The New and Improved Home Buyer Tax Credit

It is now official, the President has signed the extention of the home buyer tax credit.  Yeah.  If you had not found a house or were worried about being able to close by the end of the month you have time once again. 

House on tax refundThe much-anticipated extension to the home buyer tax credit has finally been approved.  The Senate's vote yesterday resulted in a 98-0 win and today it was passed in the house.  The bill now moves to the President's desk for a final signature. 

First-time home buyers have been eligible for tax credits of up to $8,000 since last January as part of this year's economic stimulus package.  The newly backed program will expand the credit to include existing home owners.  

Under the revised program, those who have owned a home for at least five years will be able to apply for tax credits of up to $6,500 when they purchase their next home.  To qualify, buyers will have to sign a purchase agreement by April 30, 2010 and close by June 30. 

The maximum purchase price on a home will be $800,000 with vacation homes not eligible. Income limitations are $125,000 for single tax payers and $225,000 for joint filers. 

The National Association of Realtors (NAR) and the National Association of Home Builders (NAHB) have been lobbying hard for the extension and expansion of the tax credit.  NAR claims that so far, about 1.4 million first-time homebuyers have qualified for the program and they estimated that 350,000 of these buyers would not have otherwise purchased. 

The tax credit is also set to be extended for another year for military personnel serving outside of the United States until June 30, 2011. 

Senator Johnny Isakson, who heavily pushed for the extension, along with his own version that would have increased the credit to $15,000 stated, "This is probably the last extension." 

But, is this really true?  When April 2010 comes around and the housing market is still not in full recovery mode, will the politicians be able to let this go and actually come to an end, or could it possibly become a more permanent subsidy? 

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Comment balloon 3 commentsJon Sigler • November 08 2009 09:40PM

Comments

For the $6,500.00 tax credit will they need to sell their existing home to get the credit. When does this credit start.

Liz

Posted by Elizabeth Benefield (Montana Country Real Estate) almost 10 years ago

Liz,

Excellent question.  I don't want to hand out tax advice, but from everything I could find to read trying cite a source to answer your question NONE say you must sell the home, only that you must have lived in the house for 5 of the prior 8 years.

Great information can be found on the web here about the tax credit.  I suggest to anyone who has a tax question that they contact a tax professional to get an answer that applies to them.

Jon

Posted by Jon Sigler, South Windsor Homes for Sale 860-306-8029 (Keller Williams - Greater Hartford) almost 10 years ago

Liz,

I have found a resource which answers your question.  Example #1 on this link shows you do not have to sell your current home, just buy a new one in the example.  Obviously consult a tax advisor to make sure that your specific situation meets the guidleines, my CYA statement!

Jon

Posted by Jon Sigler, South Windsor Homes for Sale 860-306-8029 (Keller Williams - Greater Hartford) almost 10 years ago

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