Homebuyers closer to getting more time for tax credit

By Reuters
Posted June 29, 2010 at 4:15 p.m.

The House of Representatives Tuesday approved giving extra time to homebuyers trying to get a popular federal tax credit by the end of the month.

The House voted 409-5  to extend the closing deadline to Sept. 30 for buyers who met the April 30 deadline to have a signed contract. The current deadline requires those buyers to close the transaction by June 30 to receive the $8,000 tax credit for first-time homebuyers.
The Senate must still approve the measure before President Barack Obama can sign it into law.

Senate Majority Leader Harry Reid sought this month to attach a companion proposal to a separate effort to extend insurance benefits to unemployed workers but the overall measure was rejected by the Senate.

Reid is expected to find another way for the Senate to consider the popular measure before Wednesday, though it remains unclear how he will do that.

Reid faces a tough re-election fight in Nevada, where the U.S. foreclosure crisis is most pronounced.

Real estate agents say thousands of settlements may not be completed by Wednesday because settlement offices are slammed with buyers trying to close on transactions  to receive the funds.

Critics say the three-month extension is an invitation for fraud, providing prospective home buyers time to back date contracts to  before April 30 and subsequently closing on those contracts by the new Sept. 30 deadline.

Congress extended the $8,000 tax credit for first-time homebuyers last fall and added a $6,500 tax credit for all buyers who were purchasing a primary residence.

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