Homebuyer Tax Credit

Have you got that credit yet? Many have, including many who did not deserve it. We're looking at the new homebuyer tax credit worth 10% of the purchase price of the house, with a limit of $8000. The house must become and remain your primary residence.

But first the good news. Yesterday the House voted to extend the time period required to close escrow by three months. Under the current law, you must enter a binding contract to purchase the house by April 30, 2010, and then close escrow by June 30, 2010. That's today! The bill in focus here would extend the deadline to close escrow until September 30, 2010. This will help the estimated 180,000 homebuyers who entered a contract by April 30, 2010, but are expected to miss today's deadline.

Why are they missing the June 30, 2010, deadline? In many cases it is because the sales are "short sales" where the current mortgage holder is being asked to accept less than the full amount as pay-off of the loan. (Think Las Vegas where short sales are about 1/3 of all house sales.) These simply take more time.

Of course the House passing the bill does not make it a law - remember your days in the Political Science class? (Why is that called a "science" anyway?) But a similar measure is already in action in the Senate and all the Hill forecasters talk as this will eventually become law.

Oh, and what about those who didn't deserve the credit but got it anyway? Like the roughly 1300 prison inmates who managed to grab more than $9 million? The bill includes provisions to aid in information sharing between the IRS and state prison authorities in an attempt to prevent further fraud.

Update: This was signed into law on July 2, 2010.