Home Buyer Tax Credit Extended – YAY!

In an effort to again prop up the flailing home buyer’s market, congress has approved an extension on the infamous, and very generous, tax credit for new home buyers that helped to stimulate the market prior to this. Here’s the catch though, that three month extension is for people who have already signed a contract, they just haven’t closed the loan yet. This is designed to help people who have already committed to buying a home for the first time, not for people who are just now shopping, in other words.

They really want to give the benefit of the doubt to those that have committed to a mortgage payment and home purchase already (this is probably because they have already mentally committed, or at least that is probably the line of thought also the government is taking on this), so that they may have more time to close the deal, which we all know if you’ve ever purchased a home, can take a lot more time than you think it would. The first time home buyer must have signed a contract before or on April 30th in order to qualify for this extension.

The extension is also an imposed measure to try to combat fraud when it comes to the tax credit. Apparently some fraudsters are trying to claim the tax in a manner that benefits their taxes, but this measure should help at least to make that more difficult. There always seem to be a few that try to cheat the system!

The tax credit is still the whopping $8,000, which is a nice tidy sum for new home buyers! So, if you’re in the middle or wrapping up a home buying deal and you’re a first time home buyer, this is definitely something you’ll want to consult with your accountant on, who should be up to speed on the latest tax developments from the IRS and the US government.

In other news, consumer confidence is down again, and also the housing market, seemingly propped up by the same tax credit we were just speaking of, has taken a nose dive as well. I guess we’ll see once all this government spending has ended if it has truly helped fuel a self sustained economic recovery that’s fueled by consumer spending, not government spending.

That is the big, lurking question right now in everyone’s mind, particularly economists who are worried that it may turn into a double dip recession if that’s the case.