Know before you lose-Short Sale contracts and the Homebuyer Tax Credit
Good information on the tax credits.
We all know by now that as long as you are in a binding contract by April 30th and closed by June 30th you will meet the dates specified to qualify for the Homebuyer Tax Credit. Here in Central Florida that tax credit easily represents 5-10% of the average purchase prices we are seeing, for first time as well as repeat buyers. It's a great incentive to buy, and one you need to plan for.
You better plan well because yesterday the IRS verbally clarified their definition of a binding contract (we are awaiting written confirmation) and if you are buying a short sale or even a foreclosure you need to plan WELL ahead. The IRS told us that a binding contract must be signed by all parties that need to authorize the sale. When buying a short sale, that will include any lender or lenders that need to approve the deal. When purchasing a foreclosure the selling bank obviously must sign before the cutoff as well.
Since we all know that short sale approvals can take months, it would seem likely that many being negotiated right now may not even make the April 30th cutoff, since we have only 91 calendar days left. If you haven't started house shopping or have not submitted any offers, you are probably best served overlooking short sales completely. The bottom line is now more than ever you need to be working with a knowledgeable realtor and you need to seriously heed their advice!
Since I am a lender, not a tax professional or Attorney, please do not construe this as tax or legal advice but remember, knowing is half the battle!
Gerry Suarez, Jr.
Your FHA Loan Pro!
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