Last day for the first-time home buyer tax credit
The two-year-old federal tax incentive credited with a spike in home buying -- and tax fraud -- is scheduled to end tonight.
You have until the end of the day to sign a binding contract if you hope to qualify for the $8,000 credit for first-time home buyers. (There's a second deadline for the settlement itself, which must happen by the end of June.)
A $6,500 credit for certain repeat home buyers, added to the program when it was extended in November, also phases out today.
A number of local buyers have only just gotten under contract, agents report.
"Everyone I’ve been talking to is saying they've been super busy," said Joseph T. "Jody" Landers III, executive vice president of the Greater Baltimore Board of Realtors.
The first-timer incentive, passed in July 2008, started as a $7,500 credit (retroactive to April purchases) and was actually a no-interest loan: Buyers had to repay the money over 15 years. The reaction was tepid.
In February 2009, Congress turned it into an $8,000 housewarming gift from Uncle Sam -- no repayment needed as long as you kept the place as your primary residence for at least three years. (The sweeter incentive was made retroactive to purchases in January.)
It's fully refundable, "meaning the credit will be paid out to eligible taxpayers, even if they owe no tax," as the IRS notes.
Supporters called the credit a necessary stimulant for a housing market that had helped topple the economy and was one of the anchors preventing USS Recovery from sailing off. Detractors said it was a big expense and stole buyers from the future to handle today's problems.
Then there were the flurry of $8k checks mailed out to non-buyers, not to mention the preschool-aged children of buyers who figured their darlings qualified as first-timers. Congress tried to shore up the controls when it extended the credit, requiring proof of purchase and at least 18 years of life on Earth.
The National Association of Realtors is estimating that 2 million Americans qualified for the credit last year, and it expects more than that will qualify this year, despite the shorter period.
So, folks: Was it worth it? Are you sorry or glad the credit is coming to an end?
And what do you think will happen to the housing market in its absence?
It should be noted that an echo of the program will be bouncing around for a while yet: People in the military and certain federal workers stationed overseas have until April 30 of next year to get under contract."It applies to any individual (and, 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," the IRS says.