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Tax Breaks

Home-Buyer Tax Credit Extended

Tens of thousands of home buyers who were in jeopardy of losing a valuable tax credit have been granted a three-month reprieve.

To qualify for the home-buyer tax credit -- worth up to $8,000 for first-time buyers and up to $6,500 for longtime residents of their previous homes -- a buyer had to sign a binding contract by April 30, 2010, and close on the deal by June 30. Now, home buyers who signed sales contracts before May 1 have until September 30 to complete the transaction. The problem, according to the National Association of Realtors, was that as many as 180,000 buyers who met the April 30 purchase deadline were unable to close by June 30.

This was a particular problem for people buying foreclosed properties; working through the complexities of such deals simply takes more time. NAR president Vicki Golder, of Tucson, Ariz., says that these buyers were "at the mercy of a work-flow jam with lenders' that could cost them the credit. Lawmakers agreed that prospective home buyers shouldn't be penalized by lenders' delays.

Buyers who meet the new deadline don't have to wait until they file their 2010 federal tax return to claim the credit; they can get their cash faster by filing an amended 2009 return.