There are dozens of articles on this site about the Home Buyer Tax Credit. You can see them all here.
For the most recent news about the Home Buyer Tax credit, please see this article (July 2, 2010).
UPDATE Nov 5, 2009: The Senate and House have both passed legislation extending and expanding the home buyers tax credit. See details here!
Back in June, I wrote an article, Homebuyer Tax Credit to be Extended? Expanded? That article linked to five bills that were circulating in the House and Senate that would either extend and / or expand the existing $8,000 tax credit for first time home buyers that is currently set to expire on Nov 30 (keep in mind a home purchase transaction must be closed by Nov 30 to qualify).
As of this writing (Sept 21, 2009) all five of those proposed bills are still stuck in committee.
However, a sixth bill to extend the tax credit was introduced in the Senate last week.
Senate Bill S1678 extends the existing first-time homebuyer tax credit to June 1, 2010. It makes no changes to the requirement that one must be a first time buyer (defined as not owning a home in the last three years) or to income limits that currently exist in the current law.
Here’s what I find interesting about this latest attempt to extend the tax credit
S. 1678 is co-sponsored by Senator Johnny Isakson (R–GA). “So what?” would be a natural reaction to that revelation. Here’s what: Senator Isakson was the impetus behind the original $15,000 tax credit proposed in the Stimulus Bill. That proposal was later trimmed to $8,000 and the first time buyer restriction was added before the Stimulus Bill was passed.
Senator Isakson is also the sponsor of Senate Bill S1230 – the Home Buyer Tax Credit Act of 2009 – one of the five other bills proposed. S1230 goes back to Sen. Isakson’s original plan of a $15K credit for any primary residence purchase, not just hose made by first time buyers.
So the junior political analyst in me says, “Hmmm. Isakson wants $15K for any purchase, and now he’s co-sponsoring another bill that only extends the existing $8K credit. Has he given up hope on his $15K for every purchase dream?”
Seems like a reasonable question in my mind (and let’s have no snide remarks in the comments about the state of my mind please).
So rather than speculate, I called the Senator’s office and asked to speak to him. Naturally the young staffer that answered the call wouldn’t connect me to the Senator…
But he did say that Senator Isakson still fully supports and believes in increasing the tax credit, extending the deadline, and including all primary residence purchases. He mentioned that as late as last week, Isakson had been on Bloomberg and spoken on the Senate floor to garner support for his original $15K tax credit bill.
The staffer felt that the Senator co-sponsored S1678 “just in case” he can’t round up enough support for S1230. I sensed frustration on the staffers part when he talked about how long Isakson’s bill has been in committee.
And of course, even if Isakson’s bill is passed by the Senate, it would still need to get through the House. The same House that nixed the 15K credit previously…
So will the $8,000 tax credit be extended?
That is anyone’s guess. This new Senate bill does have Harry Reid as a co-sponsor. As the Senate Majority leader, Reid obviously has influence, and his co-sponsorship could indicate Reid doesn’t feel there are enough votes to get Isakson’s version past the Senate.
But there is of course, a lot of politics involved. There is little question that tax credit has stimulated housing sales. Depending on whose numbers you believe, between 350,000 and 500,000 people have bought homes because of the tax credit. Whether those people would have bought any way is (or should be) subject to debate. And whether or not the tax credit should be extended is (or should be) a matter of debate. The National Association of Realtors and local and state associations are clearly pushing for extension / expansion. My personal take is still being formulated, though I’m leaning toward not extending it. Blasphemy! will cry many in the real estate profession, but I’ve never been a fan of big government mucking about in a market economy – there are just way too many examples of where that has failed miserably. This debate is for another post though as there’s too much to go into here.
For now, the $8,000 tax credit for first-time home buyers is available – if you close on the home before November 30. We recommend being under contract by October 15 in order to maximize the possibilities of closing by the deadline. If you’re going to hold off hoping Washington extends the credit, you may wind up kicking yourself in the end.
We’ll keep tabs on this latest incarnation of the tax credit extension…
(Photo Credit: cliff1066 on Flickr. Creative Commons License)
Hat tip to Inman News and Senator Johnny Isakson Google Alerts!
Email This Post
Print This Post
Next post: [ An Open Letter to Manuel Contreras-Galdean ]
Thanks for reading! We value your thoughts and opinions, so please feel free to leave a comment. Please contact us if you have any questions or need help. You can also get automatic updates for this blog free via:
{ 43 comments… read them below or add one }
I think it's good that Sen.Isakson went “back to the drawing board” since his previous bill is not going anywhere. A simple extension is reasonable. But why June 2010? There's so much talk about 2-3 years of Foreclosures. I think a 12/2010 extension would be better. Too many extensions, and the gov't will start looking like the weekly ads from mattress retailers and used car dealers. After awhile, the urgency to buy will not be there.
Great info, Jay! So, is this “Plan 9 from Capitol Hill”? Like it's namesake horror film of equally dubious quality, it seeks to resurrect some dead things to try to make things better. And believe me, I think those other five bills are dead, as they've been buried in a graveyard called the Ways and Means Committee forever. I'm not sure any of these proposals will ever be (or should be) passed but, as I've said before, whatever they're gonna do, let's do it quick and stop all this political BS so we can get back to selling homes to the people who can afford it. I know, fat chance…
We are now dealing with the number of home buyers that believe that since the last tax credit expired and the new one was “better” that they will just wait and see what comes along. They believe that it will be better in the next round. Perhaps it will, but just like the number of homes that kept increasing at insane rates, there has to be a swing back to normal somewhere.
Angelica – There's already a lot of discussion surrounding the cost of this thing, so I suspect that may be tempering the potential extension date…
“I know, fat chance…”
But we can always hope Wayne…. (I think the other five bills are dead too)
Agreed Colleen. I've had people tell me, “I'll wait for the next round, it'll be better”. At some point, there will be no next round… Someone is going to close the day after the last tax credit is in effect, and that's going to be painful.
Well, I don't find anyone really interested in the tax credit. It's the FHA loan for 3.5% down and sellers helping with closing costs that has sold houses for me. Of course, those few homes that I have been able to sell were described as “distressed” or the owner was willing to accept the fact that the house was worth much less than the asking price. I don't think reality has real hit most home owners, yet. Even when I do the math for them showing what a person earns in this area for a job they think is good for the area, or, the type of person that I should try to market the home to for a sale.
My guess is that they will not let anything out of the committee until the current credit is gone. If people think that there is another one coming, then they may hold off until then to buy which would kill the current rush that is happening right now.
-Tyler
Just attended our Portland Board of Realtors luncheon where a Washington D.C. rep from NAR on Governmental Affairs spoke – the concensus he said is split between the Democrats and Republicans with more leaning towards extending it. Isackson is a former NAR chap. They are also proposing higher loan limits for Fannie, Freddie and FHA.
If the government really wants to stimulate the housing industry, just remove the first time homebuyer restriction and leave the tax credit at $8,000. This would achieve several objectives: #1 It would be a strong incentive for a current homeowner to buy a new, larger home. #2 It would spur the construction industry as the demand for new homes increases. #3 It would create an inventory of good, older homes for first time buyers to purchase. I know what you are thinking…you can almost hear Ray Charles singing, “What a Wonderful World”
Agreed, Bruce. In an ideal world that would perfect, right? LOL..My guess is they will leave the tax credit as is and extend it until at least May of 2010.
Air jordan
jordan shoes
Isakson is smart enough to know that an extension with a $15K expansion is unlikely, but he is hoping for at LEAST the extension (keeping it at $8K for at least 6 months) to get something out of it. Thus, the reason he supports both bills. I hate phrases like this but here goes.. Shoot for the stars, and if you miss them, you'll at least land among the clouds…or something like that…
Sincerely,
- A potential first-time homebuyer who is waiting on a Short Sale approval from the bank, and hoping to close before 11/30.. You guessed it.
You have an excellent website. Your posts help to remind me why I love real estate so much. You seem to really love your site. Aside from my medical practice, I help my wife with her small real estate business. Keep up the great work and please visit by my health blog sometime. I would really appreciate it. The url is http://healthy-nutrition-facts.blogspot.com
I totally agree with you about not extending it. There is only so much money in the barrel (of course, that all goes out the window when our government borrows like it does and the Fed prints like they do), and I think that the long term consequences of more government debt just doesn't justify the short run artificial boost it provides to the economy. But I'm a younger real estate agent, so naturally i have a lot longer timeline to worry about how bad the government is messing with my future earnings than all you old dogs…
Regarless of the outcome, I really hope the credit is at least extended into next year.
This has been an important tool in getting homes sold this year.
Jay – Great post. I was hoping to add to the thought process, but find that your readers/commenters are also very insightful. The prospect of future extensions, upgrades and criteria changes for qualifiers may be having a detrimental effect on the first timer, and I concur with the writer who says that we just have so much that we (the taxpayers) can spend. It would seam that there would be benefit immediately for announcing that there would NOT be any new program, but that anyone in a transaction before the deadline could reap the rewards of this bill. This may spur the buyer to consider a short sale with it's longer transaction time a more viable choice. In my opinion, the better move would be to have real pressure exerted on lenders to impliment Real Loan Modifications, getting rid of the Ghost Inventory and returning to a market where prospective sellers see value in listing standard sales, increasing good inventory and returning to normalcy. I'd love comments – good or bad. Thanks Jay.
Hi!
Congratulations! Your readers have submitted and voted for your blog at The Daily Reviewer. We compiled an exclusive list of the Top 100 real estate Blogs, and we are glad to let you know that your blog was included! You can see it at http://thedailyreviewer.com/top/real-estate/4
You can claim your Top 100 Blogs Award here : http://thedailyreviewer.com/pages/badges/real-e...
P.S. This is a one-time notice to let you know your blog was included in one of our Top 100 Blog categories. You might get notices if you are listed in two or more categories.
P.P.S. If for some reason you want your blog removed from our list, just send an email to angelina@thedailyreviewer.com with the subject line “REMOVE” and the link to your blog in the body of the message.
Cheers!
Angelina Mizaki
Selection Committee President
The Daily Reviewer
http://thedailyreviewer.com
I remember getting my call to action letters to all my local representatives. As a Realtor any type of legislation like this will have a positive impact on the short term.
Being a fiscal conservative/libertarian i'm really starting to question the actual impact of trying to control a free market. We are starting to see this type of legislation in other parts of our economy. Once you implement these type of programs they are extremely hard to get rid of and become a norm instead of an actual short term incentive.
Are we trying to postpone the inevitable market correction? It's time we actually let a market do what it's supposed to do. Trying to control a free market is not capitalism it's something extremely different.
Same situation here….have been waiting 4 weeks on approval from the bank on a short sale. Curious to know if others are waiting more/ less time for short sales? If we cannot close by 11/30 and credit is not extended…will be pulling offer out.
The existing program was put in place to help the economy and housing affordability but stretching the measure too far beyond its original scope is a bad idea. It costs billions of dollars and excludes millions of Americans who rent or bought their homes before the program was available.
Let's just extend the tax credit – let's not get greedy and start adding more onto it. This is like being a kid in a candy store – your parents gave you one piece of candy now you are throwing a tantrum and want more
BW and Matt – There are a TON of factors that go into how long it can take a short sale to be approved. Not the least of which is the lender involved, and even the specific indivual loss mitigation officer assigned to the file. If two lenders are involved, it can get really complicated.
I've seen short sales close in as little as 4 weeks, and have had others take close to six months. Unfortunately you're at the mercy of many people, none of whom you have any control over and few of whom even care if the deal closes.
Would love to have you all come back here and let us know how it's going. Best of luck to you both!
Remember when the fed kept interest rates low in the 00's. Look at the result of that. seems like de ja vu as the housing market is artifically proppoed.
Fantastic idea Bruce!
Proposed plan was of amount $15000 and got approval of $8000, almost half of it. I think now the plan of action is to be; propose the double amount or double days than what actually is required.
On serious notes, i wish new propose plan gets the approval.
Great blog.I really enjoy reading your blog and commenting on blogs.All the information of this post are so much useful for me because i recently started my real estate business.Any way thanks for your informative post.
It is the least the government can do. Recently all of my tax dollars have been going toward bailing out Wall Street fat cats, can I just get a little of my money back? Gheesh!
$15,000 would be a real boost to the Real Estate market, that is exactly why it will never happen. These clowns in Washington just don't get it. O well what can you do? I hope at the min they can push through an extension to June 2010.
I agree Tyler. There is no way that Congress is going to offer higher incentive to buy after this current cycle and announce it before the current offer expires. Which is probably why the senator is straddling multiple bills. Throwing everything on the wall to see what sticks.
omg.. this is really inspiring! been blogging for a year or so but it was only now that i thought i should monetize my blog and be serious with it.. thanks for this post.
That's a great post I have come across. The way you have described all the things are superb.This is one of the creative post and it’s very innovative one.Thanks a lot.Keep blogging.
Good post on Home Buyer Tax Credit Extension. I did come across a blog WGCommunities.com. It has wonderful information on community building and investing in real estate. Hope it will be helpful for you guys too.
Thanks,
Roy Peter – Real estate Marketing
I, too, am waiting on a short sale house. We had out offer in July and still haven't made it through Phase 1. There is no chance to close by Nov. 30th. If it is not extended, I will have to retract my offer. They need to extend it at least 6 months to compensate for the lack of sales in the winter months, IMO.
We need an extension just to complete the purchase we started back in JUNE that is stuck in BofA “short sell hell”!!!
Been waiting for approval from BOA since JUNE!!!!!!!!!!
They should extend to credit to ALL buyers for at least another six months… but my suggestion would be to exclude all foreclosed and short sells from it. These sales are already a great deal to the buyer and don't need the additional incentive. The $15K idea seems a little far fetched and too costly, but the current 8K for all buyers except those under forclosure or short sale would be a good compromise.
Well we pulled our offer on the short sale, and found another house that was a foreclosure. It was owned by Fannie Mae, and was such a smooth, efficient process! Our offer was accepted in a week, and we close on the 13th!
Apparently the credit will be extended till April and phased out over the next few quarters as discussed here: http://www.savingtoinvest.com/2009/02/15000-fir...
Hopefully this is extended and expanded prior to the deadline. Home prices in Florida are finally down to where I can afford to buy a home, and would like to be able to take advantage of this program. Also since 30yr fixed rates are near historic lows, there has never been a better time, and the tax credit is great incentive. By the way this is the only part of the stimulous that is actually working. The reason? Because it is a tax credit, not a bailout, not a freebie. Proof that tax cuts are what stimulate not handouts.
For those following the home buyer tax credit extension, see this post for the latest developments. Credit extension and expansion passes both House and Senate:
http://www.phoenixrealestateguy.com/home-buyer-...
.
I love this article!!! I am now officially a fan of yours. I love your style of writing and how you captured my attention. I am definitely subscribing to your RSS feeds.
Really Good regarding income tax extension filing. I would like to read all post and main thing is that this year I think more people are filing tax extension because of recession. Thanks for sharing
{ 7 trackbacks }