$8,000 Tax Credit in Limbo…

An extension of the deadline for closing on a home purchase to claim the federal homebuyer tax credit remains tied to Senate legislation that would extend unemployment benefits, complicating efforts to get the deadline extended before it expires today.

House lawmakers passed a standalone bill Tuesday, HR 5623, that would extend today’s deadline for closing on a home purchase to Sept. 30.

But rather than take up that bill, Senate lawmakers will continue to push for passage of HR 4213, the “American Jobs and Closing Tax Loopholes Act of 2010,” a bill extending unemployment benefits that was amended June 16 to include a provision extending the homebuyer tax credit deadline.

A June 24 vote to end debate in the Senate and hold a vote on HR 4213 failed to win the needed 60 votes. Republican opponents said the bill would increase the federal deficit, and voting was on straight party lines.

Senate Democrats announced today a substitute amendment to HR 4213, stripping some of the bill’s more controversial provisions but leaving in place language reinstating federal unemployment insurance benefits and extending the purchase closing date for homebuyers to qualify for the tax credit.

To address concerns that prison inmates have been claiming the homebuyer tax credit, the amended bill would allow the Internal Revenue Service to disclose tax-return information to officers and employees of state agencies charged with the administration of prisons.

If the Senate approves the substitute amendment introduced by Senators Harry Reid, D-Nev., and Max Baucus, D-Mont., it would have to go back to the House for approval before it could be sent to President Obama to be signed into law.

Had the Senate approved HR 5623, the House’s standalone bill extending the closing deadline for claiming the homebuyer tax credit, that legislation could have gone directly to the president’s desk.

The National Association of Realtors estimates as many as 180,000 homebuyers who were under contract by April 30 may miss the current June 30 closing deadline, but it’s unclear how many of those transactions would fall through.

“It’s possible (President Obama) can get something tomorrow, but not if this substitute has to go back to House,” said NAR spokesman Lucien Salvant.

Democrats may still fall short of the 60 votes needed to bring HR 4213 to a vote, and it’s still possible that the Senate could take up HR 5623, Salvant said.

If lawmakers don’t extend the deadline until after June 30, the language in both the House and Senate bills would apply retroactively.

Realtors had also hoped that another provision of HR 4213, retroactively extending the National Flood Insurance Program, would become law.

The expiration of the program on May 31 has derailed many home closings. It was unclear whether the substitute amendment to HR 4213 retains language extending the flood insurance program.

The House has also passed a standalone bill on that issue, HR 5569, in a June 23 voice vote. NAR is pressing the Senate to take action on that legislation.

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