The short sale and the homebuyer tax credit

Our attorneys have been getting several variations of this question recently…

Q: My buyer clients made an offer on a short sale on April 29. The sellers ratified the contract on April 30th. The bank hasn’t even had an opportunity to review the offer yet. Will my clients be able to claim the homebuyer tax credit?

A: Yes, as long as your clients meet all the other criteria, says VAR’s special counsel Lem Marshall and many other other attorneys. The date of the ratified contract between the buyer and seller is what counts. Bank approval is a contingency, just like an appraisal or financing contingency.

For more information, visit the ACAR Watercooler blog.

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2 Responses to The short sale and the homebuyer tax credit

  1. rfs says:

    What is equally important is the close/recordation date of 6/30/2010. So if the short sale lenders drag their feet and do not allow the closing to take place until after 6/30/2010, then the tax credit for the buyer will be in question. Its both contract signing by 4/30/2010 AND CLOSING/RECORDING by 6/30/2010!!

  2. Great point made by RFS. With a short-sale, the fact that a lender can drag their feet can disqualify the purchase from the tax credit. However, most often, by the time a lender has accepted the offer (which would have to taken place by 04/30) the settlement/closing is scheduled within 4-6 weeks.

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