Senate Votes to Extend Tax Credit Deadline

By:: Kirk Haverkamp | June 17, 2010

The U.S. Senate has approved a three-month extension for closing home sales that qualify for the federal homebuyer tax credit.

The measure would extend until Sept. 30 the current June 30 deadline for homebuyers to close sales to qualify for either the $8,000 first-time homebuyer or $6,500 repeat homebuyer tax credits. To qualify, buyers must have finalized purchase agreements by April 30.

There has been concern from some quarters that the June deadline will not allow many buyers enough time to close sales in order to receive the credit. The National Association of Realtors (NAR) estimates that as many as 180,000 purchases will not be closed in time to qualify for the credit, due in large part to the volume of loan applications being processed.

Extending the deadline would also allow more time for buyers to complete short sales, which typically involve extended consideration by lenders before being approved.

“These are not buyers who just entered into the market,” said NAR President Vicki Golder, in a statement prior to the Senate’s vote. “These are buyers who previously met all the qualifications for the tax credit, but find themselves at the mercy of a work-flow jam with the lenders or other delays and might not be able to complete the purchase of their homes. It would be a tragedy for them not to be able to complete the purchase in time to claim the credit.”

The 60-37 vote, largely along party lines, was to amend a bill dealing largely with unemployement benefits, HR 4123. The House and Senate previously approved separate versions of the bill; the House must approve the Senate’s amended version for the extension to become law.

The measure must be approved by June 30 at the latest, as many purchase contracts have provisions stipulating that they be closed by that date in order to qualify for a tax credit, and will otherwise be cancelled.

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