With the cutoff to qualify for a federal tax credit fast approaching, Congress wants to delay the deadline for consumers scrambling to close transactions. Congress is considering an extension for would-be homebuyers who are racing to close home sales in order to receive a federal tax credit.
The real-estate industry has warned that tens of thousands of buyers who rushed to buy homes to qualify might not close before the deadline imposed by Congress, meaning they could miss out on receiving credits worth thousands of dollars if lawmakers don't act. Congress last fall extended an $8,000 tax credit for first-time homebuyers and added a smaller $6,500 credit for current homeowners who were buying a primary residence. To qualify for the credit, buyers had to sign purchase contracts by April 30 and must close on the transaction by June 30.
But there are so many transactions in the pipeline that the companies responsible for handling the sales, including mortgage lenders, appraisers and title insurers and real-estate brokers, say the last-minute homebuying rush in April has created bottlenecks.
Senate Majority Leader Harry Reid (D., Nev.) last week said he would back a measure to extend the June 30 closing date to Sept. 30 for buyers who had met the April contract deadline.
The National Association of Realtors estimates that from 55,000 to 75,000 homebuyers who are under contract won't be able to close in time to claim the tax credit. The trade group is lobbying Congress to extend the June 30 deadline only for those buyers who met the April deadline.
It is unclear how many sales would fall through for those who miss out on the tax credit. Buyers could be hard-pressed to void sales contracts unless they have made their closing contingent on receiving the tax credit or are willing to forgo any deposits.
--This article was reported by Nick Timiraos for The Wall Street Journal--
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