“Part of the middle-class dream in our country has been to own a home, to be part of a thriving neighborhood. The housing crash has been particularly painful.” — U.S. Sen. Sherrod Brown, D-Ohio
With a little more than a month left before the deadline for first-time home buyers to close on a property to receive the $8,000 tax credit, residents and legislators alike are hoping a new bill could give them more time.
U.S. Sen. Sherrod Brown, D-Ohio, announced Wednesday, Oct. 14, his sponsoring of Senate Bill 1678, which would extend the current refundable tax credit, valued at 10 percent of the purchase price of the home up to $8,000, from Dec. 1 to May 31.
The current credit applies to residents who have never owned a home or have not owned one in the past three years. There is an income requirement of $75,000 or less for a single tax filer and $150,000 for couples filing jointly.
Another requirement is homeowners must use the property as their principal residence for at least three years or they may have to repay the credit, according to the Internal Revenue Service.
Bill 1678 is not the only one being considered. Other proposals would include upping the credit to $15,000 or increasing income restrictions. However, Brown maintained that he supports this bill because the credit is “reasonable” and lower-budget than some other proposals at $6 billion.
“Part of the middle-class dream in our country has been to own a home, to be part of a thriving neighborhood,” he said. “The housing crash has been particularly painful. We know that what leads us typically out of a recession is autos and housing so it is imperative that we move on this. The tax credit is critical to getting the economy back on track.”
Currently, about 44,771 Ohio households have received tax credit for purchasing their first home, receiving more than $325 million collectively as of Aug. 22, Brown said.
But with local Realtors saying it takes at least 30 days to close on a property — which must be done by Nov. 30 to receive the credit — time is running out.
Get the credit now
Many residents, fearing the government will run out of funds for the program or will be backlogged with last-minute filers, have been submitting tax addendums to their 2008 returns in order to receive the credit now. The practice is allowable under the legislation as long as the home was purchased this year.
Only about $6.6 billion of the $787 billion federal stimulus package was set aside for the homebuyer’s program, and Brown estimated it would cost about $1 billion a month to extend the credits until the end of May 2010. However, he said he did not believe they were out of money yet for the original program.
But Middletown resident Clara Lieben said she doesn’t want to take her chances.
“I don’t want to wait. What if they run out in April? I only bought the house to get this money, and I need it to fix it up.”
Jen Allen of Hamilton said she filed in August but hasn’t gotten her tax credit back yet and is concerned due to the lack of information she’s getting from the IRS.
“I will probably not see my credit until next year anyway, and that is money we are counting on because the house we purchased is in need of a roof,” she said.
Ruth Atha, a credit counselor with LifeSpan who has been assisting troubled homeowners with their mortgages, has found herself in a tough situation. As a first-time home buyer, she has been working to purchase a home through a short sale — where the bank agrees to sell the property for less than what is owed on the loan — since April. She said she fears she’s no closer to closing in time for the tax credit “than a man on the moon.”
“It’s just frustrating because there is no reason for this and as I told the counselors it is interesting sitting on the other side of the desk,” she said. “You get a better understanding as to what people are going through.”
Residents cannot file for the tax credit until they have closed on the property; however, residents do not need to include their closing papers in their addendum to receive the credit. To check the status of your credit, call the IRS’s Where’s My Refund hotline at (800) 829-4477 and move through the prompts until you can speak with a customer service representative. The IRS advises to allow at least four weeks for processing before checking the status. A letter will be sent in the mail to confirm your addendum has been processed.
If your income has become lower in 2009 — from a job loss or cut wages — officials from the IRS advised filing for the credit with your 2009 taxes as your decreased income may result in a higher refund.
Contact this reporter at (513) 705-2843 or jheffner@coxohio.com.
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