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Running out of time to benefit from the First Time Home Buyer Tax Credit?

By
Real Estate Agent with The Filbert Real Estate Group At Skyline Realty-Boise Idaho
Potential homebuyers are running out of time to benefit from the American Recovery and Reinvestment Act of 2009’s First Time Home Buyer Tax Credit. Will Congress allow the $8,000 tax credit for first-time purchasers to expire as scheduled on November 30th? Or will the tax credit get a second life and be extended, thus allowing the struggling housing market additional time to recover. This is of particular concern if you are a buyer just starting to shop and you see entry-level prices bottoming out or rebounding in your local market. The tax credit statute requires buyers to completely close on their purchases by Nov. 30. This doesn't leave a lot of time left for people who haven't yet decided on a house, have not obtained mortgage financing, or who are in the process of repairing their credit in order to qualify for a mortgage. Buyers considering the purchase of a short sale property may still have many weeks or months worth of bank bureaucracy to muddle thru before they can close on a property. According to economists at the National Association of Realtors, between 300,000 and 350,000 additional sales of houses will be stimulated this year by the tax credit across the country. Some economists estimate that each home sale additionally generates approximately $63,000 in new sales of items like appliances, tools, landscaping, building materials, furnishings, moving expenses, etcetera. Assuming these estimates are accurate (and even if they are grossly overstated), this means that the housing tax credit provides an immediate and significant benefit to the overall American economy. In fact, housing represents a significant percentage of the National GDP. Failure to extend what may be one of the most effective pieces of the Obama administration's 2009 stimulus legislation would cost jobs, economic growth and lost tax revenues. In an effort to put pressure on lawmakers the National Association of Realtors and the National Association of Home Builders have initiated intense grass roots campaigns to make the case for extending the credit, and perhaps even expanding it. However, a tax credit extension would cost billions of dollars in lost federal revenues thus contributing to an already historically profound deficit. With the rapidly approaching deadline, the likelihood that Congress will extend the tax credit remains uncertain. Bills are currently pending in both houses to extend the credit for another year. But can any of this happen before the Nov. 30 deadline? Congress is stretched thin with focus on two wars, health care reform, climate change and energy concerns, financial system regulatory reform and a new Consumer Financial Protection Agency, among others. Bottom line: I believe that given the political and economic importance of the housing tax credit, its significant influence upon the housing sector’s ability to recover, and the aggressive lobbying in Washington, some sort of extension is likely. However, don’t count on a bigger credit. If I were buying my first house, I would not wait to see what’s going to happen…I’d be buying a house NOW! Author: Randall Filbert, MPA www.LendingIdaho.com www.FamilyGuideToFinances.com www.BuyandSellinIdaho.com This blog's intention is to provide inspirational stories as well as historical accounts and insight into matters concerning the mortgage and real estate markets. These are my opinions and should not be regarded as factual data.

Comments (1)

Dan Haggerty
RE/MAX RESULTS - Orlando, FL

Randall, I too agree dont wait, Buy a House NOW!

Oct 09, 2009 02:23 AM