Earlier this month, Congress and the President created a new law that extended and expanded the $8,000 tax credit for homebuyers. If you’re in the market for a house and you’re counting on this tax benefit, you no longer need to rush to purchase before December 1. The new law extends the credit for anyone who closes on a primary residence by June 30, 2010 and allows more than just first-time purchasers to qualify.
The credit is designed to save the real estate industry from abject failure during the recession and recovery, creating a temporary incentive which might encourage more people to buy houses. The National Association of Realtors estimates that 335,000 out of the 1.8 million home buyers who will have qualified for the tax credit by the end of November 2009 would not have purchased their new houses if not for this credit, so the incentive may be working.
Home buyers purchasing a house in 2009 have the option of filing an amended income tax return (1040X) for 2008 to receive a credit if it wasn’t claimed on the original income tax return for 2008. Although it originally took six weeks for the IRS to send tax credits to home buyers filing amended returns, as the volume has increased there may be a longer delay. It may save time and effort spent on paperwork to claim the credit on the 2009 income tax return filed early in 2010.
There may not be a better time to buy a house in terms of price and availability. Unfortunately, many people are having a difficult time qualifying for good mortgage interest rates or, in some cases, any loan at all. Now that the recession is officially over and the economy is beginning to improve in all but the job market, we’ll see fewer tax incentives designed to stimulate the economy. If you can, and if the timing is right for you, consider taking advantage of the home buyers’ tax credit and any other credits the government has made available.