Homebuyer Tax Credit On Verge of Being Extended

June 30, 2010 No Comments »

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The homebuyer tax credit, which expires tomorrow, will probably be extended another three months, assuming the Senate gives it the green light.

Both the $8,000 first-time homebuyer tax credit and the $6,500 tax credit for move-up homebuyers will expire tomorrow if legislation being floated by Majority Leader Harry Reid (D-Nev.) and Senate Finance Committee Chairman Max Baucus (D-Mont.) doesn’t get the required support.

Under current rules, the tax credits only apply to binding sales contracts signed by April 30 and closed by June 30.

But many home sales have apparently been delayed thanks to overworked banks and mortgage lenders, new home constructions, time consuming short sales, and lapses with the National Flood Insurance Program, according to the National Association of Realtors.

The group said up to 180,000 prospective homeowners already in contract could miss out on the tax credits if they aren’t extended.

An extension would mean those who didn’t have enough time to actually get the deal closed would have until September 30 to take advantage of the tax credit.

It already passed in the House, but the Senate bill is trickier because it includes several very expensive measures to reinstate unemployment insurance benefits.

Those provisions will cost an estimated $33.9 billion over 10 years, while the homebuyer tax credit is only expected to cost an additional $140 million.

Home purchase applications have declined in seven of the past eight weeks, but this measure only applies to those already in contract, so it’s unclear how beneficial it’ll really be.

Update: It passed…

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