With the deadline looming today for home buyers to obtain their tax credit, a bill in the US Congress to amend the closing deadlines for the tax credit has been sent to the President for signing into law, after passage by the Senate and House of Representatives.
Given the strong support for the measure, the President’s signature is imminent. The new deadlines will allow qualifying home buyers who entered into a purchase contract before April 30 to have until September 30 to get their deals closed and still receive the tax credit.
This bill had very strong support in Congress and was lobbied for incessantly by the National Association of Realtors. From our perspective as real estate agents, we are actually scratching our heads a little bit on why this was really necessary. There are two scenarios that the extension is designed to address:
- Lender delays – Claims of overwhelmed lenders and appraisers across the country meant that many buyers weren’t able to close by June 30th, through no fault of their own. I’ll buy that the lenders were busy, but 60 days is plenty of time to close a deal, even with delays built in.
- Short sales – Getting a short sale to close in a reasonable amount of time is virtually impossible. The extension will allow short sale buyers to take advantage of the credit, but they should have never assumed that they would get it in the first place. Our counsel to short sale buyers was simple. If you are reliant on the tax credit, either do not make offers on short sales, or be prepared for unexpected delays where you will lose tax credit eligibility. I am assuming that many buyers were misinformed or over-promised by their real estate agents if their expectations were any different.
Anyway, it is a positive measure for home buyers who were in limbo on whether or not they would receive a tax credit.