Extended or Not Extended? This is the question on most people’s mind as it relates to the Homebuyer Tax Credit.
The media has been buzzing with the news that the Homebuyer Tax Credit has been extended, and a new tax credit of up to $6,500 for repeat homebuyers who have owned their current home for 5 years or longer is available.
This news broke after a congressional aide leaked positive news about the extension of the tax credit. Unfortunately the news stories did not lead with the fact that this congressional aide spoke to the media under the condition of anonymity, because “he WAS NOT authorized to publicly discuss the deal that Senators have been considering.”
Many people heard and saw news stories on Wednesday evening and Thursday morning that simply said, “Senators agreed Wednesday to extend the tax credit for first-time homebuyers.” But there was a lot more to the story! The key information missing from most of the reports is that members of Congress are still NEGOTIATING the details of both tax credit provisions.
These two tax credit provisions are expected to be added to a bill that would extend unemployment benefits for up to 20 more weeks. This bill could be finalized and voted on as early as next week.
The extension of the first-time buyer tax credit and an additional credit for repeat buyers would be a major positive for consumers and the housing market. Unfortunately there is also major opposition from some due to fraud. The Treasury Department has reported that nearly 74,000 individuals who claimed the tax credit did not appear to qualify for it, at a cost of half a billion to the government.
Linda Stiff, the deputy commissioner for the IRS said, “Anytime there is an opportunity
to receive cash back it tends to attract people who might have an intent to defraud the government,” She went on to say that the agency is committed to rooting fraud out of the program and that the agency has already opened 8,000 fraud related criminal investigations.
How many of you have received the tax credit or know someone who has received it? How are they using it? How many of you know someone who is eligible but didn’t take advantage of it?
What are your thoughts on the extension? Do you think it will pass?
Tags: atlanta real estate, extended, first-time homebuyer, homebuyer tax credit extension, Judy Jones, Metro Brokers, Metro Brokers Financial, pass
October 30, 2009 at 7:39 am |
Isn’t it always true that the few spoil things for the many?? I am not sure what the IRS requires to be submitted other than their tax credit document, but it seems to me if they also required a fully executed copy of the HUD-1, AND if closing attorneys were required to go online to a security site and “log” the closing into an IRS system, the government might catch suspicious activity before those tax credit checks are issued. It’s not a perfect system, but it would certainly beat trying to get this money back from the perpetrators after the fact.
October 30, 2009 at 8:07 am |
Pat,
It’s a shame that the IRS did not hire you to create their workflow system for filing the tax credit. Your suggestions are exactly what should have been done and would have prevented the majority or all of the fraud that occurred. Your suggestion to have the folks provide a copy of their HUD 1 possibly could have saved the IRS $600 million in funds they have handed over to folks who do not qualify!
In fact, The Treasury Inspector General for Tax Administration, Russell George, warned the IRS that there would be fraud if they did not ask people to provide documentation of the closing. The IRS ignored the advice. This resulted in the $600 million that has been given to fraudulent filers. It is possible that there is much more that has been claimed fraudulently as the investigation is just beginning!
October 30, 2009 at 2:26 pm |
Judy: Thank you for staying on top of things for us. This is not just theory, we all have clients waiting in the wings for a decision that will control how they move forward. I am currently negotiating a transaction scheduled to close 11/26. If the tax credit is extended, it will sure give us some breathing room. Over fifty per cent of my business is from Buyers who are benefitting from the tax credit. I think it is vital to our recovery.
October 30, 2009 at 3:40 pm |
Judy,
It is crucial that the Tax Credit gets extended as a lot of my buyers this year were actually first time home buyers that benefited from this program. I have a few more buyers still on the fence waiting to see what decision the Government will make within the next few days.
October 31, 2009 at 9:58 am |
Thank you Judy..,as always you keep us informed with correct the information! We all need to contact our Senators and Congressmen ASAP. The proof of success with the program is in the numbers. Check out SmartNumbers months supply in the first time home buyer sales price range! The recent sales are like the little engine that could, “I think I can, I think I can” We just need one more big push to roll that engine again and it is in the hands of Washington.
November 2, 2009 at 9:11 am |
I think everyone in our industry agrees that an extension of the existing tax credit and a possible expansion for more tax credit dollars for homebuyers is desperately needed.
But, until there is a vote and the President has signed the bill, I would strongly encourage everyone who has a home under contract to make every effort to close by Nov. 30.
There will be extended turn times in underwriting and closing attorney’s closing calendars will get filled quickly. The best way to ensure that you or your buyers close under the Nov. 30 deadline is to provide EVERYTHING that is needed TODAY to your mortgage lender.
November 2, 2009 at 12:58 pm |
Thanks so much for keeping us updated. I too am working with alot of first time homebuyers. The price range and homes we are looking at are short sales and foreclosures. The banks don’t seem to be in any hurry to answer our offers as we are trying to meet this Nov. 30th deadline. So I am truly hoping they will extend to help the honest people out there.
November 4, 2009 at 1:06 pm |
Judy — Read this update the other day. We are still waiting for the extension. While it may well be enacted, it certainly was important to have the correct information.
Inventory is down at many price points. And houses are moving at least in some areas at the price points most affected by this program. It is certainly wise to keep on target for the end of the month deadline until an extension or new program is a reality.
I do know of several people who have benefitted from this porgram & their closings were happy events.
November 7, 2009 at 12:54 am |
Well, the wait is over. Start calling those borrowers sitting on the fence and help them get into an affordable home. Don’t forget about the move up buyers who have been waiting for a break to help them as well.
Happy selling!
November 7, 2009 at 8:35 am |
Judy, I read that only 12 House members voted “NO” with everyone else voting “YES”. I wonder who those 12 are? This is just another great way for people to get excited about buying and/or selling a home in this market and I’m glad to see it coming! Just as the MHA program, it’s going to be vital that agents educate themselves on this program and help educate the public!