Obama Signs Homebuyer Tax Credit Extension, but Not for Everyone
For example, we have this headline from HousingWire: "Obama Signs Homebuyer Tax Credit Extension."
Based on that headline, you'd think that the $8,000 first-time homebuyer tax credit was extended. Time to start scouring the Web for your dream house? Start calling real estate agents?
Hold on just a minute.
Sadly, the extension signed by President Obama was merely for the closing deadline, not the credit itself. From the IRS website:
You must meet the required deadlines to be eligible to claim the credit. For other information on eligibility requirements, see our questions and answers.
- You must have bought -- or entered into a binding contract to buy - a principal residence on or before April 30, 2010.
- If you entered into a binding contract by April 30, 2010, you must close (go to settlement) on the home on or before Sept. 30, 2010 (recent legislation extended the June 30 deadline previously in effect). So unless you've already found your dream house, and entered into contract, some two months ago, you won't be getting any government payout. Sorry.
Which is not to say some of you won't try.
USA Today reports that the Federal Government paid out $9.1 million of your money to incarcerated felons for buying their first home:
I, for one, am glad to know that so many in our freedom-challenged community will have new homes to go to after they're done serving their sentences, some of them for life in prison. Although the additional prison sentences from the credit-generation activity might delay their move-in date by a couple of years."1,295 prisoners, including 241 serving life sentences, received $9.1 million in credits, even though they were incarcerated at the time they reported that they purchased their home. These prisoners didn't file joint returns, so their claims could not have been the result of purchases made with or by their spouses, the report said."
In another case, cited in the same article, 67 different people claimed the first-time homebuyer tax credit for the same house. Maybe the house was this one with 123 rooms?
Now that the deadline has been extended to Sept. 30, such "insistent customers" may stop insisting so much. There's plenty of time to backdate contracts, enter into conspiracy for fraud, and other activities that may lead to not just a new house, but to the Big House.Some real estate brokers see signs of dubious behavior. Glenn Kelman, chief executive of Redfin Corp., a Seattle-based broker that operates in nine states, says he started to wonder if tax fraud was on the agenda after hearing from some customers who were very insistent on closing by June 30 even though they went under contract after April 30.
It may be that Congress and President Obama would eventually extend the tax credit itself, rather than just the deadline for closing. Whether that would be wise or not is for you to decide. However, until that event happens, if someone should tell you that now is a great time to buy a new house because the tax credit has been extended.... Well, you've been warned.
If the real estate market rebounds due to this news of the "extension" of the homebuyer tax credit, then we'll know one of three things is true:
- Americans are really, really impatient, and can't get past reading just the misleading headline; or
- Americans are really, really smart at perpetrating (or planning to perpetrate) massive tax fraud; or
Otherwise, there is absolutely no reason to believe that this "extension" would have an impact on the real estate market one way or the other. Either way, when it comes to real estate news, might I suggest ignoring the headline and reading the entire story?