This article was last updated on July 18
Unfortunately it looks like the chances of a further extension to the home buyer tax credit are lessening by the day as stronger housing data and focus on reducing government debt and foreclosures emerges. Bloomberg reports that purchases of new homes in the U.S. surged 27% in March, the most in almost five decades as buyers rushed to qualify for the home buyer tax credit. The annual pace of 411,000 new home sales exceeded even the highest forecast of economists. Last month’s purchase rate was the highest since July 2009 and followed a record-low of 324,000 in February that was higher than previously estimated. Home sales increased in all four U.S. regions last month, led by 44 percent jump in the South.
The median price of a new home in the U.S. increased 4.3 percent in March from a year earlier to $214,000. The jump in sales brought the number of new houses on the market down to 228,000, the fewest since March 1971. The supply of homes at the current sales rate dropped to 6.7 months’ worth, the lowest level since December 2006, from 8.6 months in February. A report yesterday from the National Association of Realtors showed sales of existing homes jumped to a 5.35 million rate in March, the first increase in four months. Lawrence Yun, the group’s chief economist, said the government’s homebuyer tax credit “has done its job,” bringing more buyers into the market and stabilizing prices.
The Obama administration originally extended the credit in November 2009 and expanded it to include existing home-owners. To claim the home buyer credit you must have a signed contract by the end of April 2010, with the transaction to be completed by June 30 (see all the qualification details and claiming criteria in this article). You can submit an amended tax return with Form 5045 to claim the home buyer credit or file for it in your 2010 tax return.
While the home buyer credit is likely to lapse, there are some exceptions for certain groups who can claim the credit into 2011. For example Members of the Armed Forces and certain federal employees serving outside the U.S. have an extra year to buy a principal residence in the U.S. and still qualify for the home buyer credit. An eligible taxpayer must buy or enter into a binding contract to buy a home by April 30, 2011, and settle on the purchase by June 30, 2011.
I will continue to monitor this tax credit for any further updates and encourage you to subscribe (free) via Email or RSS to get the latest news along with all the other stimulus payments in 2010 and 2011.