Homebuyer Tax Credit Changes
As of May 1, 2010, This credit is no longer available.
Now that the President has signed the bill into law there are many who have some questions if they are eligible. There has been much discussion with the changes to the Tax Credit. The extension is part of a $24 billion economic stimulus bill that will extend the $8,000 tax credit for home buyers who are purchasing their first home from the current November 30 deadline and expands the program to offer a credit of $6,500 to homeowners who have lived in their current home for at least five years and are seeking to relocate.
Read Also: President Obama signs homebuyer tax credit extension, expansion into law
Here is the latest information regarding the extension as of November 6, 2009:
Frequently Asked Questions on the Homebuyer Tax Credit Changes
Here is a list of questions/answers from NAR Governmental Affairs.
Question: Existing homeowner credit: Must the new Buffalo house cost more than the old house?
Answer: 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 $6500 credit.
Question: I am an existing Buffalo homeowner. On October 25, 2009, I signed a contract to purchase a new Buffalo home. I have lived in my current Buffalo home for more than 5 consecutive years and am within the new income limits. I will close on November 20. If President Obama has signed the bill by the time I go to settlement, will I qualify for the new $6500 tax credit?
Answer: Yes. The existing homeowner credit goes into effect for purchases after the date of enactment (when the bill is signed). There is no reference to the date of contract for the new credit. The provision looks solely to the date of purchase, which is generally the date of closing.
Question: I am a first-time homebuyer but was not within the prior income limits at the time I entered into my contract to purchase on October 30, 2009. I will be covered, however, by the new income limits. If the new rules have been signed into law by the time I go to settlement, will I be eligible for a credit?
Answer: Yes. The new income limitations go into effect as soon as the President has signed the bill. The income limit and other eligibility rules will look to your status as of the date of purchase, which is the settlement date. So if the new rules have been signed when you go to settlement, you should be eligible for the credit (or a portion of the credit if you’re within the phase-out range).
Question: I am an eligible existing Buffalo homeowner. I have a fair amount of equity in my Buffalo home. I have found a Buffalo home with a non-negotiable price of $825,000. Will I be able to use any of the $6500 tax credit?
Answer: No. The $800,000 cap on the cost of the purchased home is firm at $800,000. Any amount above $800,000 makes the home ineligible for any portion of the credit. The $800,000 is an absolute ceiling.
Question: I owned my Buffalo home for 10 years, but sold it two years ago year and have been renting since. If I purchase a Buffalo home, will I be eligible for the $6500 tax credit if I meet all the other eligibility tests?
Answer: Yes. Because you lived in the home for more than 5 consecutive years of the previous 8, you will qualify for the $6500 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 “consecutive.” As long as he lived in that house for 5 years straight what he did since 3 years doesn’t impact eligibility.
Question: I am an eligible first time homebuyer. I entered into a contract to purchase on November 1, 2009. Do I have to go to closing before December 1? How does the extension date affect me?
Answer: You do not have to close before December 1. Once the legislation has been signed, it will be as if the Nov 30 date had never existed. Therefore, so long as the contract settles before April 30 (or July 1, worst case), the purchaser will be eligible for the credit.
Congress has extended and expanded the homebuyer tax credit. The modifications in the column labeled “December 1 – April 30, 2010” become effective when President Obama signs the bill. All changes made to the current credit become effective on that date, as well.
Read Also: Obama Signs Home Buyer Tax Credit Extension. Will It Be Effective?
| FEATURE | Jan 1 – November 30, 2009 Rules as enacted February 2009 |
December 1 – April 30, 2010 Rules as enacted November 2009 |
| First time Buyer – Amount of Credit |
$8000 ($4000 married filing separate) | $8000 ($4000 married filing separate) |
| First time Buyer – Definition for Eligibility |
May not have had an interest in a principal residence for 3 years prior to purchase | |
| Current Homeowner – Amount of Credit |
No Provision | $6500 ($3250 married filing separate) |
| Effective Date – Current Owner |
No Provision | Date of Enactment |
| 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 |
| Termination of Credit | Purchases after November 30, 2009. |
Purchases after April 30, 2010 |
| Binding Contract Rule | None | 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. |
| Income Limits | $75,000 – single $150,000 – married Additional $20,000 phase out |
$125,000 – single $225,000 – married Additional $20,000 phase out |
| Limitation on Cost of Home | No Provision | $800,000 Effective Date of Enactment |
| Anti-fraud Rule | None | Purchaser must attach documentation of purchase to tax return |
| Purchase by a Dependent | No Provision | Ineligible Effective Date of Enactment |
Thinking of taking advantage of this tax credit? Interested in finding out the current market value of your single family home, condo or investment property? Then call Colleen Kulikowski at (716) 650-0051 to discuss what is happening in today’s Western New York Real Estate Market. We would be happy to give you a personalized Comparative Market Analysis for your home or assist you to purchase a home. View additional WNY Market Area Statistics here.
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