Clock Ticking on Federal Tax Credit
Now that California has approved a new homebuyer tax credit, questions have started to surface whether the federal tax credit will be extended.
The federal version, which offers $8,000 for first-time homebuyers and $6,500 for repeat buyers, is set to expire in a few weeks. Those hoping to take advantage must sign a contract to purchase the home by April 30 and close escrow by June 30.
The National Association of Realtors and other industry groups have begun making the case to lawmakers for an extension, saying the housing market is still fragile and that the tax credit has helped with sales.
According to a recent Wall Street Journal report, industry groups are also pushing the argument that a tax credit should be extended because it is taking so long for lenders to approve short sales, which make up a large number of the current purchases.
Sen. Johnny Isakson, the Georgia Republican who pushed the last extension through Congress, has no plans to pursue another extension. “Part of the benefit of the tax credit is the urgency of it sunsetting,” Isakson spokeswoman Sheridan Watson told the Wall Street Journal.
However, other legislators could step forward, particularly with the completion of the health-care debate leaving time to pursue other legislation. In addition, until unemployment numbers begin to show a steady decline, many economists have portrayed the economy as remaining fragile and in need of boosts such as the tax credit.
This much is known for now: The clock is ticking on the federal tax credit, with buyers having just five weeks left to close a deal if they want to get the credit. But the minute the current federal tax credit expires, the book opens on the California homebuyer tax credit.
