It’s Official – Homebuyer Tax Credit Extended (and expanded)!

by

It’s going to be a very happy holiday season now that the bill that includes the First-Time Homebuyer Tax Credit extension and the new Current Homebuyer Tax credit was signed into law by President Barack Obama on Friday, November 6! Best of all, it’s effective immediately!

The bill extends the existing $8,000 tax credit for first-time homebuyers, plus adds a new credit for current homeowners of up to $6,500.

Current Homeowners can qualify for $6,500 Tax Credit

The new $6,500 tax credit for current homeowners is by far the most exciting portion of the bill, giving some much needed assistance to homebuyers looking to move up to a larger home or relocate to a new area. To qualify, current homeowners must have lived in their home as their principal residence consecutively for 5 of the previous 8 years.

This means that even if a homeowner is currently renting, but moved out of a home they lived in and owned for five years within the last three years, they are still eligible for the $6,500 Tax Credit. If they have been out of their home for three years or longer, then they are eligible for the $8,000 Tax Credit!

Tax Credit details

For both credits, homebuyers must have an accepted sales agreement in hand by April 30, 2010 and close no later than June 30, 2010 to be eligible to claim the tax credits. The extension is wonderful, but April 30, 2010 is not that far away. Extra time is required if the property selected is a short sale or foreclosure property. And current homeowners need added time to market and sell their existing home.

The new bill also expanded the income limits, effectively opening the tax credit to more buyers. Income limits have been raised to $125,000 for single taxpayers and $225,000 for joint taxpayers. Previously, they were $75,000 and $150,000, respectively. This is essential for the tax credit to reach as many homebuyers as possible.

Buyers who qualify don’t need to repay the tax credit, if he/she occupies the home for three years or more. However, if the property is sold during this three-year period, the full amount credit will be recouped on the sale.

Finally, there has been a maximum limit set at $800,000 for the cost of the home.

Exception for Military

The credit has been extended an additional year for military personnel that were deployed overseas for a minimum of 90 days in 2008 or 2009. In other words, the credit ends for everyone on April 30, 2010, except active-duty military working overseas. They have until April 30, 2011 to finalize a contract.

Homebuyers received an early holiday gift with this extended and expanded tax credit, and now it’s time to take advantage of it before it’s too late!

Do you know someone who qualifies? Share this great news with everyone you know.

Tags: , , , , , , , , , , ,

24 Responses to “It’s Official – Homebuyer Tax Credit Extended (and expanded)!”

  1. Arthur Harris Says:

    Great article Judy but correct me if I am wrong. In paragragh four, line three should this not read the last eight years and not the last three years as shown. Kindly let me know so I can clear my thinking for the folks that may qualify for the $6,500 Tax Credit.

    • Judy Jones Says:

      Arthur,
      Sorry for the confusion. The wording is correct.
      Allow me to try to clarify because this is very exciting and you may have potential buyers who think they do not qualify for the $8,000 tax credit but they might still qualify for the $6,500 tax credit.

      Who Qualifies for the New Move up Homebuyer Tax Credit of up to $6,500?

      Homebuyers who have owned a home in the past 3 years, making them ineligible for the $8,000 “First Time Homebuyer tax credit, who purchase a home between November 7, 2009 and April 30, 2010. These buyers must have occupied the home they either currently own or previously owned for five consecutive years within the last eight years.

      Remember, if a Homebuyer owned a home, but sold it over 3 years ago they now may be eligible for the “$8,000 First-time homebuyer” tax credit. To qualify as a “First Time Homebuyer” the purchaser or his/her spouse may not have owned a residence during the three years prior to the purchase.

      The key dates for both these tax credits are:
      Fully accepted, executed Sales Contract from Nov. 7, 2009 until April 30, 2010.
      Closing on or before June 30, 2010. (Yes the law states July 1, but I wouldn’t risk it!)

      Hope this helps.

  2. Linda Ragghianti Says:

    Regarding the 6,500 tax credit…do buyers have to wait till after December 1st to go under contract?

    • Linda Ragghianti Says:

      Judy, I saw your post back to Arthur which answered my question above. However, I have one more question…
      If a buyer’s 5 year anniversary date of being in there current home is on January 4th 2010, can they go under contract before then and just close after January 4th to get the credit? Or, do they have to go under contract AFTER being in the house 5 years?

    • Judy Jones Says:

      I will research this. But I believe as long as they close after the 5 year anniversay date of the closing on their current home they are eligible.

      However if this buyer needs to sell their current home in order to qualify for the mortgage on the new home, they might want to get the current home under contract before they try to submit a contingency offer on a new home. As you know, many sellers are not interested in a buyer who has another home to sell.

  3. Mark Broyles Says:

    This is certainly exciting news! We all had tons of buyers that are now First Time Homeowners because of the Homebuyer tax credit. Now, existing homeowners who felt that they were trapped with little or no equity will get some help moving on. And, let’s not forget, as a Seller, they will have a better motivated Buyers to choose from, as they are receiving the tax credit, as well. And Judy, a little birdie told me that rates are still at some of the lowest rates in our life time!

  4. Mark Laycock Says:

    Renters, buyers, and sellers – first time home buyers, previous home owners, and REALTORS® all have reason to celebrate.
    Read the article, “Bringing the Dream of Homeownership Within Reach” http://bit.ly/12IgrT.

  5. Anne Langley Says:

    I am glad to see the inclusion of existing homeowners in this extension. This is going to give them relief. Maybe they will now be a little more motivated since they will be receiving tax credit. With interest rates remaining low it is still a great time to buy.

  6. Sandi Rdorick Says:

    Excellent post, Judy! From local and national newscasters, all sorts of blogs and internet sites and print articles, it’s good to get the scoop from someone who knows “the full skinny” and is able to explain it in terms we can all relate to. This is exciting news and I look forward to all the added work this will bring to the front desks! Thanks for always keeping out agents informed.

  7. Pat Viohl Says:

    Do the income limits that apply per individual and per couple re: eligible first time home buyers ALSO apply to those buyers who qualify for the $6,500? In other words, do the income limits apply to both kinds of home buyers?

  8. Denise Crumpler Says:

    Hi Judy. I have a question concerning the 1st time homebuyer piece. My son is listed as a co-buyer, along with my husband and myself, on a home that we purchased in 2005 while he was in college. He stayed in the house 2 years until he graduated in 2007. Since then, we have rented the house out. Would he be considered a first time homebuyer, because in 2010, he would not have lived in the house for 3 years? I’m trying to see if this will work for him since he is ready to purchase a home.

    • Judy Jones Says:

      Denise,
      Unfortunately since he has owned a home in the last 3 years, even though is was not his residence, he is not eligible. He can not have owned a home even if it was a rental property that he did not live in. Sorry.

  9. Terry Young Says:

    Spread the word!!!

  10. latisha Says:

    I am excited about this good news. I have individuals who will be excited also. I am spreading the word to all. Thanks for the detailed update.

  11. Valerie McDonald Says:

    Thank you for your clarification of the details. This should be good news for many people and should help home values as well.

    I have just had a call from someone who will qualify for the $6500 credit hopefully.

  12. Annette Osbourne Says:

    Whooptido!!!!!!! (All in the Family)

  13. Suzie Perlstein Says:

    WE all owe our Senators a lot of credit. Johnny did a GREAT job on this bill, and I am thrilled.

  14. Shannon Says:

    Very exciting news! Will keep the market moving in the right direction! I love that they have included current homeowners as well! Now those move-up buyers and downsizers can get in the game too! yeah!

  15. James Standart Says:

    I had an interesting question posed to me today at an open house. The buyer sold a home June 15, 2007. The 3 year anniversary will be June 15,2010. Will she qualify for the existing home owners $6500 credit as long as she signs a contract by 04/30/10 or must she close prior to June 15, 2010. Additionally, if she doesn’t qualify for the existing homeowners credit (because she is past the 3 year deadline having to own a home for 5 years of the last 8), wouldn’t she qualify for the new home owners $8,000 credit?

  16. ann bone Says:

    Questions are coming in as to whether the state of Georgia has extended their $1,800 ITC beyond 12/31/09. No, not yet. I can’t even find any reference to proposed legislation to do so when the 2010 session opens in January.

    Buyers should not wait to see if this happens or not. Remember that homes must be under contract by April 30, 2010 and close no later than 6/30/10 to take advantage of the up to $8,000 ITC for first-time homebuyers and up to $6,500 for qualifying “move-up” buyers.

  17. Maria Says:

    Any word on whether the $6,500.00 tax credit will be extended past June 2010? I am buying new construction and it may not be completed by June. Thanks!!

    • Judy Jones Says:

      Maria,
      There has been no news of a possible extension of the $8,000 or $6,500 tax credit. If and when a new bill to extend either or both of the tax credits is announced I will definitely post the information. The other possibility is the announcement of yet another tax credit.

      Congratulations on your new home!

  18. Bruce Michalke Says:

    Do you have to be a certain age to use this?

Comments are closed.


%d bloggers like this: