Last week I wrote about how congress was attempting once again to pass an extension of the $8000 first time homebuyer tax credit. There had been several false starts to get an extension passed as the senate and congress weren’t able to agree on amounts of credits, whether to extend the credits at all, and whether it should be expanded to include current homeowners.
Earlier this week congress was finally able to come to an agreement on an extension of the $8000 first time homebuyer tax credit, and in addition, they added on a new $6500 tax credit for people who already own a home. This morning President Obama is expected to sign into law the Worker, Homeownership, and Business Assistance Act of 2009 that expands the popular homebuyers tax credit and extends unemployment benefits.
$6500 Homebuyer Tax Credit For Move-Up Buyers Added
For many people the most exciting news is that there will now be a tax credit for current homeowners. The tax credit for move-up buyers will take effect after the date of enactment
(when the bill is signed). Unfortunately for those who have already bought a house it doesn’t seem to be retroactive.
- The credit is available for homes that go under contract by April 30, 2010 and close by June 30th, 2010.
- Current homeowners can claim a $6,500 credit as long as the property they are vacating has been their primary residence for at least five consecutive years out of the last eight years.
- Income limits: $125,000 a year for individuals, $225,000 a year for married couples. (these are higher limits than before)
- Homes that cost more than $800,000 aren’t eligible for the credit.
- $6500 tax credit is not retroactive. (from the language of the bill: “shall apply to residences purchased after the date of the enactment of this Act.”)
So to all those people who have been sitting on the sidelines hoping for a tax credit for current homeowners , some of you are in luck. Because of the language of the bill a lot of people are still excluded (myself included), but there are still a lot of folks who will now be jumping into the home shopping game.
Will the new $6500 tax credit push you to start looking for a new home? Would you consider moving if there wasn’t a tax credit? Do you think it will have an appreciable effect on the economy and the real estate market?
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I’ve been in my house for 2 years. So I don’t qualify. Ah well. We weren’t planning on buying something else anyway…
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We just bought a house in August, looks like we will not qualify since the bill is not retroactive. Oh well another government handout that we do not qualify for. It seems like if you work hard and take care of your family you do not qualify for many government handouts..
Hey Ryan,
I can totally relate! My wife and I are recently married. In the past 9 months we have sold 2 houses. Her 1st home and my 1st home both to 1st time buyers and purchased our new home. Boy! talk about falling through the cracks! But like everything else, “Middle America” foots the bill and gets nothing to show for it.
Luke
Sigh. We’ve been looking to move for the past couple years out of our small town so I can find a job. And of course, we’re missing the deadline for this by 11 months.
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No way. It’d be really nice if I were already PLANNING on buying a house, but getting a credit isn’t going to make me a buy a house I didn’t already have money for. I would rather use my money to pursue business plans. I would only get a house when I have no other choice. I think that people are so used to paying such ridiculous prices for homes, that no one questions it. But if you think about the fact that it takes THAT many years for most people to pay one off, I think it’s an insane amount of money.
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We sold our house in August and are building currently. We’ll close beore the April 30 deadline, but our closing on our new house was just shy of 5 years by about 3 weeks. I’m wondering if there will be any credit (maybe not the full $6,500)? Have you come across how much of a stickler they’ll be with that 5 year mark Pete?
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I think you have to be in the house for 5 consecutive years out of the last 8 years. So I don’t think you’ll qualify if you were not in the house for 5 consecutive years.
What if you will keep your current house and rent it, do you still quality (we’ve been here much longer than 5 years)? Also, we signed on the house we’re building in July, but won’t close until January – are we still good on the credit?
We have been renting a house in Atlanta for a year and a half, however, we are ready to buy a home. Even though we have been renting a house for a year and a half and ready to buy, would we qualify for the tax credit since my husband’s company transferred us to Atlanta and we owned a house in Ohio prior to moving down here, which we owned more than 5 years?
If you owned a home for 5 consecutive years out of the last 8 years, I think you would probably qualify if i’m reading it correctly. Good luck!
I’m in a similiar situation–can you verify please.
Thanks,
Troy
for more details about your specific case I’d suggest checking out the IRS site on this credit, or check out this list of tax credit scenarios.
Does anyone know what effective date the existing homeowners $6500 tax credit officially starts. Some pages (like IRS.gov) say 11/6/09, some say 11/7/09 (NAR) and some say 12/1/09. I know the new rules for payroll limitations start 12/1/09 but not sure about the actual effective date of the tax credit ACT. ALSO does anyone know if a homeowner has to have their house sold prior to buying their new home or can they keep it as a rental?
I believe the bill said the day after it was signed into law – which would be 11/7/2009 i think?
I, too, am trying to determine the effective date for sure. I meet all the criteria for the repeat buyers credit, except that I sold and bought on the same day: Nov. 6th. From everything I’ve read, it appears that I will not qualify by one ridiculous day, because most articles state “after the enactment of this bill,” which was on Nov. 6th. I will be so frustrated if there’s no leniency at all. But like most have said here, all of us hardworking middle class Americans are the ones who get screwed.
We have lived in our house since March of 2006. I was hoping for some clarification on what “5 years” means. Does it refer to living in a house for at least 60 months, or does it refer to calendar years? In 2010, we will have lived in our house in 2006, 2007, 2008, 2009, and 2010 (5 years). We plan to sell our house in early 2010, so I’m wondering if we qualify for the $6,500 rebate.
I believe it says “5 consecutive years”, and I’m pretty sure that means say from March of 2003 to March of 2008. Not calendar years. I don’t think you’d qualify, but you may want to contact the IRS for clarification.
We are buying a second house at the end of November. We live in our current house for 10 years. We fit under all other limitations (our income is under 225K, house price is under 800K). Will we be eligible for a credit if the new house will become our primary residence or we MUST sell our existing house to qualify?
Thanks.
Ilya.
I don’t believe you need to sell your existing home to qualify. You would just need to purchase a new primary residence. See the full answer below in the comments.
Is there any one who can help I can’t find this answer anywhere. We just sold our home which we lived in for 5 years and 6 months. Can my in-laws cosign if my wife and I are a not first time home buyers but in the (Move-up repeat home buyer) tax credit bracket?? I realize that the First time home buyer credit applies with a cosign but what about our situation being the Move-up repeat home buyer $6,500 tax credit? Thanks in advance for responding to this question as we sign and cosign this week and want to make sure we are still eligible for the full credit with a cosign. And yes, we would be the Only residents of the home.
I’ve lived in my house since 2004 and got married last year. We refinanced our house last year and added my husband’s name to the house, would we be eligible for the $6500 tax credit?
WE LIVED IN OUR HOUSE FOR 20 YEARS
THEN IN JULY WE BOUGHT THE HOUSE NEXT DOOR DO I QUALIFY OR DO I TO FALL THRU THE CRACKS BY A MERE FEW MONTHS?
THANKS IN ADVANCE BOB
We bought our house in June 1976 and sold it on October 15, 2009. We closed on our new house on Oct. 20,2009. Are you telling me that we miss the $6500 tax credit by 3 weeks after living in our other house for over 30 years? Doesn’t seem right to me. In the past, with very few exceptions, any tax credit that applies to the current tax year when enacted has been retroactive to the beginning of the tax year so as not to discriminate against anyone paying taxes for that specific year — just like a child born on 12/31 – they are still claimed as a dependent for the entire year.
Unfortunately that’s the way it looks. Try missing it by one single day. I closed on my new house on Friday Nov. 6th and it looks like the repeat tax credit went into effect Nov. 7th. I even tried to figure out a way to have my fiance, a first time homebuyer, buy my new house instead of me so we qualified for the $8000. Now I find out I missed the $6500 by one day! If anyone knows what the exact rules are, please let me know!
Looks like we are in the same boat. We closed on Nov. 6th, missed by one day, something just isnt right here. So not happy with our government.
We closed on Nov 6th on our first “house” after living in our first “home”, a 1 bedroom condo for 6 years (sold at a loss mind you). By everything I read, it looks like we fall through both cracks, the condo stops us from being “first time” $8,000 credit homebuyers and we closed 12 hours too early to get the $6,500 credit. Is there anything we can do?
Yeah, we closed on our new home on November 6th and missed the credit by one day as well! It is extremely frustrating, especially when you read news articles that state it is effective November 6. Of course the IRS says it is effective AFTER November 6. At this point, I think our only hope is that when the new 5405 form is published by the IRS, it will miraculously states the credit applies to purchases made on November 6 as well.
i am purchasing a hud house and it will close in jan, 2010.
i have rented for one year. will i qualify for $6,500.00 if i owned and lived in 2 houses consecutively since 2002?
cory
RE: $6,500 existing homeowners credit
I have owned & lived in a condo since 2003. First 3 yrs. owned with a friend. In 2006 when I married I bought the friend out & put my wife’s name on the property title. Since I have owned & lived in the condo since 2003, would I quality for the $6,500 credit??
We are looking for a house now.
hello and thank you for your article,
how can i find out for sure when the $6500.00 becomes effective. some have told me Nov 7th and others December 1st. can you please help me with this?
respectfully
irena
Re: 8000 Credit new income limits not being retroactive
I closed my first home 15 days before Mr Obama’s new amendment to the bill…with the income limits I would qualify for the 8000$ but not with the old income limits:(.
Why is the credit not retroactive since it was first enacted on Jan 1st 2009.
Sorry, they just didn’t write it this way unfortunately.
It would be more of a stimulus ,I think, if they would give some money to anyone owning their home for the last 5 years that did not get the $8,000 credit. This would keep more people from losing their home and if they aren’t having trouble making their payments then they would spend the money to stimulate the economy. I’m sure millions of people agree with me on this or at least the people that are getting nothing. Thanks
We currently own two homes, the one in Texas is our primary home and that is where we bought the new home. The one in Texas is a mobile home which we sold and bought a new one. Does that qualify for the tax credit?
My husband has owned his home for over 5 consecutive years. I’ve only been there for 2 years. Now would he qualify for half the credit or the full credit if we claimed married but filing seperately? This is for the $6500.
Yeah and what about those of us who have had to refinance and add more years onto our home loan to get our payments lowered so we do not lose our home due to losing a job. We are now a one income family making it a struggle to actually keep our home.
Can some guru out there tell me if we qualify for the $6500 credit? We sold our house of 27 years in July and moved into an apartment while we are building a new house. We signed a construction contract with a builder in October, 2009 and closed on a construction loan on October 27, 2009. The house is being constructed with an estimated completion end of June, 2010. If we move into the new house by June 30, 2010, do we qualify for the $6500 credit? As far as I can tell, we meet all other qulifications; my concern is the timming of when w signed the construction contract and closed on a construction loan.
I think it would be when you signed the contract unfortunately – and if that was before the date the bill was signed into law, you’d be out of luck. As always, I’d suggest contacting the IRS to make sure there isn’t some loophole you can take advantage of.
Thanks for the reply but not what I was hoping to hear. I did find a response on another web site to a home construction question regarding applicability of the credit that stated “For purposes of the home buyer tax credit, a principal residence that is constructed by the home owner is treated by the tax code as having been “purchased” on the date the owner first occupies the house. In this situation, the date of first occupancy must be after November 6, 2009 andd on or before April 30, 2010(or by June 30, 2010, provided a binding sales contract was in force by April 30, 2010)” It made no reference to when the home construction contract was signed. Guess I’ll have to figure out how to contact the IRS to ask them about my specific scenerio.
The IRS site says:
By statute, a residence which is constructed by the taxpayer is treated as purchased on the date the taxpayer first occupies the residence.
So it sounds like the other information you got was sound. So as long as you occupy the house before the deadline you should be good I suppose. More details here.
I currently own a house purchased 10/2005 will i qualify for any credit?
My husband is purchasing a new home to close 1/15/10 but bought a house in 2005 and sold it in 2006 will he qualify for any credit?
I don’t think you would qualify as you haven’t owned a home for five out of the last eight years. As always, please consult the IRS for full details on your exact situation.
Dave, let me know what you find out. I am in the same situation. I signed a construction to perm loan in March and we finished the house in December. I also saw it on another site that it was the date you moved into the house. I hope we are in luck.
I have the same question on the construction loan. I signed that loan in October 2009 but will not close until June 1, 2010 or earlier. I read also that it depends on when you take possession of the house. I hope that is correct.
Do I quality for the $6500 tax credit I purchased my home in 2006 and it’s my first home? Please someone give me an answer?
I don’t believe you qualify. The wording says:
Current homeowners can claim a $6,500 credit as long as the property they are vacating has been their primary residence for at least five consecutive years out of the last eight years.
If you bought your current home in 2006, that wouldn’t allow for 5 consecutive years to have passed, correct?
This question was asked a couple times but I think it was overlooked. If I rent out the house I own now (and have lived in for the last 7 years) and buy a different house to use as our primary household, will I still qualify for the $6,500 tax credit?
I know this is newer so a lot of people are confused by this. Thanks!
My understanding is that you don’t have to sell your existing home to qualify for the credit. I found this question and answer regarding keeping your current home:
Q: Do I have to sell my home to qualify for the homebuyer tax credit?
A: If you meet all of the requirements for the credit, the law does not require you to sell or otherwise dispose of your current principal residence to qualify for a credit of up to $6,500 when you buy a replacement home to use as your principal residence. The requirements are that you must buy, or enter into a binding contract to buy, the replacement principal residence after Nov. 6, 2009, and on or before April 30, 2010, and close on the home by June 30, 2010. Additionally, you must have lived in the same principal residence for any five-consecutive-year period during the eight-year period that ended on the date the replacement home is purchased. For example, if you bought a home on Nov. 30, 2009, the eight-year period would run from Dec. 1, 2001, through Nov. 30, 2009. (11/17/09).
i purchased my home in 1994 and refinanced it in 2006 and not planning on buying a home at the moment do i quailfy for the $6500 or do i have to buy another home to qualify for it
i bought a home in jan 2009. and would like to know if they are going to retro the 6500.00 homenbuyers tax credit. from what i am reading i do not qualify. i think the 6500 tax should be for anyone that bought a home in the year 2009 and just not part of the year of 2009. it sure would be nice if i qualified. please let me no thanks
I’m afraid you probably wouldn’t qualify if I read the law correctly. Sorry.
who do we contact to ask for the bill to cover all of 2009 can we call a senator the president a lawmaker this has to be an oversite by all of them.
normal no , any tax law is for the year. why no on this one
If we knew the bill was going to screw us we would have waited the 2 months to sell a house that the local goverment purchased from us. we were not disclosed this information at all from our mayor or the town legal dept. we feel he had knowledge what can be done here
I bought a condo Sept. 2009 as a new homeowner and qualify for $8000 but have not apply for it yet. but I am planing to sell it and a smaller unit,
should I apply for the $8000 now (since I am not sure if I can sell it), or wait and when I got the other one apply for it? if I still can? can the $8000 be roleover? will I be qualify for $6500 too if I buy the next home? If I have to repay the $8000 (after I got it) back due to selling my home, do the amount calculated as prorated based on the months that I lived in?
Can some one answer me. pleas