Will the Homebuyer Tax Credit Cutoff Date be Extended?by Tim Manni
While there has been little to no chatter about lawmakers extending the homebuyer tax credit for a third time, there has been increasing talks about extending the time a borrower has to close on their deal. Under the current arrangement, to qualify for the tax credit a borrower must sign their contract by April 30 and close by June 30.
According to the latest edition of The Kiplinger Tax Letter (June 11):
Now, Congress is eyeing an extension of the June 30 cutoff date to Sept. 30 because of reports that a number of buyers are experiencing paperwork delays that will cause them to miss the deadline. Note that lawmakers won’t expand the credit to apply to purchases after April 30.
One such borrower “experiencing paperwork delays” is our reader ‘Chris S’ who left us the following comment last week:
I had signed contact before April 30th but the bank says that because so many people rush for the deadline they are overwhelmed and are not sure that they can close by June 30th. I did everything I had to do in time and there are no open issues on my end. I’m just waiting on the bank. Why would they put a dead line of June 30th closing? They had to know the banks would get overwhelmed.
The main reason why a sixty-day deadline to close was instituted was to keep the process moving along. Lawmakers didn’t want borrowers signing contracts in April and then closing them a year later.
“Sixty days isn’t really a lot of time to close your deal. Especially if the banks are swamped, or if there’s even a small snag, the process can easily be delayed,” explained HSH.com’s VP Keith Gumbinger.
“Building a new home or executing a short sale in just 60 days is difficult, if not impossible.”
What We Say: We agree with extending the cutoff date past June 30 for several reasons. First off, borrowers like ‘Chris S’ who seemingly did everything right shouldn’t be penalized because of his bank’s inabilities. Secondly, there would be no added costs to extending the cutoff date: borrowers who could take advantage of the extension have already qualified in the first place.
Are you concerned you might miss the deadline? Leave us a comment, let us know!
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We’ll keep you posted as we learn more about the possible extension of the cutoff date for the homebuyer tax credit.