Not in Contract? Federal Tax Credit Expires Friday

This Friday, at midnight, the Federal Home Buyer Tax Credit will expire for anyone not in contract at that time. The definition of “in contract” is a mutually accepted offer, fully signed and initialed by both the buyer and the seller. Anything less than this will not qualify, nor will anything signed even one second after midnight on Friday, April 30th, 2010.

If you are planning to take advantage of the Federal Home Buyer Tax Credit, you must have a mutually accepted offer signed by both the buyer and the seller by midnight on Friday, April 30th.

Are we repeating ourselves? You bet we are. There is no leeway in this rule whatsoever, so we want to be absolutely clear. There will be no way to backdate or “fudge” dates, or get an exception, or appeal to the Supreme Court, or fly really fast around the world to reverse time. This is a hard, government-mandated deadline. There is zero wiggle-room.

Our agents in every market will do everything in their power to expedite the process for home buyers who are trying to qualify for the tax credit. If you have any concerns about not making the deadline, you should contact your agent as soon as possible. Don’t put it off until later.

Good luck!

Discussion

  • james

    Are you considered to be still under contract if your contract expired on April 23rd, but you still end up closing on that same property as if the contract had not expired?

  • http://none BuyingNextWeek

    I’ve had a mutually accepted contract for months now, buying a short sale. Should be closing next week. I know I need to include a copy of the HUD statement when claiming the credit, to prove that it closed before 6/30. How do I prove that our contract was mutually accepted before 4/30? Copy of contract or other? thanks

  • Peter Pastorelli

    I think that if you are rushing into a contract to get some free money you are insane.
    I also think that if you are offering $20K-$30K over the price of a house just to get $8,000, you need to go back to grammar school.

  • Tom

    There is a mad rush to claim the credit which means there will be a lot more bidders. I just had a client lost out to six other bidders which is a lot for a home. There will be other homes available so don’t rush into things. You might get a better deal when there are more homes on the market because the pool of people looking to claim the credit is no longer competing with you. If you are looking for a home in CA then you will be able to claim the tax credit beginning May 1st for CA residents only.

  • Mike

    Is there a limit to the refund. I bought a house in CA within the April 30th timeline but purchased in Lafayette. That means that my purchase price was over 800K. Am I still eligible for the tax rebate?

  • http://www.redfin.com Bryan Howell

    Hi Mike,

    There’s no upper limit to the home price for the federal tax credit. However, you may be limited by income.

    Basically, if your income is above a certain limit, you’re eligible for less of the credit, or none at all. Here’s the information from the IRS:

    For purchases on or before Nov. 6, 2009, for a married couple filing a joint return, the phase-out range is $150,000 to $170,000. For other taxpayers, the phase-out range is $75,000 to $95,000. This means that the full credit is available for married couples filing a joint return whose modified adjusted gross income (MAGI) is $150,000 or less and for other taxpayers whose MAGI is $75,000 or less.

    For purchases after Nov. 6, 2009, for a married couple filing a joint return, the phase-out range is $225,000 to $245,000. For other taxpayers, the phase-out range is $125,000 to $145,000. This means that the full credit is available for married couples filing a joint return whose MAGI is $225,000 or less and for other taxpayers whose MAGI is $125,000 or less.

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  • Julia

    Is the $8,000 tax credit for first time home buyer offically over? I heard in California is was extended untilJune 1st is that correct?

    Or is there any forecast that the feds will extend this?

  • http://www.redfin.com Bryan Howell

    Hi Julia,

    Unless you already have a mutually signed contract on a home purchase, it’s too late to claim the federal tax credit. There are no signs that the federal tax credit will be extended or renewed.

    California is offering a separate state tax credit for home buyers. It’s not related to the federal credit. You can read more about the California state home buyers tax credit on our Sweet Digs blog:

    http://blog.redfin.com/sfbay/2010/03/the_new_california_home_buyer_tax_credit.html

  • Mike

    Brian thanks for the response back. So I bought a house in 2002 and had possession of the home until 2009 and then it took me about a year to find a new home so I am guessing that makes me eligible for the $6,500 on the federal tax credit. I don’t hit the income levels that you spoke about in your post above. Now, I have to click on the link and see if I am eligible for the CA credit. I know greedy but every penny counts for me these days.

  • Mike

    Just read your link above and it looks like I don’t qualify for the CA tax break. Do I file for the federal tax credit now or do I wait until I file my taxes for 2010?

  • http://www.redfin.com Bryan Howell

    Hi Mike,

    Glad to be able to help a little.

    If you made the purchase in 2010, you have the option of claiming the tax credit on this year’s taxes (if you haven’t filed yet), or you can claim the credit on your 2010 tax return.

    Here’s some information from the IRS on the process of claiming the tax return:

    http://www.irs.gov/newsroom/article/0,,id=204671,00.html

  • http://www.redfin.com Bryan Howell

    (claiming the tax credit, I mean!)

  • http://www.yams.com TomPier

    great post as usual!

  • Mike

    Thanks Bryan for all of your help.

  • Eddy

    Here’s another link that may be helpful to this subject.

    http://www.irs.gov/newsroom/article/0,,id=215791,00.html

    Also if anyone need my assistance into getting their loan close fast, please feel free to contact me at iclosefha@gmail.com

    I work for a direct lender currently 24 to 48 hours underwriting turn around time.

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  • Ed

    We have been under contract on a house since April 22, 2010. We are scheduled to close on the same house on June 17. We have asked the owner to do some repairs and have increased the offer price to pay for some of them. Same house, same contract, but there is an addendum regarding change in sale price. Do I still qualify for the first time homebuyers credit?

    Thanks for your feedback!

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