Home Buyer Tax Credit Expanded By Congress
Congress has extended and expanded the homebuyer tax credit. The modifications will become effective when President Obama signs the bill, which could occur as early as November 6, 2009.
I have received numerous emails and comments from readers who asked for me to report the changes to the First Time Homebuyers Tax Credit when they occurred, and the changes most likely will occur immediately. This post will review the changes and enhancements so you should be able to understand the new housing tax credit.
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The Obama Administration Says Buy A Home
Buy a house and you can take part in the Obama Stimulus plan. The Obama train is printing wheelbarrow loads of money for everybody who wants to buy a home now, not just first timers! So, how does this all work?
The $8,000 homebuyer tax credit for first-time buyers, due to expire November 30, 2009, will be extended through June 30, 2010. First-time buyers who are in the process of making a purchase will no longer need to worry about qualifying for the $8,000 credit if they close after the November 30 deadline. The new legislation increases the income limit for couples with income up to $225,000, roughly a $55,000 increase above the level in existing law.
For the first time, the new legislation states that buyers who already own a home are eligible for a credit. A $6,500 maximum credit will be available to existing homeowners who have lived in their current residence for five of the prior eight years. The legislation limits eligibility for the existing homeowner credit to homes worth $800,000 or less.
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Download Home Buyer Tax Credit Changes Flyer
In order to provide a means to simplify and identify the new additions and changes to the program, we have prepared a one-page flyer that explains the features of both the old and the new programs, and provides the guidance and limitations for each.
This flyer will be updated should any of the programs change in the future, so please check back here from time to time to make sure you do not miss any of the updates.
The flyer will also be available for download in the right sidebar of the Tallahassee Real Estate Blog, under the section titled "First Time Home Buyers".
Remember, we love your feedback, so please comment below and let us know what you think of this flyer and what you think of this new Home Buyer Tax Credit. Are you heading out to get your wheelbarrow?
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Discussion
Great news! It's effective legislation.
and there are lots of ways to finance real estate purchases
The Senate voted 98-0 Wednesday to extend the February "stimulus" package tax credit for first-time homebuyers. About 1.4 million tax credits of $8,000 have been available for those buying their first home between January and August; the program was set to expire this month. The National Association of Realtors claims that 350,000 of the lucky grantees would not have bought homes without the credit. Now, $6,500 will be doled out to "qualified" buyers -- even some who already own homes -- between now and April 30, 2010.
Sen. Kit Bond (R-MO) questioned the credit's efficiency, saying, "For the vast majority of cases, the homebuyer tax credit amounted to a free gift since it did not affect their decision to purchase a home. And for the small minority of buyers whose decision was directly caused by the credit, this raises the question of whether we are subsidizing buyers who may not have been able to afford buying a home in the first place." Bond -- drum roll, please -- voted for the bill anyway. 'Atta boy, Kit! Show 'em that GOP spine.
Does the following qualify for first time buyer category?
Husband and wife buy house, wife is first time home-buyer, husband is not?
Hey Rob, great question. It would depend who "owned" the first house. If both on deed, then both owned the house.
If I buy a condo and a garage or a storage unit that's in the same building but is not attached to the condo unit itself, would whole purchase qualify for the first time homebuyer tax credit, or just the amount for the unit itself?
Thanks,
Dan
Dan, most likely, if it is recorded under just 1 tax ID number, then it should qualify in the entirety. But if they are separate parcels, I suspect you might be pushing it to claim them both. If they are separate, just put most of the amount of your offer towards the condo, and less towards the storage. Does that make sense?
Sure does, thanks Joe!
purchased a 2nd home Jan. 2009. Live in 2nd home approx. 52% of time. do we qualify for expanded credit? Have lived in 1st home over 13 years and meet income limit.
I don't think so Gina, I'm sorry. The home buyer tax credit was expanded to all buyers, but not for homes purchased back then.
Can I take advantage of the new expanded credit of $6500.00? We have lived in my home for 7 years.(min.5 of previous 8) It was our first home purchase. I am not planning to purchase a new one. Is this credit also for homeowners who have weathered the test of time and the economy? We meet the income guidlines and are married with both of our names on purchase documents. Alot of the explanations for this credit is confusing. Some say we are eligible because we have owned a home for the time period and etc., and others say it applies if you are a previous owner buying a new one, and some say for both situations we are eligible. Can you help clarify this because I heard on the radio this morning from a real estate broker that what I am thinking is being hidden, but that people like me can have the credit also.
Hey Melinda,
Unfortunately, no. There is no tax credit that I am aware. The ones identified above are for people who are buying a home. See above, it states "buyers who already own a home are eligible" meaning for the $6,500 tax credit, you can already own a home, but you must be a buyer of another one.
Joe,
I need clarification on the five years of ownership/residence for currently owned homes when purchasing a new or resale home. The home we currently own was purchased in June of '05 and closed July 3rd, 2005...we are looking to purchase a home in Alabama next month. Even if we close on the very last day allowed we will not have a full five years residing in the current home. Is the five years specified in days or is it possible we would qualify?
Thanks
Thanks. I guess that was wishful thinking.
Hey Ray, you would need to consult an accountant for this .... but if I were to guess, I'd say you would not qualify, sorry! But seriously, ask an accountant, they are better suited to answer your question. Good luck!
Yeah, but worth a try :)
hey joe, i lived in previous home for 9 years, was divorced in aug. 09, purchased a new home on aug 05/09 this purchase falls tween the two bills passing, home bought before the new bill was signed, are the new regs. retroactive for buyers that fall in between these dates or does a divorce qualify someone for the frist ?
No Roger, unfortunately the purchase must happen within the time periods specified in the Bill.
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