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| TAX CREDIT EXTENDED - Updated November 5, 2009 |
| FIRST TIME HOME BUYERS - CLICK HERE - INFORMATION ABOUT $8,000 TAX CREDIT |  | | The 2008 tax credit has been expanded. Eligibility of this credit extends to existing home owners towards the purchase of any kind of home and must be in effect no later than April 30, 2010, closing no later than June 30, 2010. Home owners who have owned and resided in a home for at least five consecutive years of the eight years prior to the purchase date are eligible for this credit. The tax credit is equal to 10 percent of the home’s purchase price up to a maximum of $6,500. Purchases of homes priced above $800,000 are not eligible for the tax credit. The tax credit can be claimed even if the taxpayer has little or no federal tax liability to offset. | | | FEATURE | Jan 1 – November 30, 2009 Rules as enacted
February 2009 | November 7 – April 30, 2010 Rules as enacted
November 2009 | Current Homeowner Amount of Credit
| No Provision | $6500
($3250 married filing separate) | Effective Date
Current Owner | No Provision | November 7, 2009 | | Current Homeowner Definition for Eligibility | No Provision | Must have used the home sold or being sold as a principal residence consecutively for 5 of the previous 8 years | | Binding Contract Rule | No Provision | So long as a written binding contract to purchase is in effect on April 30, 2010, the purchaser will have until July 1, 2010 to close | |
CURRENT OWNERS:
The tax credit program now gives those who already own a residence some additional reasons to move to a new home. This incentive comes in the form of a tax credit of up to $6,500 for qualified purchasers who have owned and occupied a primary residence for a period of five consecutive years during the last eight years.
EXISTING HOMEOWNER CREDIT: MUST THE NEW HOUSE COST MORE THAN THE OLD HOUSE?
No. Thus for example, individuals who move from a high cost area to a lower cost area who meet all eligibility requirements will qualify for the $6,500 credit.
I AM AN EXISTING HOMEOWNER. ON OCTOBER 25, 2009 I SIGNED A CONTRACT TO PURCHASE A NEW HOME. I HAVE LIVED IN MY CURRENT HOME FOR MORE THAN 5 CONSECUTIVE YEARS AND AM WITHIN THE NEW INCOME LIMITS. I WILL GO TO SETTLEMENT ON NOVEMBER 20. IF PRESIDENT OBAMA HAS SIGNED THE BILL BY THE TIME I GO TO SETTLEMENT, WILL I QUALITY FOR THE NEW $6,500 TAX CREDIT?
Yes. The credit goes into effect for purchase after the date of enactment (when the bill is signed). There is no reference to the date of the contract for the new credit. The provision looks solely to the date of the purchase, which is generally the date of the settlement.
I AM AN ELIGIBLE EXISTING HOMEOWNER. I HAVE A FAIR AMOUNT OF EQUITY IN MY HOUSE. I HAVE FOUND A HOME WITH A NONNEGOTIABLE PRICE OF $825,000. WILL I BE ABLE TO USE ANY OF THE $6,500 TAX CREDIT?
No. The credit cap on the cost of the purchased home is firm at $800,000. Any amount above the $800,000 makes the home ineligible for any portion of the credit. The $800,000 is an absolute ceiling.
I OWNED MY HOME FOR 10 YEARS, BUT SOLD IT TWO YEARS AGO AND HAVE BEEN RENTING SINCE. IF I PURCHASE A HOME, WILL I BE ELIGIBLE FOR THE $6,500 TAX CREDIT IF I MEET ALL THE OTHER ELIGIBILITY TESTS?
Yes. Because you lived in the home for more than 5 consecutive years of the previous 8, you will quality for the $6,500 credit. For example, say John and his wife bought a home in 2000 and lived there until 2008 when he got a divorce. Whether John has been renting or bought in the interim, he WOULD INDEED be eligible for the credit because he owned a home and occupied it as his principal residence for 5 consecutive years out of the last 8 years. The keyword here is “ c onsecutive “. As long as he lived in that house for 5 years straight what he did in the last 3 years doesn’t impact eligibility. | |
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