First-Time Home-Buyers Credit Expires Soon

September 28, 2009 | by Brian Robertson	0 comments

If you are a prospective home buyer who has been deliberating on whether to take advantage of the $8,000 first-time home-buyer tax credit, time is running out. The deadline is November 30, meaning you must close on the home before this date and remember the average closing time is 30 days.

Will Congress pass an extension on the program? Well, there is definite pressure on Capitol-Hill from real estate lobbyist pushing hard to extend the deadline as well as increase the tax credit to $15,000, but will this actually happen? Kenneth R. Harney of The Washington Post, thinks the bill could have new life as he in his article New Life for First-Time Credit?, "On Sept. 17, the leadership of Congress's primary tax-writing committee introduced a tax credit bill that's likely to zip through the House and quickly move to the Senate. House Ways and Means Committee Chairman Charles B. Rangel (D-N.Y.) sponsored the bipartisan Service Members Homeownership Tax Act (H.R. 3590), which would extend the credit 12 months for thousands of military, Foreign Service and intelligence agency personnel who have been posted abroad in 2009.

Rangel's bill, with 29 co-sponsors, would keep the credit alive through Nov. 30, 2010, for service members who had at least 90 days of overseas duty assignments in 2009 and who otherwise meet the eligibility tests for the credit. The bill would also prohibit the Internal Revenue Service from "recapturing" the $8,000 credit when service members are forced to sell or rent out their houses because they are ordered to deploy to a different duty station...

...Though nothing is guaranteed on Capitol Hill, legislation eliminating tax penalties on the military during wartime looks like a good bet for early passage in both houses. Equally significant: It now appears likely that there will be an $8,000 tax credit available a year from now -- at least for some purchasers. That raises the question: Why not leave it in place for all first-time buyers?

...There's growing support for that on both sides of the Capitol, but there are also some complicating issues. In the Senate, the most outspoken advocate for months has been a Republican, Sen. Johnny Isakson of Georgia, a former real estate broker. He wants not only to extend the credit to Dec. 1, 2010, but to raise the maximum to $15,000, and make it available to all home buyers next year..."

It is doubtful that they will not extend the credit to every first-time home-buyer if they decide to offer it to veterans returning to the US. However, most likely Congress will make this decision less than 30 days out from the deadline on Nov. 30 in order to flush out as many buyers as possible. Do not count on the government to act in a timely matter. In the case they do not extend the program you probably will not know about it until it is too late, so begin your search today.

For more information on the first-time home-buyers visit,
FinanceAnswers First-Time Home-Buyers Credit

Let's take a quick snap shot of where the housing market is today,
• New home sales were up in August from July 0.7%, down 3.4% from one year ago
• Existing home sales which make up nearly 85% of the housing market fell 2.7% in August to a 8.5 month supply. This however was the second busiest month in over the last two years and was up on a year-over-year basis.
• Nearly 1/3 of all sellers are distressed (20% of sales are foreclosures and 10% are short sales)
• Interest rates are extremely low and will probably increase within the next 3-6 months
• According to Zillow.com, home values across the nation are down 20% from the peak in 2006 with the median home value of $240,000
• If you are looking to purchase an investment property you will likely need a 20-25% down payment

Resources:
Zillow.com
Washington Post - New Life for First-Time Credit?

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