July 5, 2010

Homebuyer Tax Credit Closing Deadline Extended Until September 30th; RBA Yawns

Obama signs 3-month extension of homebuyer credit

By Corbett B. Daly

WASHINGTON | Fri Jul 2, 2010 3:11pm EDT

(Reuters) – President Barack Obama on Friday signed a law giving consumers already in the process of buying a home three extra months to close the deal and still get a popular tax credit from the government.

Homebuyers with contracts signed by April 30 who failed to go to closing by the original June 30 deadline will now have until September 30 to complete their purchases.

The measure is meant to support the battered U.S. housing market which still faces tough headwinds despite low mortgage interest rates.

The extension would not help anyone purchasing a home now, only those who already went into contract by April 30th but could not close in time for the original June 30th deadline.  There’s some talk that this is an invitation to fraud.  “The IRS reminds taxpayers that special filing and documentation requirements apply to anyone claiming the homebuyer credit,” said a spokesperson from the Internal Revenue Service.

This measure should not affect anyone buying in the Real Bay Area, despite real estate industry watchers claiming May’s terrible housing numbers are due to the tax credit’s April contact deadline.  RBA buyers would not change their purchase plans due to a mere $8000 federal tax credit ($6500 for existing homeowners) and would not make their decision based on such a small percentage of the contract price.  The increase in RBA sales this May over last confirms it, and let’s not discuss the California tax credit.  Experts agree: everything is fine.

Comments (16) -- Posted by: madhaus @ 5:01 am

16 Responses to “Homebuyer Tax Credit Closing Deadline Extended Until September 30th; RBA Yawns”

  1. SEA Says:

    If we assume now is the right time to buy, and if you all me to go to a market where the selling prices are much lower, then let me present how one guy is hoping to close and double his $8k. It’s quite simple, in the original contract, signed before the April deadline, if the closing did not take place before June 30, the purchase price was reduced by $8k. Then the tax credit was extended. That’s $8k times two, on a ~$125k place, or $117k now, less the $8k, for a net of $109k. Please don’t ask if the $109k is a good deal, as we know that now is the right time to buy, and we all know that the place is really worth $125k (probably $130k, even though the seller agreed to the $8k reduction back in April). The purchase price is about 2.5x annual household income.

  2. bob Says:

    I’m not a gambling man but I’d almost be willing to put down money that the government is going to come up with some other tax credit, incentive, or some other thing to goad people into buying houses. Its painfully obvious that the housing market isn’t going to recover ( at least naturally) without incentives.

    In the end these incentives have created a worse problem than if things had been allowed to progress unimpeded. People now open up their newspapers and see that once more home sales and prices are falling dramatically, which once again stokes fear into consumers who will once again get back on the fence. This is all fine by me. But the effects it is having on the overall economy is nasty.

  3. Alex Says:

    I love how taxpayers always get screwed by some dirtbag gubment employee.

    http://www.mercurynews.com/bay-area-news/ci_15443935?source=rss&nclick_check=1

  4. SV Shopper Says:

    I vote for making the tax credit permanent, and increasing the amount for high cost areas. $8000 is not even enough to help win an overbid around here.

  5. madhaus Says:

    #4, overbidding in Sunnyvale? Are you joking or did you just forget which sockpuppet was talking?

    As to making the credit permanent, I wouldn’t be surprised if it was authorized for another year or two, but once the housing market comes back in 2016, it will be gone.

  6. Petsmart groomer Says:

    > $8000 is not even enough to help win an overbid around here.

    Come on, Top Dog, We already have an unfair advantage here. Remember: the more you borrow, the more you save.

    Anyway, we haven’t heard from you in a while… How is your shopping? Found your investment properties yet?

  7. SEA Says:

    SV Shopper- Do your shopping here–most sellers of properties featured on burbed would be happy to get an offer, and a full price offer? No worries!

  8. Pralay Says:

    Anyway, we haven’t heard from you in a while… How is your shopping?
    ——

    Poor SV Shopper. Even though he made lot of money from his Manhatten NY apartment, he is renting in bay area for four years now!!!! He is unable to own anything here and gets overbid by someone else every time he writes an offer. I am pretty sure his big-on-education wife already ran away from him and found a new “big-on-education” husband. Who wants to live with a person who rents for four years? Renters can’t compete with owners.

  9. SEA Says:

    Here’s the best idea I’ve heard yet:

    A tax credit for the entire amount in excess of the asking price.

    I wonder what would happen to asking prices…

  10. Real Estater Says:

    >>Who wants to live with a person who rents for four years?

    Just ask your wife.

  11. Pralay Says:

    Don’t contradict with yourself, Real Estater. Stick to your original argument – Renters can’t compete with owners. :)

  12. Real Estater Says:

    Is there anything wrong with my statement, Pralay?

  13. SEA Says:

    I thought living with a renter was a way to make tax free income.

  14. Real Estater Says:

    SEA,

    Is your wife living with a renter?

  15. Pralay Says:

    Is there anything wrong with my statement, Pralay?
    —–

    Your statement is based on the assumption that the world revolves around your opinion. :)

  16. SEA Says:

    Are you asking if she is collecting tax free income?


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