Friday, September 18, 2009

Home buyer tax credit ends sooner than you might think

Barry White arouses tiger shark
Experts suggest signing a contract by October 15 to make the November 30 deadline -- the date the sale must be complete in order to cash in on the federal tax credit of up to $8,000 for first-time home buyers.

by Broderick Perkins
© 2008 DeadlineNews.Com
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Deadline Newsroom - The popular federal home buyer tax credit ends sooner than you might think and proponents say without it the economy could slip back into recession.

Nearly 40 percent of first-time home buyers in California say the federal tax credit of up to $8,000 prompted them to buy a home.

That's strong indication that the measure has spurred home sales that otherwise may not have been completed and helped the number of home sales rise, albeit slowly.

Builders and real estate agents say that trend could be reversed if the credit isn't extended.

"It is clear that the federal tax credit for first-time home buyers is working, as evidenced by the spike in home sales in recent months," said California Association of Realtors' President James Liptak.

"This tax credit is arguably the most successful strategy employed by the government’s efforts to stimulate the housing market," added Liptak.

(California's own tax credit for buyers is over budget.

And as goes housing, so goes the economy.

Unfortunately unless federal legislation extends the deal on new or resale homes purchased this year, the home buying perk, with its economic boost, will end Nov. 30 -- or sooner for some.

Better Homes and Gardens Real Estate, like other realty operations, is urging first-time homebuyers to sign a contract by October 15th or sooner, in order to qualify for the credit which says the sale must complete and keys exchanged by Nov. 30.

According to BH&G, the list of customary closing requirements including mortgage approvals, appraisals, home inspections and other tasks necessary to close, together can typically take 45 to 60 days between the contract signing and the closing date.

"First-time homebuyers have a lot to consider when choosing a home, not the least of which is the fact that the November 30th deadline they may have circled on their calendars is effectively an October 15th deadline – and even that is cutting it very close," said Sherry Chris, president and CEO of Better Homes and Gardens Real Estate.

"No one should rush the decision of buying a home, but if the tax credit is motivating their decision, they should be very aware of their timing," she added.

• Read about more tax credits and tax breaks that really hit home.

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Broderick Perkins, an award-winning consumer journalist, parlayed 30 years of old-school journalism into a digital real estate news service, the San Jose, CA-based DeadlineNews Group, including DeadlineNews.Com, a real estate news and consulting service and Web site, and the Deadline Newsroom, DeadlineNews.Com's news back shop.

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