Tax Credit Extension Fails to Extend to September 30th for Kansas City Home Buyers

If you're planning to claim the home-buyer tax credit in Kansas City, better get to the closing table soon by the end of June: A measure that would have extended the amount of time that buyers have to close the deal got shelved in the Senate this week.

The amendment to extend the deadline was part of the larger American Jobs and Closing Tax Loopholes Act of 2010; the Senate failed to garner the votes needed to end debate on the bill on Thursday. Even if the bill passes the Senate, it also still needs House approval.

The extension proposal was simple and necessary: Extend the closing date for the home buyer tax credit from June 30th to September 30th — not the tax credit itself, which required buyers to sign a contract by April 30th, just the closing date.

Anybody who has ventured into the real estate market in the past year knows that tighter lending standards, new appraisal rules and general banking backlogs are making a two month contract-to-closing period very difficult. Add to this the short sale process and 2 months is difficult.  

Adding time to close made sense, right? It is not that simple.

This week the chief economist for the National Association of Realtors said up to 30 percent of the buyers who signed in April will not get to closing by June 30th; that translates into roughly 180,000 home purchases. The credit is $8000 for first time buyers and $6500 for repeat buyers. This is not to say that all those buyers will pull out of the deals, but theses buyers will lose the extra incentive that may have gotten them to the table in the first place.

The closing date extension was added to a tax extenders bill backed by Democrats in the Senate. That bill has failed three times already, in the face of Republican opposition to adding to the federal deficit.

But it ain’t over ’til it’s over.

Yes, it’s dead now, but Senate sources say they are looking into “other options.” The point is they can add it to whatever they want and try passing it again and making it retroactive. But June 30th is still the current deadline, and that means an awful lot of home buyers will not get what the government promised, and many will likely pull out of deals.

Let us know what you think or add to our blog by writing a comment.

Blog post written by the Dowell Taggart Team of RE/MAX Best Associates

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