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Changes to the Home Buyer 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 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 new $6500 tax credit? Answer: Yes. The existing homeowner credit goes into effect for purchases after the date of enactment (November 6, 2009 when the bill was 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 home buyer 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 went into effect when the President signed the bill - November 6, 2009 . 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 you go to settlement by November 6, 2009, you should be eligible for the credit (or a portion of the credit if you're within the phaseout 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 $800,000. Any amount above $800,000 makes the home ineligible for any portion of the crdit. The $800,000 is an absolute answer. Question: I owned my home for 10 years, but sold it two years ago year 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 qualify for the $6,500 credit. Fox 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 of the last 8 years. The keywod 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 home buyer. 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. Now that 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. Higher Income Caps in Effect
The amount of income someone can earn and qualify for the full amount of the credit has been increased. - Single tax filers who earn up to $125,000 are eligible for the total credit amount. Those who earn more than this cap can receive a partial credit. However, single tax filers who earn $145,000 and above are ineligible. Under the previous 2009 First Time Home Buyer Tax Credit, the income limitation for single tax filers was $75,000.
- Joint tax filers who earn up to $225,000 are now eligible for the total credit amount. Those who earn more than this cap can receive a partial credit. However, joint tax filers who earn $245,000 and above are ineligible. Previously only married couples with incomes up to $150,000 could receive the maximum tax credit.
Courtesy of the National Association of Realtors
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