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Saturday, May 1, 2010

WILL THE HOME BUYER TAX CREDIT BE EXTENDED?

THERE HAVE BEEN RUMORS, but recent strong housing data suggest that the credit will not be extended.  Housing data shows that purchases of new homes in the U.S. surged 27% in March as buyers rushed to qualify for the home buyer tax credit.  Perhaps the Tax Credit has done its job???

You may be thinking, "but not in Michigan," and you have a strong point; however, it is a National program.  The argument can be made that the economic recovery still is still fragile, and extending the home buyer tax credit past the end of summer may be wise.

A report by the National Association of Realtors showed that the sale of existing homes jumped 5.35 million in March -- the last month for eligibility for the tax credit.  Prices have begun to stabilize as well.  

The tax credit was originally extended in November 2009 because the Obama administration felt that as the housing market suffers, so goes the economy.  Positive indications this time around, along with a desire on the part of the Administration to rein in the debt, are combining to work against an extension of the Home Buyer Tax Credit.

So, while the tax credit has expired, there are some exceptions for certain groups who are allowed to claim the credit into 2011. 
If you fall into one of these 2 categories you have an extra year to buy a principal residence and qualify for the home buyer tax credit.  Here are the ground rules:
  • Home buyer must enter into a binding contract to buy a home by April 30, 2011
  • Home buyer must close on their purchase by June 30, 2011
If you have purchased a home and do qualify for the $8000 or $6500 tax credit, you can submit an amended tax return with Form 5045 to claim the home buyer tax credit or you can file for it in your 2010 tax return.

I will continue to monitor this tax credit for any future updates.  I encourage you to check back here often for valuable information!


 

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