2010 Home Buyer Credit Expiration, Key Dates and Another Possible Extension

20 comments

[Update] See this post for the home buyer credit extension

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A report released today by the National Association of Realtors shows home sales are up eight-percent, the single-biggest monthly rise since October 2001.  The reason? – The first-time home buyer tax credit. Nationwide, the tax incentive has been a huge boost, helping to sell more than 900,000 homes. The credit is expiring April 30 2010, but home buyers can still qualify for the $8,000 (new buyers) or $6500 (existing home owners) credit up to June 30 2010, as long as they have their home under contract by April 30th. The credit may be claimed on 2009 taxes, even if the return was already filed. Just submit an amended return. Note that buyers get the full amount of the credit they’re due even if that exceeds the amount of taxes they owe. If you’re a first-time buyer and your total tax bill for the year is $6,000, you get all that back plus another $2,000. You can see more on this credit’s history and other qualification details in earlier articles

Will the Home Buyer be Extended Again? There have been rumors that a December 2010 extension is a possible bill proposal but no one knows for sure. The recent strong housing data suggest that the credit will not be extended as the Obama administration wants to try and rein in government spending (or at least give that impression). However with the economic recovery still fragile, many in the real estate industry want to see the home buyer credit extended past this summer.

CNN reports that “. . .this is absolutely, positively your last chance to claim the credit. (Probably.) So don’t wait, thinking the credit will be extended for a third time.”  Even the Senate’s biggest proponent of the homebuyer tax credit, Johnny Isakson, R-Ga., is ready to let it end.  “He has no plans to introduce legislation to extend the credit,” said Isakson’s spokeswoman. “Part of the benefit of the tax credit was the urgency its sun-setting generated.”

Either way, if the credit is extended it will done at the last minute to prevent people from waiting to see if the re-extended credit is more generous (as previous extensions were). So the extension debate will continue and everyone – Realtors, the media, and politicians – will have their viewpoint in an effort to eke out as many sales as possible over the next few weeks. It will be very interesting to see what Washington does with this issue, and you can get the latest by subscribe free via Email (verification email will be sent) or RSS to get the latest updates on the extension of this credit.

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[Update] The IRS brings us some key information and tips related to qualifying for and claiming the Home Buyer credit.

  1. You must buy – or enter into a binding contract to buy – a principal residence located in the United States on or before April 30, 2010. If you enter into a binding contract by April 30, 2010, you must close on the home on or before June 30, 2010.
  2. To be considered a first-time homebuyer, you and your spouse – if you are married – must not have jointly or separately owned another principal residence during the three years prior to the date of purchase.
  3. To be considered a long-time resident homebuyer, you and your spouse – if you are married – must have lived in the same principal residence for any consecutive five-year period during the eight-year period that ended on the date the new home is purchased. Additionally, your settlement date must be after November 6, 2009.
  4. The maximum credit for a first-time homebuyer is $8,000. The maximum credit for a long-time resident homebuyer is $6,500.
  5. You must file a paper return and attach Form 5405, First-Time Homebuyer Credit and Repayment of the Credit with additional documents to verify the purchase. Though you cannot file electronically, you can still use IRS Free File or tax-preparation software to prepare your return. The return must then be printed out and sent to the IRS, along with all required documentation.
  6. If before May 1, 2010, you enter into a binding contract to purchase a home before July 1, 2010, and you are claiming the credit, attach a copy of the pages from the signed binding contract to make a purchase showing all parties’ names and signatures, the property address, the purchase price and the date of the contract.
  7. New home buyers must attach a copy of a properly executed settlement statement used to complete such purchase. Generally, a properly executed settlement statement shows all parties’ names and signatures, property address, sales price and date of purchase. However, settlement documents, including the Form HUD-1, can vary from one location to another and may not include the signatures of both the buyer and seller. In areas where signatures are not required on the settlement document, the IRS encourages buyers to sign the settlement statement when they file their tax return — even in cases where the settlement form does not include a signature line.
  8. Buyers of a newly constructed home, where a settlement statement is not available, must attach a copy of the certificate of occupancy showing the owner’s name, property address and date of the certificate.
  9. Purchasers of mobile homes who are unable to get a settlement statement must attach a copy of the executed retail sales contract showing all parties’ names and signatures, property address, purchase price and date of purchase.
  10. If you are a long-time resident claiming the credit, the IRS recommends that you also attach documentation covering the five-consecutive-year period such as Form 1098, Mortgage Interest Statement or substitute mortgage interest statements, property tax records or homeowner’s insurance records.

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20 Comments on "2010 Home Buyer Credit Expiration, Key Dates and Another Possible Extension"


[…] contract by April 30, 2010, the buyer has until June 30, 2010, to settle on the purchase. (see this post for details on a further extension into 2011 of the home buyer […]

Patsy
Wednesday 12:14 am

I bought and closed on my house in August. That sucks I do not qualify. Dear Mr. President extend the law a bit longer! ugh

Ryan
Tuesday 11:40 am

I was in a binding sales contract by May 25th 2010 and closed before June 30th 2010. Would it be in my best interest to apply for this even though I was in a binding contract after April but closed before June 30th???

~Thanks

Judy
Monday 8:33 pm

We have a signed agreement to buy a new manufactured home dated before April 30, 2010 but have had a lot of problems with a lein on the property we want to put it on . Because of all this it doesnt look like we will sign by September 30, 2010 but should soon after. My question is can we still qualify for the $8,000?

Jason
Tuesday 12:53 am

As long as I am seeing all of this correctly I dont think I will get the tax credit at all. We signed out contract the first week of May. But we closed before the deadline. But since we didnt have the contract signed in time then I am right to assume we wont be able to get it. Correct?

» Further 2010 Extension of $8,000 First Plus New $6500 Existing Home Buyer Tax Credit From the Economic Stimulus Package. 2011 Extensions Available For Certain Groups | Saving to Invest
Monday 11:01 pm

[…] May 2010] Unfortunately it looks like the chances of a further extension to the home buyer tax credit are lessening by the day as stronger housing data and focus on […]

Linda
Wednesday 11:41 pm

Does buying property on land contract qualify for the $8000, credit?

andys2i
Thursday 9:34 am

Unfortunately no. You need to have the home constructed by the expiry date – June 30 – to qualify for the home buyer credit.

Lenora
Saturday 4:07 am

I have been in a contract on a short sale on a townhome since February 2009, of course with Bank of America(nightmare) who took over a year, just got the short sale approval on April 21, 2010, and now waiting for Hud to approve the property, which was submitted by my lender on 5/24/10. If I don’t close by 6/30/2010, do I loose out on the tax credit?

andys2i
Saturday 2:47 pm

As you long as you can prove that you signed the initial contract by Apr 30 (which it looks like you did) and close before June 30, you should still qualify for the credit. To double check, I would call the IRS or check with your local accountant.

April Klava
Friday 8:45 pm

I have been renting for three years and under a binding contract. I did not sign a new contract so I can purchase a home. The contract kept me from buying before April 30. I did find a home May 26th and signed a binding contract. Due to close on June 21st. Would I fall under any provisions?

andys2i
Saturday 2:49 pm

April – this is a tricky situation. Normally you have to have had a binding contract on the home you are purchase by Apr 30. Again, check with the IRS and at worst case just submit for the refund and see what happens. I hear that the IRS is being less focused on the contract date and more focused on closing by June 30th.

Christine
Monday 1:47 pm
Wow, April…we are in the same boat! I was under a binding contract with my landlord which prevented me from being able to buy a home before April 30th also. I was not able to gain opportunity to enter into a binding contract for my home until 7/28/10 and closed on 9/30/10. Thank you for the advice Andy, but I’m kind of scared to apply for the credit. Per Turbotax, I’m eligible for the credit and they said I have to mail in my return with only my HUD-1 paperwork (settlement paperwork) which only includes the settlement date and not the contract date. They only asked for the settlement date and not the contract date. If I were to submit for the refund anyway, would I get in trouble or would they just send me a letter denying the refund?? I’m kind of in a pickle right now…I don’t want… Read more »
carol meyer
Friday 5:41 pm

I have been told that if we receive this money for first time home buyers, of 8000.00 we would be made by the government to pay it back . is this true or is this free money for us. We are about to close on a home this week, I don’t want to accept this if I have to pay it back along with our mortgage.please respond back asap. thank you for your response. Carol Meyer

t rock
Thursday 12:16 am

i entered into a contract before april 30 about mid may the house failed its inspection …………now if i find another house and close before june 30 can i still get the credit thanks

andys2i
Thursday 5:39 pm

Unfortunately, no. You have to have signed the contract for the specific home by April 30th to get the contract.

Cynthia
Wednesday 12:42 pm

My husband and I are first time homebuyers and were in contract on a short sale since November 2009 with a scheduled closing date of April 29th, 2010. This had us well within the tax credit guidelines. Then, disaster struck. The bank foreclosed on the property and sold it out from under us 3 days before we were scheduled to close. We have now lost a total of $11,700 including the $8,000 tax credit we have missed the deadline to since we were in contract with this house for 6 months. I am desperately hoping the credit is extended because now it will take us at least 5 years to recoup what we’ve lost, nevermind fulfill the dream of owning our own home!

Greg
Saturday 6:34 pm

>This is a sizable tax credit. It would be unfortunate for any potential homebuyer to leave this money on the table simply because you missed the deadline. If you’re in the market, build your timeline accordingly to take advantage of this credit.

Navin
Thursday 9:51 am

>Well this has come as a boost to many first time-home buyers. But if you are planning to take advantage of this credit make sure you have all the necessary documents with you. The law says that a “first-time home buyer” is a buyer who has not been the owner of a principal home during the three-year phase prior to the purchase. For wedded taxpayers, the law is going to test the homeownership record of both the home buyer and his/her spouse.

Sarah
Wednesday 1:12 am

>Great! Can my tax payer money be spent any faster.

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