tax-credit-extendedLast week, President Obama eased the mind those hoping to take advantage of the First-Time Homebuyer Credit who were struggling to meet the previous closing deadline of June 30th. On Friday, July 2nd Obama signed the Homebuyer Assistance and Improvement Act that will allow those who recently contracted a home to finalize the deal by September 30, 2010. Remember, that is the only deadline that was extended and that in order to qualify taxpayers still must have entered in a binding contract by April 30th.

The approval of this credit was encouraged by negative trends in the housing market that showed no evidence of a turn-around. Given this, law makers agreed that it was no time to see the homebuyer credit expire and this revised bill was quickly passed through the House and Senate.

The passing of H.R. 5623 will provide many first time homebuyers with huge relief and is estimated by the National Association of Realtors to affect nearly 200,000 buyers who had little hope of meeting the previous deadline. However, everyone may not share the same excitement over the recent passing of this bill as it is estimated to cost $140 million.

If this new deadline applies to you make sure that you have all of the required documents prepared. In addition to Form 5405, those wishing to qualify for this credit must also submit at least one of the following:

  • A duplicate of the settlement statement
  • A copy of the sales contract if you purchased a mobile home
  • A copy of the certificate of occupancy if you are purchasing a newly constructed house

Regardless of which of the above options applies to you they must all include the names of those involved, the address of the property and the date issued.

First time homebuyers are not the only ones who can benefit from buyer tax credits. In fact, taxpayers who can verify that they have resided in their home for at least five straight years and are interested in purchasing a new main residence can claim this as well. If you wish to claim this credit make sure that you attach either records of your property taxes or your homeowners insurance in addition to Form 1098.