This is a tricky one. I got to take advantage of the $8000 tax credit for home buyers when it was first issued. Although I wasn’t going to turn down the $8000 tax credit that the government gave me, I see that there are going to be some longer-term negative effects of a program like this.
Then of course, the government extended the tax credit from November 2009 to June 2010 and opened it up to existing homeowners as well. And so, as we near the end of June it was up for another extension.
Tax Credit Extension Fails
Apparently the Senate Jobless aid bill that included an amendment to extend the homebuyer’s tax credit until September failed to pass in the Senate. So what this means is that in order to still qualify for the tax credit, you have to close your home purchase by June 30th 2010.
According to this article (Homebuyers tax credit extension fails)…
The bill, H.R. 4123, included an amendment allowing homebuyers a three-month extension on the tax credit, allowing them until September 30 to close on a home. But the extension only applied to buyers who signed purchasing contracts before the original April 30 deadline.
The bill would have provided repeat homebuyers a $6,500 tax credit and first time homebuyers a $8,000 tax credit.
Update July 1st, 2010 – A couple days later Congress went back at it again and they decided to pass a bill that does extend the homebuyer tax credit until September 30th 2010. According to this article from Reuters…
The U.S. Congress on Wednesday approved a bill extending the closing deadline for homebuyers trying to take advantage of a popular tax credit.
Homebuyers with contracts signed by April 30 who failed to go to closing by the June 30 deadline will now have until September 30 to complete their purchases. The House of Representatives on Tuesday approved the bill and it now goes to President Barack Obama for his signature.
The $8,000 tax credit for first time homebuyers and $6,500 credit for others purchasing a new primary residence was a highly popular temporary measure by the Obama administration to jump start home sales during the economic recession.
Do you have any opinions about the homebuyer’s tax credit? Do you wish it failed? Are you glad it was extended?
{ 7 comments… read them below or add one }
I just read about this also. I think now that the homebuyer’s credit is out of the equation the housing market will continue its decline. There is nothing to stop it since people are still being laid off. Here in Washington State our housing market is beginning to decline again.
Ok, I have a radical idea here…I’m interested in what others think.
My husband and I signed a contract to purchase our first home before April 30 but will close in September, so I guess we will qualify for the tax credit. We have decided not to take the credit. With the amount of debt our government is in (13 trillion dollars!!!) this tax credit (and other credits) is just adding to that debt. We’re ALL going to pay massively for this later.
Our reasoning is twofold:
1. WE are the ones who are going to have to pay for all this government spending. It will come back to us, and our children and our grandchildren and their children through higher taxes, more taxes and generally higher priced goods. We are ALL going to experience significant tax hikes in order to pay back all this money. That means that less of the money we earn will actually be ours. The government will take it before it even reaches our bank accounts.
2. There is something that doesn’t feel right about accepting “free money” from someone (or the govn’t) when they really can’t afford to be giving it to us in the first place.
I compare it to this situation, for example, you have a friend or family member who wants to give you a gift. They are up to their eyeballs in debt. They cannot control their spending, more debt is mounting every day, but they really want to help you buy your first house. This person cannot afford to give you anything…they can’t even control their own spending. Although the intentions are not bad, they are good; your friend really can’t afford it. How do you feel about taking money from someone who is not financially in a place to be giving?
We realize that us not taking the “free $8000″ isn’t going to change anything. We’re going to be saving the government pennies comparatively. But we are not willing to contribute to the government digging itself deeper and deeper in the hole.
We could certainly use the money. We’re not wealthy by any means. My husband is a minister, and I work part time. We’re pretty much going to deplete our savings by buying this house. It would be nice to replace some of it…But as Christians and American citizens we feel like we need to take a stand somewhere.
Any thoughts? Are we crazy?
@Stephanie
Yes, you are crazy. The government is in debt now and will continue going into debt. The only difference is that you have the choice to have $8,000 of that debt ended up on your balance sheet or on the balance sheet of somebody else (or some organization).
You easily pay more than $8,000/year in taxes if you make enough to afford a house, so this can be thought of a one time rebate of some of those taxes.
Mike –
Good point. Thanks for the input.
Comparing the government to a friend isn’t even close to being apples and apples. You could actually help your friend (deny gift, counseling, etc). You can’t help the government. It’s too big, encompasses many people and is global in a sense.
Take the credit and if you feel compelled to “help out” then get politically active. Getting politicians who are fiscally minded and responsible elected is far more valuable than your $8,000 credit.
Pray about it. Perhaps this will be a blessing for you guys.
Stephanie,
Take the money. If you have any regrets, give it to a charity. Be a blessing to others. Good luck with your decision!
Take the money, fight the program. Consider it getting back what was stolen from you. Then vote the bums out that authorized it!