WASHINGTON — An estimated 180,000 consumers eligible for the government's homebuyer tax credit could lose that benefit because a huge backlog could make them miss the June 30 deadline to complete the transaction, but the Senate voted Wednesday to give consumers three more months to seal their deals.
The House of Representatives still must go along before the extension becomes law, a vote that's likely before June 30. The Senate passed the extension 60 to 37. It will be included in an emergency spending bill that includes extending certain unemployment benefits, funding summer job programs and boosting Medicare payments to physicians.
Contracts had to be signed by April 30 for consumers to qualify for the tax credit, but if those who qualified for the credit are unable to finish the deal by June 30, they could lose it.
Vicki Cox Golder, president of the National Association of Realtors, said the extension was a matter of fairness.
"These are not buyers who just entered into the market. These are buyers who previously met all the qualifications for the tax credit, but find themselves at the mercy of a work-flow jam with the lenders or other delays and might not be able to complete the purchase of their homes," she said.
"It would be a tragedy for them not to be able to complete the purchase in time to claim the credit."
The homebuyer credit program proved enormously popular, as well as a boon to the moribund housing market. The Realtors figure that since the credit program began in February 2009, 4.4 million people got the tax credit, and the break boosted sales by 1 million. First-time home buyers qualified for an $8,000 credit, while repeat buyers got a $6,500 credit.
The tax credit helped produce a major sales spike in April. The Commerce Department reported sales of new single family homes were up 14.8 percent in that month, after a 29.8 percent gain in March. The Realtors reported that existing home sales, which account for about 80 percent of the market, were up 7.6 percent in April, the biggest jump in five months. First-time buyers accounted for 49 percent of sales, up from 44 percent in March.
Senate Majority Leader Harry Reid, D-Nev., sponsored the extension. It would cost the government an estimated $140 million, and would be paid for by disallowing tax deductions for punitive damages paid in connection with a judgment or settlement, a legal change that would save an estimated $315 million.
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