referred to the House Ways & Means Committee.
Representative Dan Burton (R-IN) introduced HR 2655 on June 2. It has picked up six cosponsors, four Republicans and two Democrats. It joins its cousins in the House Ways & Means Committee and also eliminates the first time home buyer requirement while extending the credit to Jan 1, 2011. CLICK HERE TO READ THE ENTIRE POST
Here is an excerpt from Mr. Thompson’s recent post discussing the 6th proposal:
…a sixth bill to extend the tax credit was introduced in the Senate last week. Senate Bill S1678 extends the existing first-time homebuyer tax credit to June 1, 2010. It makes no changes to the requirement that one must be a first time buyer (defined as not owning a home in the last three years) or to income limits that currently exist in the current law. CLICK HERE TO READ THE ENTIRE POST
In the most recent news, Senate Majority Leader Harry Reid is proposing a counter to Senator Johnny Isakson’s Bill S1230. His proposal would extend the credit through December 31, 2010 with a plan to phase the credit down to $6,000 in April through the end of June, $4,000 from July through the end of September and $2,000 from October until the end of the year.
What’s interesting is how much these tax credits differ. Personally, I don’t feel making the credit larger will help much. Will a buyer really say, “$8,000 isn’t enough to get me excited. However, $15,000 would do the trick!” Every buyer I’ve talked to is throughly pleased with the amount.
I do think that raising the qualifying income limits, extending it to all home buyers and extending the deadline will. The goal for the tax credit is to incentivize home buyers into making a decision. I’ve found that many of the most undecisive buyers are ones who currently own a home. They know they’re going to lose money when they sell which often hampers their decision. I think an incentive for existing home owners is a great idea. This will help move inventory of sellers who are waiting for the market to turn, which may slow the growth of the real estate market for many years as mentioned by Spencer Rascoff on Bloomberg (Related Blog post here).
Last 5 posts in $8000 Tax Credit
- You Don't Have To Be A First Time Homeowner To Receive The Tax Credit - November 10th, 2009
- $8000 Tax Credit is Extended through April 30, 2010...and it's been Expanded! - November 6th, 2009
- The Tax Credit Landslide: Homebuyer Credit Extended through June 2010 - November 6th, 2009
- So, How's the Mortgage Market Today? - October 29th, 2009
- Don't want to wait for your $8000 tax credit? No problem. - October 29th, 2009
- Stumble it!
- Categories: $8000 Tax Credit
Comments
12 Comments so far
JASON
IF A NEW BILL OR EXTENSION OF THE EXISTING BILL IS PASSED WILL THE QUALIFIED PEOPLE THAT CLOSE ON THERE HOME AFTER THE DEC 1ST DEADLINE BUT BEFORE THE SIGNING OF THE THE NEW BILL LOSE OUT ON THE CREDIT?
Keane Ng
No guarantees, but they will likely bridge the gap so no buyers are left out. This is what they did last year. There was a $7,500 credit that expired on December 31st, 2008. The current tax credit was signed into law after January 1st, 2009 but included all purchases done from January 1st. If an extension is signed into law, I expect a similar result.
julia
Today I began looking for homes for rent in the $2k/mo range (<– yes, we can afford a mortgage…) and save our savings for another time.
I have come to the realization, that without a bid currently in place, there isn’t a ’snowball’s chance’ of closing by 11/30. We had recently started looking to buy due to a job relocation and were on the verge of bidding on a home. Very disappointing, that because of the length of time it takes to process the paperwork, the credit is not available. This should have had an ‘End date’ for a contract to be in place by, rather than a gambled closing date.
For me, the eight grand makes a difference, especially in a market such as Maryland where closing costs are astronomical (~25k to close on a 3 bedroom responsibly sized 50 yo home - exclusive of down payment). The credit was designated to be ‘returned to’ the 401k. Sure, I could bid; maybe snowball’s have a higher heat tolerance than I’m aware of. Maybe we will close in time. Maybe they will extend the credit for offers on the table, or just in general. And maybe they won’t.
Eight grand is eight grand… Until someone can tell me what happens to those who bid and didn’t make the cut off due to paperwork backlogs, a failed inspection item to be repaired before closing or other circumstance, my good faith money stays in my pocket.
Keane
Julia,
I would feel the same in your shoes. Your voice is exactly what the billmakers in Washington need to hear. So many of them are getting information that the tax credit is not a major factor in the home buyers decision. In your position, it clearly is.
Keane
UPDATE:
The extension could be passed by the end of this week. Stocks plummeted today due to fears of the credit expiring soon.
I first read about the extension on Bloomberg. Here’s a related Zillow blog on the topic.
http://www.zillow.com/blog/decison-on-extending-first-time-home-buyer-tax-credit-could-come-this-week/2009/10/26/
Hilary
Why are the banks so slow to act in shortsale situations? I put an offer in on a home that is a short sale home. The owner has an attorney representing her & she has proven hardship but the lender is moving at a snail’s pace. You would think that they would move faster to avoid ending up with yet another property on the books. Why is that?
Keane
Hilary,
I’m assuming you’re asking because you want to close before the tax credit deadline. Is that correct?
With respect to anybody working for the lenders, common sense and urgency are not things they typically practice. I will say it’s better than last year in most cases, but hardly fast.
Good luck on that home! Hopefully I’ll be telling you when the extension becomes official (if it does) and you won’t be under pressure to close so soon.
Keane
deanna
Hilary,
I too am in a short sale situation, it took me nearly 5 months to get an approval from BofA, now they want to hurry everything up and close less then 10 days! Amazing! My lender says BofA is playing games and says it can’t possibly close within 10 days.. my lender has to schedule an appraiser and an inspector yet since they can’t schedule one before getting the paperwork. My RE agent says they’ve seen a ‘trend’ now with the banks first waiting for months on end then hurry up!!! What’s the point in all of this?
Danielle Watson
I am in the middle of paperwork with the purchase of a house this month, and yes I think the mortgage industry lost the memo on the “Paper Reduction Act.” First of all it took me 8 months just to find a house, and I wasn’t even looking for Foreclosures! When I finally found one, of course with an FHA you gotta wait and wait and wait. Well, I am supposed to close by Nov. 30th and I sure hope that I make it! What I don’t understand about this whole thing is why couldn’t they just have had the bill to include all those people who have their loans already approved, banks in agreement, and everything in place to get the benefit if they don’t decide to continue this program. If we are waiting on FHA and they are back-logged, then it sure would make me feel a little better. I can’t sleep at night knowing that I might not make it. I want to be able to use that money to buy energy efficient appliances and get another tax break on that stuff too!
Keane
The house passed the bill today after the senate passed it yesterday. President Obama is expected to sign it into law by the end of this week.
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First-Time-Home-Buyer Tax Credit Extension Info
Thanks for sharing
Keane
The president signed the bill into law on the 6th. It included an extension through the end of April, increased the income limitations and also includes a tax credit for move-up buyers.