Time Running Out On $8000 Tax Credit

There may be less time than you think to take advantage of the first-time home buyer tax credit. I've heard many misleading or uninformed statements made recently about this tax credit, with one of the many confusions being when the program ends. I'm sure if this program got anywhere near as much publicity as Cash For Clunkers that wouldn't be the case. Unfortunately, a not so uncommon response I hear from buyers is that they have until the end of the year to buy a house. Well, that's not exactly true. Let's take a closer look at that statement and do a little math. First thing first, here's what the IRS says about the tax credit:


The American Recovery and Reinvestment Act of 2009 authorizes a tax credit of up to $8,000 for qualified first-time home buyers purchasing a principal residence on or after January 1, 2009 and before December 1, 2009.

Let's be clear, "purchasing a principal residence" means closing on your home - not making an offer or even getting your offer accepted. It means going under contract, doing inspections, getting financing, removing all contingencies and closing. All of this before December 1 (a.k.a. Nov. 30th or earlier). Now, if we look at a calendar, November 30th is the Monday following Thanksgiving weekend. I would advise all clients to avoid closing on this date for a couple reasons 1) It's sure to be a mad house at the title companies with everyone trying to make it in before the deadline and 2) if there are any hold-ups with the financing and your lender needs to set the closing back a couple days, you're out of luck. So, to be on the safe side, let's say you close a week earlier on November 23, and with a typical closing date 30 days out from time of accepted contract, that puts you at October 23 (or roughly 2 months from now).

But don't fear, for a focused and motivated buyer that is plenty of time to find the right home. There is a good amount of inventory out there to choose from and with low rates coupled with reasonable prices, there is no better time than now for the first-time buyer.

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