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June 6th, 2010 (Modified on June 15th, 2010)

Serving Overseas? Homebuyer Tax Credit Good for Another Year

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Despite the overwhelming support for a second extension of the homebuyer tax credit from the readers of this blog, to this point, lawmakers have expressed little to no indication that there will be another extension.

However, if you or your spouse is overseas on extended duty, you still have another year to take advantage of the Homebuyer Tax Credit.

According to the IRS:

Members of the military and certain other federal employees serving outside the U.S. have an extra year to buy a principal residence in the U.S. and qualify for the credit. Thus, an eligible taxpayer must buy, or enter into a binding contract to buy, a principal residence on or before April 30, 2011. If a binding contract is entered into by that date, the taxpayer has until June 30, 2011, to close on the purchase. Members of the uniformed services, members of the Foreign Service and employees of the intelligence community are eligible for this special rule. It applies to any individual (and, if married, the individual’s spouse) who serves on qualified official extended duty service outside of the United States for at least 90 days during the period beginning after Dec. 31, 2008, and ending before May 1, 2010.

In many cases, the credit repayment (recapture) requirement is waived for members of the uniformed services, members of the Foreign Service and employees of the intelligence community. This relief applies where a home is sold or stops being the taxpayer’s principal residence after Dec. 31, 2008, in connection with government orders received by the individual (or the individual’s spouse) for qualified official extended duty service. The credit is still allowable even if this happens during the year of purchase. Qualified official extended duty is any period of extended duty while serving at a place of duty at least 50 miles away from the taxpayer’s principal residence (whether inside or outside the U.S.) or while residing under government orders in government quarters. Extended duty is defined as any period of duty pursuant to a call or order to such duty for a period in excess of 90 days or for an indefinite period.

Question and Answer

Q. Are both spouses required to be overseas for the requisite time period in order to qualify for the 2011 extension to claim the credit?

A. Only one spouse must be overseas on official extended duty for the requisite amount of time for either spouse to be eligible for the 2011 extension of time to purchase a principal residence and claim the credit.

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6 Responses to “Serving Overseas? Homebuyer Tax Credit Good for Another Year”

  1. Mitch Says: June 7th, 2010 at 1:32 am

    Okay, I have to say that’s a fair deal. Taking care of the military folks while they’re out of the country doing their duty makes me proud.

  2. Tim Manni Says: June 7th, 2010 at 8:15 am

    Hey Mitch,

    I agree. How could we not extend this for our servicemen and women who are overseas. It’s the least they deserve.

    Thanks for commenting,
    Tim

  3. Joe Engle Says: June 13th, 2010 at 12:10 pm

    Thanks for this blog post. However, using the term “veterans” here is misleading. Veterans are servicemen and women who have completed their duty and/or who have retired from the military, like I am. This extension is only good for servicemen and women who are currently serving overseas (who are not yet veterans). You’ll understand why I wish this extension applied to me when you read my story.

    I was under contract in early April before April 30th for a great condo here in the San Francisco Bay Area, but it took the bank until after the 30th to figure out that I they shouldn’t have qualified me for that veteran loan amount until Mid-May. Had they figured this out in the beginning of the process (i.e. the loan officer and/or processor knowing his/her underwriter rules), I could have been under contract for a different contract and been eligible for the federal tax credit. I had a couple other properties in mind to place a bid on but went with the one that I liked the most of the three.

    I know that ‘I’m not alone’ but it’s already challenging enough living being a Veteran in an area of the country where the professionals are not familiar with how VA loans work. In this area of the country the VA loan also could not be used for so long, a few decades, because the limit was so low and the prices were so high, causing the phenomenon where many condos are NOT VA-approved limiting what I can bid on. (During the last year, the VA also lost a lot of legal human resources which allowed them to approve condo units which had not been already approved through a process initiated by the builder.) Needless to say it takes a long time to find one to bid on that is VA approved that doesn’t have HOA probelms, etc. The other challenge is that VA loan offers are not attractive to many sellers, because they tend to take longer to close.

    It was just diappointing that, after my bid was accpeted on the one that I liked the most which the bank originally said that I qualified for, then went through the entire process only to tell me weeks later that I not only ‘lost’ the condo but also was out of the running for the $8,000 tax credit.

    I think the bank should take some of their bail-out money and invest in training their staff. They wasted their time and money on this deal.

    I’ve also read that it looks like another extension won’t happen but I’m not giving up hope – even if it’s not extended.

  4. Tim Manni Says: June 15th, 2010 at 9:19 am

    Joe Engle,

    Thanks for the comment. I agree, the use of the term “veterans” is a little misleading, I should change that. You make some interesting observations about VA loans and their availability across different portions of the country. As June 30 draws near, we are hearing a lot more stories about lenders holding up the mortgage process, causing borrowers to worry if they’ll miss the end-of-the-month deadline for the tax credit.

    I don’t think there will be another extension, but there could be an extension in the time a borrower gets to close.

    Thanks for commenting, good luck,
    Tim

  5. Home Buyer Tax Credit Extension for Some Military Members, Foreign Service Members and Intelligence Community – The Trump Blog | Lagravier.com Real Estate Says: August 5th, 2010 at 10:17 am

    [...] Veterans: Homebuyer Tax Credit Good for Another Year (hsh.com) [...]

  6. Bob McDee Says: December 23rd, 2010 at 12:50 pm

    Joe, I’m not sure you understand what a veteran is, yes you are a veteran, but to say I am not just because I am still serving is bogus. Here is the definition of Veteran given by Webster.

    1
    a : an old soldier of long service
    b : a former member of the armed forces

    2
    : a person of long experience usually in some occupation or skill (as politics or the arts)

    I receive Veteran’s Benefits due to definition 1.a and/or 2.a Make sure to read up before you insult those still serving claiming we are not “in your class” as a Veteran!

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HSH.com's daily blog focuses on the latest developments in the mortgage and housing markets. Our mission is to relate how changes in mortgage rates and housing policy, as well as the latest financial news, impacts consumers, homebuyers and industry insiders alike. Our 30-plus years of experience in the mortgage industry gives us an edge as we break down the latest changes in an ever-changing market.

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Tim Manni is the Managing Editor of HSH.com and the author of their daily blog, which concentrates on the latest developments in the mortgage and housing markets.

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