On June 30, Congress passed H.R. 5623, the Homebuyer Assistance Improvement Act of 2010, which provides first-time homebuyer credit relief to taxpayers who could not meet thea June 30 closing date.

Under prior law, both the regular Code 36 first-time homebuyer credit of $8,000 and the reduced credit of $6,500 for long-term residents generally expired for homes purchased after April 30. However, if a written binding contract to purchase a principal residence was entered into before May 1, the credit could be claimed if the purchase closed before July 1.

The Act provides that if a written binding contract to purchase a principal residence was entered into before May 1, the credit may be claimed if the purchase is closed before Oct. 1. Thus, this extension allows homebuyers who signed a contract no later than the April 30 deadline to complete their closing by the end of September.

The cost of the three-month closing reprieve is fully offset with revenue raisers, including several tax changes.