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Posts Tagged ‘april 30th’

The deadline for the First Time Home Buyer Tax Credit and the Long Time Home Buyer Tax credit is FAST approaching.  The deadlines are:

1.  The parties must enter into a “binding contract” on or before April 30, 2010; and

2.  The transaction must close on or before June 30, 2010.

This means you have just days or hours until Friday, April 30 2010 to enter a “binding contract.”  Lets get those offers signed!

NOTE:  The IRS has not defined “binding contract” and many parties have questioned the effect of contingencies.  For instance, short sales require bank approval.  When that approval is a contingency that has not been met prior to April 30th, is there a binding contract?  One would have a strong argument that the offer is binding (the lender is not a party and their approval is only a contingency), but it is the IRS and a court’s interpretation that will matter.  Consult an accountant and or an attorney if you or your clients have this issue.  See Our Blog Post on Short Sales and The Tax Credit.

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 The Tax Deadline Approaches . . . or does it?

Buyers who wish to qualify for the first time home buyer tax credit must meet two deadlines:

  1. They must “enter into a binding contract to buy, a principal residence on or before April 30, 2010” and
  2. Close on the home by June 30, 2010.

See The IRS Website for more information.

So why are people flocking to close on April 30th?   We are seeing record volume for the last few days of the month. Indeed, Homestead Title’s sales volume for the last 4 days of April is up over 250% compared to the previous 5 year average.

Most title companies in Madison are already booked and the orders keep rolling in. (Homestead is still available for those who truly need to close – link here to place a title order). 

But this is a phantom deadline — the deadline for closing is not until June 30th.  Perhaps we are seeing a coincidental market upswing?  Perhaps buyers are erring on the side of caution?  Or perhaps buyers were simply confused when they wrote their offers and think they really need to close by the end of April?

Any questions about whether you or your buyer qualifies for the tax credit should be directed to an accountant. We have provided information from the IRS website, but it is important to consult with an expert about your specific facts and circumstances.

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