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Time running out for homebuyer's tax credit

homebuyers tax creditApril 15 isn't the only tax deadline to be mindful of this month: The first-time homebuyer's credit is winding down this month, too. Taxpayers hoping to qualify for the credit must finalize their contracts by a month from today, on April 30, 2010. If you sign a contract by that date, you have until June 30, 2010, to settle on the purchase.

If you're hoping for another extension of the credit, as happened with the Worker, Homeownership, and Business Assistance Act of 2009, which extended the deadline for qualifying home purchases from Nov. 30, 2009, to April 30, 2010, don't hold your breath. Enthusiasm for the bill has waned, possibly due to the enormous price tag of the last extension: $1 billion per month.

Sen. Johnny Isakson (R-Ga.), who initially pushed hard for the bill, has no intention of re-introducing the legislation. His spokesman explained, "He has no plans to introduce legislation to extend the credit. Part of the benefit of the tax credit was the urgency its sun-setting generated."

In other words, nobody's buying anymore.

The idea behind the credit was to kick start the housing economy. But according to a report released by Goldman Sachs economist Alec Phillips, all but about 200,000 of the 1.4 million first-time buyers who claimed the first-time homebuyer's credit in 2009 would have purchased a home even without the incentive. Put another way, that means $1 billion a month for just 200,000 new home sales all year. Those kinds of numbers are hardly inspiring in the midst of a bad economy.

What that means, realistically, is the push on the Hill to sign on for a third term probably won't happen. In other words, if you're hoping to take advantage of the credit, you should do it now.

You may be eligible for the $8,000 credit, or 10% of the purchase price, whichever is less, if you (or your spouse, if married) have not owned a home for the past three years. If you have owned a home for five consecutive years of the last eight, you may be eligible for up to $6,500 in credit. Taxpayers must be at least 18 years old to claim the credit and must not be claimed as a dependent on any other taxpayer's return. Income limits and other restrictions apply -- see our prior post for details.

If you buy now, you can still claim the credit on your 2009 federal income tax return (or choose to take it on your 2010 federal income tax return, if you prefer). If you've already filed your 2009 federal income tax return, you can file an amended return and still get your refundable credit for this year. But act soon -- the credit will be gone before you know it.

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