On Sunday, HUD Secretary Shaun Donovan implied on an interview with CNN’s Ed Henry that the Obama administration that the $8,000 home buyer tax credit could be revived.

From the transcript:

HENRY: Let’s end on two quick points. First of all, along the lines of this debate, there are some critics saying the federal government can’t keep up the intervention to try to prop up the industry much longer. Along those lines, you mention the $8,000 first-time home buyer credit expired a couple of months ago. Many people believe that’s why some of the housing numbers were so bad this past week. Is that housing credit now dead?  Or does the administration think you should try to revive it to try to prop this industry up?

DONOVAN: Look, Ed, I think it’s too early to say after one month of numbers whether the tax credit will be revived or not. All I can tell you is that we are watching very carefully. I talked earlier about new tools that we will be launching in the coming weeks, and we are going to be focused like a laser on where the housing market is moving going forward, and we are going to go everywhere we can to make sure this market stabilizes and recovers.

Will the tax credit return? Who knows. But it’s not beyond the realm of possibility…

Should it be revived? Did the tax credit really help the housing industry, or did it just pull in buyers that would have bought anyway?

I’ll go out on a limb and say there are many agents salivating at the thought of a revived tax credit, and I’d be shocked if the National Association of Realtors didn’t lobby, hard, for it.

Personally, I have yet to be convinced the home buyer tax credit did much to truly help a housing recovery. And I am completely convinced that buying a home just to score an $8,000 tax credit is a bad idea. A really bad idea.

As I wrote on May 1st in, Home Buyer Tax Credit: So long, and thanks for all the fish, and in June 2009’s, How the Government can Fix the “Foreclosure Crisis”, I feel that the government – and We the People – need to understand that housing market will correct itself. Will we like it? Will it be pretty? Nope. But further mucking about in the market will only postpone the inevitable, and quite possibly through unintended consequences make it even worse.

We need to suck it up, and give the market time to correct.

Here’s an article from CNBC (courtesy of @MortgageProBlog) where the author seems to agree with me. She went the extra step to contact HUD spokesperson who responded:  “No news here…there are no discussions underway to revive the credit.”  Granted, there are no discussions yet, but anything can happen in D.C. — especially in an election year — and some politicos are already weighing in that reviving the credit may be a good idea…

Hat tip to Inman News on the Donovan interview (this article will slip behind Inman’s pay wall tonight).

• Homebuyer Tax Credit Extended: Closing deadline now Sept 30.
• Home Buyer Tax Credit Extension: Yet another bill introduced
• Home Buyer Tax Credit Information
• NAR Announces Formation of Technology & Emerging Issues Subcommittee
• Demystifying the Franchisor IDX Rule / Rescission

Originally posted on Phoenix Real Estate Guy. If you are reading this anywhere but inside your RSS feed reader, the site you are on is guilty of stealing content.

Homebuyers Assistance and Improvement Act of 2010 (H.R. 5623)

This morning (Friday, July 2, 2010), President Obama signed into law the Homebuyers Assistance and Improvement Act of 2010. (Source: Whitehouse.gov)

Home buyers who were under contract to purchase a home on or before April 30 now have until September 30 to close on the transaction and qualify for the homebuyer tax credit.

This three month extension to complete the home purchase will, according to the National Association of Realtors (NAR), allow approximately 180,000 eligible home buyers to receive the tax credit. Assuming of course they meet all the other criteria and close by September 30.

There are almost two dozen articles on our little real estate blog about the homebuyer tax credit. Maybe (hopefully) this will be the last one. Perhaps we should start a pool to guess when the cries for yet another extension start up? I can assure you there will be home purchase contracts, particularly on short sales, that still won’t be closed by the new September 30 deadline. My guess is come Sept 1, there will be calls for an extension to the extended extension date. At some point,the government has to let this thing end.

For now, those that missed the original closing deadline of June 30 can relax. You’ve got until September 30 to get your home purchase closed.

National Flood Insurance Program Extension Act of 2010 also signed into law

In other real estate legislation news, the President also signed H.R. 5569, the National Flood Insurance Program Extension Act of 2010, into law. This law retroactively reauthorizes the Federal Emergency Management Agency (FEMA) to enter into new contracts for flood insurance under the National Flood Insurance Program (NFIP) through September 30, 2010. The NFIP ended on June 1, stalling many home purchase transactions. The extension is retroactive and any new flood insurance policies or renewals and waiting periods are effective from the date of application.

• Will the Homebuyer Tax Credit Return? Should it?
• Home Buyer Tax Credit Extension: Yet another bill introduced
• Home Buyer Tax Credit Information
• NAR Announces Formation of Technology & Emerging Issues Subcommittee
• Demystifying the Franchisor IDX Rule / Rescission

Originally posted on Phoenix Real Estate Guy. If you are reading this anywhere but inside your RSS feed reader, the site you are on is guilty of stealing content.

UPDATE – July 2: This morning President Obama signed into law H.R. 5623, the “Homebuyers Assistance and Improvement Act of 2010”. This extends the homebuyer tax credit closing date to September 30, 2010. (You must have been under contract to purchase a home by April 30. This extension does NOT change that date). Source: Whitehouse.gov

UPDATE June 30, 2010 On June 29, the HOUSE passed H.R.5623, which would extend the home buyer tax credit closing deadline to September 30. You still have to have been under contract by April 30. Late on June 30, the Senate passed the bill. It is now on its way to the President’s desk for his signature, which is expected soon. We’ll update when that happens.

H.R. 4213 – the bill that had an amendment to change the closing deadline for the homebuyer tax credit from June 30 to September 30, 2010 appears to be dead.

Last night the Senate failed for the third and final time to pass the American Jobs and Closing Tax Loopholes Act, which had numerous amendments attached to it, including one to extend the $8000 / $6500 first time / repeat home buyer tax credit.

A vote of 57 – 41 failed to reach the 60 votes required to end a filibuster, effectively killing the bill.

There might be other versions proposed at some point, but for now, if you are eligible for the tax credit and were under contract to purchase a home by April 30, that transaction must be closed by June 30 in order to qualify for the tax credit.

My guess, and we’re talking pure speculation here, is the unemployment extension provisions of this bill will be “spun off” into a separate bill. What will happen with the homebuyer tax credit closing extension? I won’t even hazard a guess… Congress could, in theory, pass something with a retroactive date to extend the credit. Or, the credit deadline could go on as planned. Who knows…

Mainstream Media reports:

Associated Press: Republicans kill Senate jobless aid measure

Forbes: Tax Extenders Bill Is Dead But Not For Harry Reid’s Lack Of Effort

Bankrate.com: Tax breaks, homebuyer credit on hold

The Blogiverse:

Virginia Association of Realtors: Homebuyer tax credit closing deadline extension

Originally posted on Phoenix Real Estate Guy. If you are reading this anywhere but inside your RSS feed reader, the site you are on is guilty of stealing content.

UPDATE June 25, 2010: The bill this extension amendment was attached to died in the Senate last night. Story here.

UPDATE June 16, 2010 – Today the Senate passed this amendment to extend the closing date deadline of the Home Buyer Tax Credit to September 30, 2010. (You still had to be under contract by April 30). The vote was 60-37. The entire bill the amendment is attached to has not yet passed the Senate. The House passed the bill previously. Once the BILL passes the Senate, the differences between the House and Senate versions must be reconciled, then the House votes on the reconciled bill and then, and only then, it would be delivered to the President to sign into law.

Original Post: The current incarnation of the Home Buyer Tax credit requires contracts accepted before April 30, 2010 to close escrow by June 30, 2010 in order for the purchaser to claim a tax credit of up to $8,000 (or up to $6,500 for non-first time home buyers).

Yesterday, Senators Harry Reid of Nevada, Johnny Isaakson of Georgia, and Chris Dodd of Connecticut introduced an amendment to the American Jobs and Closing Tax Loopholes Act of 2010 (H.R.4213) that, if passed, would extend that closing deadline to September 30, 2010.

This amendment does NOT change the fact that you had to be under contract by April 30 to claim the tax credit. It just changes the date the transaction must be closed by in order to claim the credit. Apparently the Senators have realized something any agent marginally versed in real estate sales could have told them – many real estate transactions, especially short sales, take more than two months to close.

H.R.4213 has already passed the House, and has wide support in the Senate. Once all the amendments (including this one) are hashed out and attached, the House and Senate versions would have to be reconciled and then sent to the President for signature.

Given the level of support for the main thrust of the bill (extending Unemployment Insurance, extending a scheduled 21.2% cut in Medicare reimbursement to doctors, and creating jobs) my guess is this will pass and the Home Buyer Tax Credit closing deadline will be extended to September 30.

But we’re talking politics and Washington, so anything can happen… Someday, maybe, hopefully, they’ll let the damn thing just die.

Originally posted on Phoenix Real Estate Guy. If you are reading this anywhere but inside your RSS feed reader, the site you are on is guilty of stealing content.

And on March 25, 2010, Ron Paul (R-TX) may have taken first prize in the Stupidest Thing a Politician Has Ever Said contest.

That was the day Representative Paul introduced the Homeowner Tax Credit Extension and Expansion Act.

Here is part of his statement to the Speaker of the House made upon introducing his legislation:

Madam Speaker, today I introduce legislation to permanently extend the first-time homebuyer tax credit and to make the credit available to people whose homes have been destroyed by a natural disaster, such as a hurricane. (my emphasis on permanently)

Now in and of itself, permanently extending the first time homebuyer tax credit is pretty dumb. Let’s not even ponder how the heck to pay for a permanent $8,000 tax credit. Since when has how to pay for something bothered the politico? I’ve said here many times that this tax credit needs to die, and that free market forces need to be allowed to run their course. That such a permanent tax credit would come from a politician that bills himself on his own re-election site as, “the nation’s leading defender of free markets” makes this proposed legislation even more ludicrous.

But that’s not the truly stupid thing…

From the same address to the Speaker comes this pearl of wisdom:

Renewing the first-time home buyer’s credit will help Americans purchase a first home with their own money, instead of having to rely on government-funded or backed programs.

Huh???

Read that again…

Renewing the first-time home buyer’s credit will help Americans purchase a first home with their own money, instead of having to rely on government-funded or backed programs.

“With their own money”? What the hell? Maybe I’m just an idiot, but isn’t a tax credit like… Not. Their. Own. Money. Recall the first-time homebuyer credit was fully refundable. If your tax liability was zero, you still got an $8,000 refund check. That wasn’t your money. That was other taxpayers money.

“Instead of having to rely on government-funded or backed programs”? OK, so I suppose technically a permanent tax credit isn’t “government funded”. It’s taxpayer funded. You know, by you, and me, and our children and grandchildren.

You’ve got to be kidding me Dr. Paul.

You stand on the House floor and say renewing (permanently no less) a tax credit “will help Americans purchase a first home with their own money”.

Seriously?

Well thanks Mr. Nation’s Leading Defender of Free Markets. That just makes perfect sense.

And I’m sure the fact that Dr. Paul is running for re-election this year has nothing to do with the introduction of this legislation…

Originally posted on Phoenix Real Estate Guy. If you are reading this anywhere but inside your RSS feed reader, the site you are on is guilty of stealing content.

Finally, after over two years of existence, the federal homebuyer tax credit is no more.

Expiring last night at midnight, what started as a $7500 “credit” that was in reality an interest-free loan (it had to be paid back), then became an $8,000 fully refundable true tax credit, which was extended and modified yet again to include non-first time buyers, the home buyer tax credit offered by the federal government is no more.

Yes, if you were under contract to purchase a home by midnight on April 30, and you close on the purchase by midnight June 30, you may be eligible for the tax credit.

But with the exception of certain people in the military and other federal employees stationed overseas, there will be no more people eligible to claim the tax credit.

This will be my 24th article on the tax credit, and hopefully my last unless Arizona pulls a bone-head move like California and offers a state-level tax credit program.

Yeah, I call it bone-headed for a state with budget woes the size of California’s to spend $200 million to continue to muck about in a free market. If Arizona were to go that route, while we’re in the midst of laying off teachers, cutting protective services and more, then heads should roll out the capital doors.

The 23 previous articles here have been viewed over 178,000 times and generated 862 comments. That’s almost 400 page views a day since I started writing about the tax credit in February 2009.

Obviously interest has been high.

Personally, I’m glad it’s over. I’ve never been a fan of the government trying to prop up a free market. While we have had several clients qualify for the tax credit, none that I’m aware of bought a home because of the credit.

And that is a good thing.

In my opinion, about all the tax credit did was pull in sales that would have occurred in the near future. So we wound up robbing Peter to pay Paul. Yeah sure, a few people somewhere bought a home that they wouldn’t have (which was a bad idea), thereby (in theory) “stimulating” the housing market – but at what cost?

I just re-read an article I wrote in June 2009, How the Government can Fix the “Foreclosure Crisis”, where I state the government needs to stop trying to fix the real estate market and let the laws and dynamics of a free market economy play out.

Call me crazy, but I’m sticking by that opinion, and the end of the tax credit is a big step toward letting the market adjust – on its own.

Originally posted on Phoenix Real Estate Guy. If you are reading this anywhere but inside your RSS feed reader, the site you are on is guilty of stealing content.

I’m seeing dozens of people landing on this blog every day using search terms that clearly indicate they are trying to find out if the $8000 homebuyer tax credit has either been extended, or is under consideration for another extension.

The short answer is no, neither the (up to) $8,000 first-time home buyer tax credit or the (up to) $6,500 existing home owner tax credit has been extended.

And while theoretically anything can happen in Congress (well, not anything – seen the budget lately?) there are no bills currently pending in either the House or Senate to extend the tax credit.  Given that it is set to expire April 30, it appears that the homebuyer tax credit will finally cease to exist.

So if you are planning to take advantage of the tax credit, here is what you have to do:

• Be under contract to purchase a home by April 30, 2010.
• Close on that home by June 30, 2010.

There is an exception to those dates if you are in the Military or “certain other federal employees” serving outside the United States. If you fall into this category, you may have an additional year to claim the credit. 

So, if you aren’t already under contract to purchase a home, you’ve got two weeks to get yourself under contract. And be sure you can CLOSE by June 30. But please, don’t rush into a financial commitment the size and scope of a home purchase just to get an $8K tax credit. That’s the last reason to buy a home as I’ve mentioned here many times.

Originally posted on Phoenix Real Estate Guy. If you are reading this anywhere but inside your RSS feed reader, the site you are on is guilty of stealing content.

The $8,000 first time home buyer tax credit ($6,500 for existing homeowners) is scheduled to expire April 30 (sales contracts signed by April 30 have until June 30 to close).

I’ve written a LOT about this tax credit over the past year. Depending on who you chose to believe, the tax credit has been wildly successful or a miserable failure in helping the real estate market recover.

Personally, I think it falls somewhere in between those two extremes.

I’m sure some people have bought homes only because of the credit. Let’s face it, eight grand is a decent chunk of change.

But buying a home solely to score $8,000 is a bad idea. Do that, and you’ll likely find that $8K evaporates swiftly. “Incentivizing” people to buy homes is fundamentally a bad decision on the government’s part. Personally I have yet to run across a home buyer that is buying now solely because of the tax credit. I’ve heard other agents though claim it has increased sales. I wonder though, how many of these agents asked the specific question, “Are you buying now only because of the tax credit?” My guess is most people buying now and getting the tax credit would have bought in the near future anyway, and if that is the case, how exactly does this credit stimulate the housing market?

I’d rather see the government step out of trying to influence the real estate market. It will self-correct, albeit not as quickly as most would like.

Now word is starting to trickle out of Washington, D.C. that certain entities (notably the NAR — National Association of Realtors) are lobbying Congress for yet another extension of the home buyer tax credit (see Wall Street Journal, Take Three; Will Congress Extend the Home Buyer Tax Credit?).

From the NAR’s website:

NAR Policy:

NAR strongly supports the first-time homebuyer credit. NAR also believes it should be extended through 2010.

Legislative/Regulatory Status/Outlook:

Senate Finance Committee Chairman has taken a very vocal and strong position that the homebuyer credit will not be extended again and that it will expire on April 30, 2010, as presently scheduled. The transition rule through July 1 will be retained.

My gut feeling is the tax credit will not be extended again. During the debate on the current extension last February, several Congressmen and Senators publicly stated that would be the last extension. Now these are politicians of course, and we all know they can flip-flop on statements and issues. I just called Senator Johnny Isakson’s office and spoke to one of his staffers. Senator Isakson was the Senator who pushed hardest for the original tax credit and the last extension. His staffer Ryan told me there was currently no planned legislation that she was aware of and that Senator Isakson currently had no intention of introducing legislation to extend the credit again.

That’s not to say that some other Senator or Congressman couldn’t step up and try to take this on. The NAR has a lot of pull in D.C. and I suspect (but have not been able to confirm yet) that other Realtor associations, home builders and the like will push the lobbying efforts to extend the credit.

Time will tell I suppose. Prior to the last extension I would have bet big on the extension. Right now, I’d bet that is will not be extended. I certainly could be wrong. That happened once.

Here are result of a completely unscientific poll I took before the last extension:

I’ve opened up a new poll asking if the tax credit should be extended again. I’d appreciate it if you could take this poll and you are of course welcome and encouraged to leave a comment on how you feel about the tax credit being extended again.

In hindsight, I should have added a “no opinion” option on the poll. Let’s face it though, you probably should have an opinion, even if you have zero intention of using the tax credit. Whether you utilize it or not, you’re paying for it…

• Will the Homebuyer Tax Credit Return? Should it?
• Homebuyer Tax Credit Extended: Closing deadline now Sept 30.
• Bill to Extend Homebuyers Tax Credit Closing Deadline Dies
• Senate Amendment to Extend Home Buyer Tax Credit Deadline
• Home Buyer Tax Credit: So long, and thanks for all the fish

Originally posted on Phoenix Real Estate Guy. If you are reading this anywhere but inside your RSS feed reader, the site you are on is guilty of stealing content.

Of course it’s not a scientific poll by any stretch of the imagination, but it’s interesting data none the less…

It’s easy… just select your choice and click “vote”. You’ll then be taken to the results page.

Here’s a clip from CBS5 News with a small portion of my thoughts on the home buyer tax credit. But don’t let that influence your selection…

.

Originally posted on Phoenix Real Estate Guy. If you are reading this anywhere but inside your RSS feed reader, the site you are on is guilty of stealing content.

UPDATE Nov 6: According to UPI, President Obama has signed this legislation. NOW it’s official.

The extension of the existing $8,000 tax credit for first time homebuyers is now all but a done deal.

Moments ago, the House of Representatives passed HR 3548 – The Unemployment Compensation Extension Act of 2009 with a vote of 403 -12.

“Whoa, hold on there Jay. You said the tax credit extension was passed. What’s up with linking to some unemployment legislation?”

That would be because the Senate attached an amendment (SA 2712, Section11) to HR 3548 that extends (and expands) the home buyer tax credit. The Senate passed the amended HR 3548 on Wednesday by a vote of 98 – 0.

The bill now moves to President Obama’s desk for his signature into law. Some mainstream media is reporting the President will sign this on Friday, November 6. THEN, and only then, will the tax credit truly be extended and expanded (regardless of whatever you may read on Twitter, on blogs, and in the press).

So what’s in the bill?

Amendments are difficult to read as they cross-reference multiple documents and contain gobbledygook that looks like this:

(1) by striking “and” at the end of subparagraph (M),

(2) by striking the period at the end of subparagraph (N) and inserting “, and”, and

(3) by inserting after subparagraph (N) the following new subparagraph:

“(O) an omission of any increase required under section 36(f) with respect to the recapture of a credit allowed under section 36.”.

Good luck deciphering that…

Here’s what I’ve gleaned from reading the amendment, cross-referencing it, and digesting various media reports:

The “New” Home Buyer Tax Credit Details

• The existing $8,000 tax credit is extended to May 1, 2010. (The credit is for 10% of the home purchase price, up to $8,000.)
• If a home buyer is “into a written binding contract before May 1, 2010”, and they close on that contract before July 1, 2010, the tax credit can be claimed.
• A new tax credit for “long-time residents of same principal residence” has been created. This has been reported in many places as a tax credit for “move up buyers”. Here is the actual verbiage of the new tax credit for existing home owners:

  EXCEPTION FOR LONG-TIME RESIDENTS OF SAME PRINCIPAL RESIDENCE.–In the case of an individual (and, if married, such individual’s spouse) who has owned and used the same residence as such individual’s principal residence for any 5-consecutive-year period during the 8-year period ending on the date of the purchase of a subsequent principal residence, such individual shall be treated as a first-time homebuyer for purposes of this section with respect to the purchase of such subsequent residence.

• The tax credit for existing “long time resident” home owners purchasing a new home is 10% of the purchase price, up to $6,500.
• The old $8K credit had income limits of $75,000 for singles and $150,000 for married couples filing jointly. The income limits have been increased to $125,000 / $225,000.
• No credit shall be allowed for the purchase of any residence if the purchase price exceeds $800,000.
• All of this applies to primary residences only. No second home or investment properties are eligible for the tax credit.
• For members of the Armed Forces deployed on duty outside the United States, the tax credits are extended to May 1, 2011 (must close before July 1. 2011) Must be deployed outside the U.S. for at least 90 days between Dec 31, 2008 – May 1, 2010.
• “Fraud prevention” measures have been implemented. The tax credit can not be claimed by anyone under 18 years of age (some knucklehead tried to put it on the tax return of a four year old). Also, a “properly executed copy of the settlement statement used to complete such purchase” must be attached to the tax return claiming the credit (I take this to mean a copy of the signed HUD-1 Settlement Statement. But check that with your tax advisor!)

That’s it in a nutshell.

Of interest: According to economists at Goldman Sachs, around 70% of all current homeowners would be eligible for the expanded home buyer tax credit. The NAR and other Realtor Associations will no doubt be salivating over the extension and expansion of the tax credit. Some Senators have said that the chances of the tax credit being extended again come next April 30 are virtually zero.

Personally, I’m not a fan of the tax credit extension. I realize that flies in the face of a large majority of my fellow real estate agent / broker brethren, but that’s how I feel. It’s going to cost a TON of money (almost $11 billion by some estimates), and I am far from convinced it encourages people to buy homes (and if it does, that’s one BAD reason to buy a home).

Disclosure: I am clearly not an elected politician and my interpretation of the legislative text could be incorrect. Also, I am not a lawyer nor a tax professional, nor do I have any desire to be either. You should seek their counsel.

AND DON’T FORGET!! Until President Obama signs this bill, it’s not in effect!

Sources:

HR 3548
SA 2712 (Sec 11 is the applicable section)

Associated Press: Congress set to expand homebuyer tax credit
Wall St Journal: Tax Credit Extension Would Keep Home Prices Up
CNN Money: Senate throws a lifeline to the jobless

National Association of Realtors, Government Affairs: Here is a GREAT summary of the current and proposed home buyer tax credits (PDF file).

Originally posted on Phoenix Real Estate Guy. If you are reading this anywhere but inside your RSS feed reader, the site you are on is guilty of stealing content.