A few months ago we wrote for the first time about the $8000 first time homebuyer tax credit that the Obama administration passed as a part of the 2009 stimulus bill. The measure was aimed at helping to improve the real estate market that has taken such a huge hit over the past year. They wanted to get the market moving, and get first time homebuyers interested in buying a home instead of just sitting on the sidelines as they have been.
By and large the measure has gotten quite a few people back into the buying process, up to a 1/3 of all sales of existing homes in the past few months have been to first time buyers. Even so, there are still quite a few people biding their time trying to find the perfect house. But the time to claim the tax credit may be running out.
$8000 Tax Credit Expires December 1st 2009
The $8000 tax credit is a great deal for people who are first time home buyers. But let’s review the tax credit and it’s provisions:
- First-time buyers can claim a credit worth $8,000 – or 10% of the home’s value, whichever is less – on their 2008 or 2009 taxes.
- To qualify for the credit, the home must be purchased between Jan. 1, 2009 and Nov. 30, 2009.
- You cannot have owned a house for the past three years to qualify as “first time” buyer. You also must live in the purchased house for at least three years, or you will be obligated to pay back the credit.
- To get the credit, homebuyers have to earn less than $75,000 for singles or $150,000 for couples. If you make more than that you may qualify for a partial credit.
Getting the credit should be pretty easy, just claim it on your return. One caveat, however. You have to close on your new house by November 30th. That may sound like it’s a long way off, but in reality it’s coming a lot faster than you think.
You may think that you’ll be able to close on your new home right before the November 30th deadline, but you’d probably be wrong. Consider this – according to themortgagereports.com the end of November 2009 will not be a good time to close on your new home:
This is when it starts to get messy. Check out the calendar.
- November 30, 2009 is the Monday after Thanksgiving Weekend.
- November 28-29, 2009 is a weekend. No closings on weekends.
- November 27, 2009 is the Friday after Thanksgiving — an unofficial holiday.
- November 26, 2009 is Thanksgiving — an actual holiday. No closings.
- November 25, 2009 is the day before Thanksgiving — a national “half-day”.
So, that backs up the November 30, 2009 first-time home buyer tax credit deadline by 6 days to November 24, 2009 — a Tuesday.
The end of November is thrown for a loop because of the Thanksgiving holidays, and when you’re talking about trying to squeeze in a closing in all that madness, you had better be extremely lucky. Instead it is suggested that you try and schedule your closing for at least the week of November 16th, just to give yourself some breathing room for things that can often come up in the buying process (problems with the final walk-through, mortgage documentation problems, etc).
Now when you think about closing on a home around November 16th, and considering that normally closings are done 60 days out by default (can be negotiated down in some cases), that means that you would have to put in an agreement on a house by September 16th in order to close on your house in time – that’s only about 3 weeks away!
3 Weeks And Counting To Find Your House!
So this post is a cautionary one in case you’re still considering buying your first home using the first time homebuyers tax credit. It’s time to get cracking, time to find the house that you want to buy, and time to put in a purchase agreement. If you wait too much longer, you may find yourself with the short end of the stick and no $8000 tax credit!
Are you considering buying a home using the $8,000 tax credit? Did you realize that the time to find your new home was so short? Have you already bought your new house and filed for the tax credit? Tell us about your story in the comments!
A great reminder for those who are eligible to take advantage of this program. I’m not, but I am eligible to refinance under Making Home Affordable. So I should probably get on that.
If you can do a Making Homes Affordable refinance, I’d suggest getting on it! We just finished our HARP refinance last friday, and it took quite a while for it to go through. The sooner you do it the better!
With unemployment remaining pretty high, there is an expected wave of foreclosures coming. Obviously this would increase the supply of houses which should lower the prices even more.
All of that is dependent on where you live, but I wouldn’t buy a house because of the $8,000 tax credit if you aren’t 120% ready. If you have any doubts, just wait it out… the prices may go down another $8,000 ;)
Me and my husband just bought a house in March 2009 and we had are taxes already done in February and didnt know nothing about this $8,000 tax credit for first-time home buyers. We r wanting to know how we can apply for it before it is too late. If anyone has that information we would love the information very much.
We have an accepted contract on a short-sale. It was accepted in July. We still have not been able to get this contract done. Our realtor was not the listing agent so it is even harder to get info on what in the world is the hold up. My question is: Since I am in the middle of a deal will I be able to get the tax credit if it goes past the deadline? Thankyou.
My daughter and husband purchased a short sale home and closed in August 2010. Are they able to get the $8000 tax credit?