New law extends homebuyer credit closing deadline to September 30

On July 2, 2010, President Obama signed the Homebuyer Assistance and Improvement Act of 2010 (2010 Homebuyer Act) into law. The new law extends the June 30, 2010 closing deadline to September 30, 2010 for Code Sec. 36 homebuyer tax credit claims on purchases under contract by April 30, 2010, that initially had set a closing date on or before June 30, 2010. Immediately following enactment, the IRS issued guidance announcing the extension and reviewing the special filing and documentation procedures for the credit. It also updated Form 5405, First-Time Homebuyer Credit and Repayment of the Credit, and its accompanying Instructions to reflect the 2010 Homebuyer Improvement Act.

The House Ways and Means Committee estimated that approximately 180,000 new homeowners would benefit from the extension. Congressional leaders pointed out that the extension was only fair to prospective homeowners meeting the qualifying April 30, 2010 deadline for a binding sales contract only to be stymied, through no fault of their own, by financial red tape from mortgage lenders and guarantors from meeting what initially appeared to be a more-than-generous June 30 closing deadline.

A revival of the general homebuyer credit until year-end 2010 has been discussed in Congress to help the still-struggling housing market. Nevertheless, Congress is unlikely to follow through due to rising concern over the federal deficit.

P.L. 111-198, IR-2010-80