Durham: Real Estate

Q: I was unable to close my tax credit sale prior to the June 30 deadline. Was the closing date extended for the tax credit home sales?

A: Yes, after a close call with the June 30 deadline that could have affected many home buyers, the U.S. Congress passed an extension of the home buyer tax credit closing deadline. The closing date extension is included in the Home Buyer Assistance and Improvement Act (H.R. 5623.) It will prevent as many as 180,000 home buyers from losing their eligibility for the tax credit through no fault of their own, according to data provided by the National Association of Realtors.

The closing date extension will only apply to the home buyers who had home purchase agreements pending as of April 30 and originally had until June 30 to close on their purchases to claim the federal tax credit of up to $8,000. Under the legislation that passed on June 30th, these buyers will have until September 3th to closes the sales transaction. The legislation does not provide for any provision to allow any new buyers to receive the tax credit.

Realtors have supported the extension of that closing deadline because of the fact that many home buyers are experiencing delays in closing sales that are out of the home buyer's control. These delays are occurring for several reasons. A large number of these transactions are short sales which can often take a long time to close due to the fact lenders are swamped with transactions to consider as a short sale. And some financing programs, such as Rural Development loans, have experienced delays due to fundamental changes in the programs while the loan approval process was under way. Another reason is the sheer number of mortgage applications received by lenders from buyers summiting contracts before the April 30th contact deadline.

The legislation, which now goes to President Obama for signature, is designed to create a seamless extension of the closing deadline. There will be no gap between June 30th and the date the President signs the bill into law.

Keep in mind that members of the military and certain federal employees serving outside the U.S. have an extra year to qualify for the first time home buyer tax credit. This allows an eligible taxpayer to enter into a binding purchase agreement for a home as their principal residence on or before April 30, 2011. This is an extra year for those home buyers who qualify. If a binding purchase agreement is entered into by April 30, 2011, the home buyer will have until June 30, 2011 to close the sale.

Members of the uniformed services, members of the Foreign Service and employees of the intelligence community are eligible for this special rule. It applies to any individual (an, if married, the individual's spouse) who serves on qualified official extended duty service outside of the United States for at least 90 days during the period beginning after Dec. 31, 2008, and ending before May 1, 2010. This is great news for returning eligible military and other federal workers. It is allowing them time to find a home and qualify for the tax credit of up to $8,000.

Get answers to questions you might have about real estate from Randy Durham, who is president of the Chattanooga Association of Realtors and a broker with Keller Williams Realty. His column appears on Sundays. Send your questions to Business Editor John Vass Jr. at jvass@timesfreepress.com

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