Congress gives homebuyers more time to close for tax credit

July 03, 2010
Author: The Palm Beach Post, Fla., Laura Green and Kimberly Miller. Distributed by McClatchy-Tribune Information Services.

– An estimated 14,830 Florida home buyers missed Wednesday’s deadline to receive an up to $8,000 tax credit on their purchase.

Good thing for them Congress extended the cut off date late Wednesday to Sept. 30. The bill now goes to President Obama.

Homebuyers still had to sign contracts for their purchase by April 30, but now have an additional three months to close the deal.

Nationally, the extension is expected to give about 180,000 homebuyers who signed by April 30 a chance to earn the federal stimulus.

Short sale purchases, which can take several months to close, were hampering many closings.

Buyers “didn’t know when they signed the contract it was going to take the bank four months to close the deal,” said John Sebree, vice president of public policy for the Florida Realtors.

Another problem was the failure of Congress to reauthorize the National Flood Insurance Program, which put the brakes on lender approvals for some loans. That program was also temporarily extended late Wednesday until Sept. 30.

Realtors are lobbying Congress to approve another bill extending the program for five years.

“It’s really not good for the real estate market to have such uncertainty,” Sebree said.

“All day there was anxiety as to whether or not numerous buyers that did the right thing signing a contract by April 30th would lose out on $8,000 due to slow short sale approvals or delays in financing that were no fault of their own,” said Realtor Shannon Brink, with RE/MAX Prestige Realty in West Palm Beach. “If the tax credit disappeared, there was a significant risk that many buyers would walk away from transactions because they may try and find a better deal.”

Some buyers grew frustrated and have already walked away, said Bob Goldstein, past president of the Realtors Association of the Palm Beaches and a vice president of the state organization.

The tax credit was initially for new homebuyers only and expired Nov. 30. It was extended to the April 30 and June 30 deadlines, and also expanded so that some current homeowners could earn up to a $6,500 credit.