Sept. 16, 2009
I hope homebuyers understand the deadline for the $8,000 federal tax credit. Getting it wrong could cost someone a lot. Well, $8,000, actually.
This credit, available to most first-time homebuyers, expires Nov. 30, 2009. Some people may think this means they merely have to have a signed contract on a property prior to December 1. Not so. The sale must actually close before December 1.
Since this credit is for first-timers, many of the folks who stand to benefit may not have a good feel for just how long it takes to get from an agreed-upon contract between buyer and seller and the successful culmination of the sale. What do you think? A week? A month? Try 45 days.
You may be able to get it done faster. More likely, it will take a little longer. But 45 days is the average I recently heard reported by a VP at the National Association of REALTORS®.
If you stick with the 45-day example, that means you'd want to have a contract on a home by October 16. Even so, you would be cutting it awfully close. One delay could blow the whole $8,000 for you. Consider this as well: There may be a bottleneck of transactions trying to beat that same deadline. A large volume of transactions will make it difficult to keep them all on track.
You may have heard of efforts to extend the deadline for the credit. There have also been proposals to broaden the pool of buyers who qualify beyond first-timers. And some have called for increasing the credit from $8,000 to $15,000.
So you could just wait and see. If you do, you take the same risk as a buyer who is counting on interest rates to drop. Maybe it happens, maybe not. Whatever you decide, at least now you know what's at stake and when the current offer runs out.
