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Will the Homebuyer’s Tax Credit Be Making a Comeback?

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Early in 2010, President Obama signed off on the bill that extended the $8,000 new homebuyer tax credit which was set to last until April 30, 2010. The extension meant more homebuyers had the opportunity to be under contract by the new April date to receive a sizable tax credit. The tax credit was very popular. In fact, the future of other extensions may have been derailed because so many people took advantage of the existing tax credit extensions. Now people want to know if it will be coming back.

What Is the Homebuyer Tax Credit?

Homebuyers who had a contract in place by April 30th with a closing date no later than June 30th were eligible to claim the $8,000 tax credit provided they had a modified adjusted gross income of up to $125,000 for single or $250,000 for couples. These income amounts were increased from the original rules of the tax credit.

The Obama administration originally extended the tax credit in November 2009. At that time, existing homeowners were included in the credit guidelines. Homeowners who were selling their homes could qualify for a tax credit of $6,500. Homes that cost more than $800,000 were not eligible for the tax credit. All claimants must be over the age of 18.

What Happened to the Tax Credit?

After the April 2010 extension deadline, many were hopeful that another extension would be issued to help new homebuyers. However, once the deadline had passed it became apparent no new extension was forthcoming.

One reason is because the housing market has begun to bounce back. Home purchases began surging in light of the tax credit and low mortgage rates. Sales exceeded what even the most seasoned analysts anticipated. Home prices have also gone up. In Match, the median price of a new home in the US rose 4.3%.

Another reason an extension wasn’t added was due to the government’s preoccupation with other issues, specifically the state of the government’s debt situation, foreclosures, and health care. Economists feel that the homebuyer tax credit and its subsequent extensions have done their job and brought the housing market back.

Will There Be More Time?

At this point, it doesn’t seem as if a homebuyer tax credit extension is on the horizon. However, while the original deadline has passed there are still some groups that remain eligible for the extension through 2011. These groups include active members of the Armed Forces and certain federal employees who are currently working outside of the US. These groups have another year to purchase a primary residence to qualify for the tax credit. They face deadlines of April 30, 2011 for entering into a sales contract with settlement of the purchase to be completed by June 30, 2011.

How to Claim the Credit If You’ve Met the Deadlines

Taxpayers have the option of claiming the credit on either their 2009 or 2010 income taxes. If you missed filing the credit for last year, you will need to get prepared to claim in for this year. Taxpayers must complete Form 5405, First Time Homebuyer Credit. Along with the completed form, the following documents must also be included to redeem proper credit:

Settlement Statement – a copy of the statement that shows the buyer/seller names and signatures, address of the property, sales price, and the purchase price.

Retail Contract – for mobile home purchases, a copy of the executed retail sales contract showing the property information, proper signatures, and purchase price and date is a suitable replacement for the Settlement Statement.

Certificate of Occupancy – for those with a newly constructed home purchase, a copy of the certificate of occupancy that shows the name of the owner, the address of the property, and the date of the certificate can be used in place of the Settlement Statement.


Published or updated January 4, 2012.
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{ 15 comments… read them below or add one }

1 Ace @ aceofwealth.com

It’d be interesting to see if this does come back. I’ve read numerous reports in the past that claim that it hasn’t really made any lasting impact (There were similar reports for cash for clunkers). As an individual, I think it would have been a great perk if I were looking to purchase during that time. But I would say that most of the people that were already planing to do a first time home-buyer purchase, probably would have done so already.

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2 Jake

I don’t see too much of an impact with this program. Not like the cash for clunkers of last summers.

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3 Doug Warshauer

Thanks for the helpful info.

Seems pretty tough to measure the impact accurately. It’s hard to know how many people would have bought their home anyway, since you have no control group to compare to.

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4 Ryan

I would agree with that statement. I think most people would have been better off waiting if they weren’t already planning on buying a home – nothing like taking out hundreds of thousands of dollars in debt just to save $8,000! ;-)

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5 Estate Yard

Most clients I worked with tried their best to find a property to put an offer on and close it before the deadline, but even those who missed the deadline were still continuing to look for a house to purchase. To me it just seemed like icing on the cake for buyers… it’s hard to gauge how much it impacted the market as we clearly bottomed out a year ago and things are slowly improving regardless of the tax credit or not.

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6 Brandon

As a future homeowner i would love for this credit to come back. Allthough it will not stop me from buying a house, the 8K would be an ice incentive for me.

I am looking hard and am hoping that it comes back before the end of 2010 allthough i know it wont.

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7 Marla

I actually bought my first home because of this incentive. Granted, I closed during the final extension for that period (January 2010), and have yet to receive a check for that tax credit (December 2010) for reasons that are frustrating and not terribly clear (I had to re-send paperwork proving occupancy three separate times) I was counting on that credit to clear certain debts that would allow me to afford this home and still be able to eat.. This has been a difficult year, although I would like to mention that just this week I got a cryptic copy of a letter from the IRS stating that I HAD received the homebuyer credit. No check, just a letter. I’m hoping there’s some sort of follow-up in the mail in the next few weeks, and I’ll be calling the number listed on the form letter as soon as possible.. but their ‘incentive’ has, in my personal experience, been nothing but a series of false hopes and cheats.

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8 blah blah

So you bought a home, counting on the tax credit to be able to afford the home you bought? I wonder why there are so many foreclosures

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9 Andrea

So I assume I do not qualifty because I was not under contract before April 30th 2010, yet did close on a home before Sep 30th 2010. Wish the government would of done more to help the people to save their homes, we went through foreclosure & being homeless & a pension to have a roof over our heads. Im sure more people still need help.

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10 Kath

Will there be a tax credit for 2011. Or they just gone leave us out to pasture. We need help in this trying economy. What books are they reading. LOL
Kathreen

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11 Kath

Does anyone know if there are any credits for A/C units

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12 blah blah

Yes, but what i learned the hard way and the IRS dont tell you is that credit can only be used as “store credit”. You can only claim the credit for that year and it can only be used if you owe on your taxes, if you do not owe expect it to be gone.

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13 Renee

It makes things difficult for everyone when the economy tanks, the homebuyers incentive was nice but not lifesaving for most of us. There are some like my husband who are still able to get this credit but since he isn’t deployed much is unable to take advantage of it. We are under contract and will close on our house at the end of March. We bought our home knowing we would not get this discount. Seems to me like it’s more hassle than good anyway.

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14 Kathy

There is any program to help first-time homebuyer in 2011 (Florida)?

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15 pd

I have purchased new home in January 2011 in USA. Do I still get First Time Home buyer Tax Credit? I already purchased one home before but not in USA, its in India.

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