You have 22 days left to buy a house

If you want to take advantage of the $8,000 tax credit for new homebuyers (or $6,500 for some repeat homebuyers), you have just 22 days to sign a contract on a house, then two more months to close.

 

But should you feel pressured by that deadline?

 

If you’re already looking for a house and you find the house you want in time, it makes sense to try to lock in a deal by the April 30 deadline for the credit, which is 10% of the purchase price or up to $8,000. But if you haven’t started looking or you don’t find a house you love in time, remember that a tax credit is just one piece of the financial puzzle you’ll need to solve to decide when (or whether) to buy a home.

 

“If, absent the tax credit, you wouldn’t make that purchase, don’t do it just to save a few thousand dollars,” John Scherer, a certified financial planner and president of Trinity Financial Planning in Middleton, Wis., told SmartMoney.

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Lisa Scherzer of SmartMoney wrote about some pros and cons you should consider when deciding whether to buy in time to get the tax credit.

 

Pros: Low interest rates that are likely to rise and affordable prices make now a good time to buy.

 

Cons: An $8,000 tax credit is just a 4% discount on a $200,000 house. Sellers who know buyers are pressed by a deadline may be less inclined to negotiate, prices could fall still further -- and if you buy a house and it doesn’t remain your primary residence for the next three years, you’ll have to pay the credit back.

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Remember that it’s already too late to try to purchase a short-sale home and expect to get the credit.

 

If you’re not sure whether you’re eligible for the tax credit, the IRS has some useful information on various scenarios for first-time homebuyers and move-up homebuyers.

 

If you bought a home last year, Flexo at Consumerism Commentary has detailed information about how to claim the credit in your 2009 tax return.

 

Will the credit, which was originally set to expire in November 2009, be extended again? Your crystal ball is as good as mine.

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Scott Van Voorhis of The Boston Globe’s Boston Real Estate Now blog thinks it’s possible, even though lawmakers said last fall that there would not be another extension.

 

“Even if Congress allows the credit to expire, don't think that's the end of the tax credit game,” he wrote. “It could very well be brought back again in a few months as sales and prices slump again.”

 

Related reading:

• Top 10 mistakes of first-time homebuyers
• The 3 worst reasons to buy a house
• 10 home-buying tips for uneasy times
• Does renting make sense?