Midyear tax tip #7: Contribute to your retirement accounts
Senate leaders also propose extending the first-time homebuyer tax credit

The homebuyer credit: It's baaacckkk!

The first-time homebuyer credit is supposed to expire tomorrow, June 30. That's the date by which buyers who had a contract in place by April 30 are to close on the residence in order to claim the $8,000 tax break.

But late this afternoon, the House approved a bill that would extend the closing date another three months, until Sept. 30.

The measure, passed 409 to 5, now goes to the Senate.

Just last week, that legislative body tried to get the longer closing time added to the tax extenders measure that kept failing. So it's likely that the Senate will sign off, too, on this separate bill.

The final Senate vote could come tomorrow. But even if it doesn't, odds are good that it will happen soon.

UPDATE: Senate Majority Leader Harry Reid (D-Nev.) and Senate Finance Committee Chairman Max Baucus (D-Mont.) late Wednesday announced legislation to push the closing date for the homebuyer credit back to Sept. 30.

And don't worry if the credit extension becomes official after the June 30 deadline passes.

Just go ahead with your closing as soon as you can. If the credit extension passes, which I believe it will, the tax break will be available to those who tried but failed to get the paperwork finished tomorrow.

Making making tax law changes retroactive is just the sloppy way Congress operates nowadays.

Tougher still: In addition to extending the closing date, this latest bill seeks to reduce fraud associated with the credit.

Thanks to a recent report by the Treasury Inspector General for Tax Administration that around 1,300 prison inmates claimed and received more than $9 million from the tax break, the bill would allow the IRS to disclose tax return information to prison administrators.

Who's worth more? This latest iteration of the often-tweaked housing tax break would save around 180,000 homebuyers from losing out on the credit.

The cost to the U.S. Treasury for three extra months? Around $9 million over the next decade.

I'm happy for the homebuyers who'll save some tax dollars, but really, this seems like a lot of money for a very small group of people.

Of course, the real dollars involved are the contributions that the Realtors will make to members of Congress this election year. Without the three extra months, who knows what kind of campaign funds would be lost.

Don't believe this tax law change is driven more by politics than policy?

Also this afternoon the House was unable to muster enough votes to keep unemployment benefits going out to folks who've been out of jobs for months.

Of course the cost is substantially more, around $33 billion. But so are the number of affected individuals, 1.7 million people trying to pay rent, buy groceries and keep the electricity on.

The sad fact is that the jobless just don't have as good of lobbyists as do folks in the real estate industry.

Related posts:

Want to tell your friends about this blog post? Click the Tweet This or Digg This buttons below or use the Share This icon to spread the word via e-mail, Facebook and other popular applications. Thanks!


Feed You can follow this conversation by subscribing to the comment feed for this post.

The comments to this entry are closed.