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.
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!
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.