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Home sweet home

Extension of tax credit deadline helps some with signed contracts

July 25, 2010|By ARNOLD PLATOU
  • Rustin Riss and his wife, Doreen, are having a home built in Westfields, a development off Md. 65 south of Hagerstown. They are among thousands across the nation who will benefit from legislation signed July 2 to extend the deadline for home buyers to qualify for federal tax credits.
By Ric Dugan/Staff Photographer,

HAGERSTOWN -- Rustin and Doreen Riss are building the home of their dreams near Hagerstown, but until about three weeks ago, the decision had a disappointing side.

Then, with the stroke of President Obama's pen, the couple and thousands of other home buyers across the nation have been given a reprieve -- and eventually, a windfall amounting to thousands of dollars.

"It's a nice little surprise," Rustin Riss said.

"Yes, I mean who's not happy with 6,500 bucks?" Doreen said. "That's an unexpected 6,500 bucks."

Obama on July 2 signed legislation that Congress passed to extend the deadline for home buyers to qualify for federal tax credits. First-time home buyers can qualify for up to $8,000 and homeowners, who are selling theirs and buying another home, can get up to $6,500.

The credit is equal to 10 percent of the home's purchase price up to the maximums of $6,500 and $8,000.

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The new legislation doesn't help people who still are looking for a house to buy.

Rather, it applies only to sales contracts signed by first-time home buyers between Jan. 1, 2009, and April 30, 2010. And it applies only to contracts signed by repeat buyers from Nov. 7, 2009, to April 30, 2010.

Before the new law was signed, those deals had to go to settlement by June 30 to qualify for the tax credits.

Now, the deadline for settlement is Sept. 30.

The new law "provides an additional three months for home builders and lenders to complete construction and backlogged paperwork in order for home buyers to close on the home and still receive the tax credit," the National Association of Home Builders (NAHB) says on its website at http://www.nahb.org.

Thus far, the tax credit program -- designed to stimulate the economy -- has drawn claims from more than 3 million home buyers for a total tax savings of more than $21 billion, the NAHB said.

"The extension will help thousands of otherwise qualified home buyers claim the credit for sales that weren't able to close in time due to conditions beyond the buyer's control," NAHB said.

Making a move



By last year, Rustin and Doreen Riss had lived in their two-story, three-bedroom house in Brighton, Colo., for more than six years.

The community is a "cute little suburb just north of Denver," said Doreen Riss, 42, an artist who specializes in painting wall murals.

Rustin Riss, 37, a power generator technician, remembers the effect the recession already was having on their community.

"I think in our neighborhood, our subdivision, there were probably, oh easily, 15 to 20 foreclosed houses," he said.

Having two young daughters, the couple decided it was time to move to the East Coast. Years before, Doreen Riss earned a degree in art and psychology from Salisbury State University on Maryland's Eastern Shore.

So they thought of Maryland, intent on "finding an affordable place, with the city influence, but not with the hustle and bustle thereof," Doreen Riss said.

Hagerstown seemed to be the place.

The move hit some bumps, but the couple has managed, even though it's meant they've had to live in different states for several months.

Rustin Riss had to move from Colorado to Germantown, Md., after he accepted a job working on backup electrical generation systems for a Maryland company last November. With their house on the market, Doreen stayed in Colorado until it was sold in February.

Then, they went house hunting in Washington County, hoping to buy an existing house and move in quickly.

All the while, they knew they wanted to sign a contract before April 30 so they could qualify for the $6,500 tax credit.

A painful decision



Everything seemed to be going according to plan.

"We wanted to sell our home first so we'd be a ready home buyer with no contingency, with cash in hand," Doreen Riss said. "We thought, 'Hopefully, within that time frame, by April 30, hopefully, great, we'll make our deadline.'"

But the foreclosed and short-sale properties they focused on here, hoping to save money, needed a lot of work, she said.

What they saw were houses that were "pretty beat up. Carpets needed to be changed, floors were beat up. It wasn't exactly the flooring we would have chosen. It wasn't the appliances we would have chosen. To rebuild the deck, do the paint, it wouldn't have been worth it," she said.

So the couple made a financially painful decision.

"When we didn't find our dream home built and standing and existing, then we went for new. And we figured we'd kissed the tax credit goodbye" because of the time it would take to build a new house, Doreen Riss said.

"Was it a devastating blow?" she asked. "Who wants to say goodbye to $6,500?"

The couple found the location and the home plans they were looking for in the newer community of Westfields, a development off Md. 65 south of Hagerstown. On April 1, they signed a contract with Ryan Homes Inc. to build a house on Lot 152 there.

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