Congress has extended and expanded the homebuyer tax credit. Modifications "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.
Here are some of the most frequently asked questions on the changes to the Homebuywer Tax Credit.
QUESTION: Existing homeowner credit: Must the new 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 homeowner. On October 25, 2009, I signed a contract to purchase a new home. I have lived in my current home
for more than the 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 qualify for the ne $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 settlement.
QUESTION: I am a first time homebuyer but was not within the prior income limits at the time I entered into my contract to purchace 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 the 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 homeowner. I have a fair amount of equity in my home. I have found a 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 $8000,000. 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 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
$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 quality for the $6500 tax 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 eligibloe for the credit because he owned a home and occupied it as his principal residence for 5 consecutive years
out of the past 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 1st? How does the extention date effrect me?
Answer: You do not have to close before December 1st. Once the legislation has been signed, it will be as if the November 30th date had never
existed. Therefore, so long as the contract settles before April 30 (or July1, worst case), the purchaser will be eligible for the credit
Please contact me me for all you Real Estate needs & desires. I want to be your REALTOR® Thank you & Sincerely, Sandra J Steele