First Time Home Buyer Tax Credit Extended to April 2010, Previous Homeowners

home

A new Senate proposal will offer a first time home buyer tax credit extension to homes under contract by April 30, 2010. The former deadline was November 30, 2009. The home buyer tax credit will also be offered to people who have lived in the same home for five years, according to the proposal, which at time of writing hasn’t passed yet, but has bipartisan support. Bloomberg has more:

An agreement reached yesterday by the Democrats would let homeowners who buy a new home qualify for a $6,500 credit if they have lived in their prior residence for five years, according to Regan Lachapelle, an aide to Senate Majority Leader Harry Reid.

“The compromise we have now would expand the credit beyond first-time homebuyers,” Lachapelle said. Lawmakers expect to consider the measure as part of a bill to extend unemployment benefits, she said. That measure has been held up by a disagreement with Republicans over other proposed amendments.

Lawmakers have said they want to keep home sales from slipping as the economy struggles to recover from the worst drop in home prices since the Great Depression. The plan would extend the homebuyers credit, due to expire Nov. 30, to home purchases under contract by April 30, 2010, with borrowers allowed another 60 days to close the sale, according to a person familiar with the details of the agreement.

The credit would be available to individuals earning up to $125,000, or $250,000 for couples, up from $75,000 for individuals and $150,000 for couples under the current law, Lachapelle said.

  • Whoa!! It’s not passed yet! Latest update is Senate leaders of both parties as well as key Senate Finance Committee members along with Senators Dodd, Liebermann and Isakson have reached an agreement on extending and expanding the tax credit..need to determine whether to introduce it to full Senate as stand-alone bill or as an amendemnt to another bill, such as the unemployemnt bill…I include complete details in an updated post a few minutes ago at:

    http://realestateconsumernews.com/financing/home-buyer-tax-credit-update/

  • Drea

    Dennis–you’re right, it hasn’t passed. I looked over the post again and realized I hadn’t made that clear. I edited the intro a bit to clarify that although the proposal has promising support, it has not actually passed yet. Thanks for the note.

  • it’s a good proposal, especially during financial crisis like this moment. It would help real estate market.

  • MK

    What’s the whoa all about. It’s stated right in the introduction. I think it’s made completely clear.

    “the proposal, which at time of writing hasn’t passed yet,…”

  • Cortnie

    Do you happen to know what the date range will be for current homeowners who have lived in their residence for at least 5 years who decide to buy a new home? I know the final date will be April 2010 but will it be retroactive back to Jan 09, or start now?

  • This proposal is idiotic and immoral. Screwing with free market supply and demand NEVER pays in the long run. When this insane give-away dries up, so will home sales, just as happened to car dealers post clunker rebates. By the way, I am a full time Realtor(R) and benefit directly from this program, and I still condemn it.

  • Latest Update on Credits:
    The Dodd-Lieberman-Isakson Amendment (which would extend the homebuyer tax credit) ended up being added to the Unemployment Insurance bill but has a ways to go before approval…See the latest, complete update at:

    http://realestateconsumernews.com/financing/home-buyer-tax-credit-update-october-30-2009/

  • Jessica

    Why do you have to extend it to people who have had a home for 5 years? Why not 3.5 years? UGH so annoying! This is totally NOT fair!

  • CJN

    Is Congress trying to get *everyone* eligible for the credit? It’s pure political pandering. Check out more dissent over at GC: http://goingconcern.com/2009/10/homebuyer-credit-to-continue-h.php

  • Tax Credit Update: It’s getting closer, the Dodd-Lieberman-Isakson Amendment is now part of the larger unemployment bill and should be voted on by the Senate this week…complete details in an update I just did at:

    http://realestateconsumernews.com/financing/home-buyer-tax-credit-update-november-2-2009/

  • Eric

    Passed at 5 pm eastern time Monday 2 Nov – Last day to close is now 30 April 2009.

    http://www.senate.gov/legislative/LIS/roll_call_lists/roll_call_vote_cfm.cfm?congress=111&session=1&vote=00332

  • New Update on Homebuyer Tax Credit…

    The Senate voted 85-2 this afternoon to end debate on the amendment..This is clears a procedural hurdle and will allow the bill and amendment to be voted on by the Senate, most likely on Tuesday or Wednesday….If passed by the Senate it would then need to go back to the House for passage and then on to the President.

    http://realestateconsumernews.com/financing/home-buyer-tax-credit-update-november-2-2009/

  • Well, the tax credit is now extended.. I wish we could peek into the future and see the true long-term effects of this. Might as well take advantage of the credit while it’s there.

  • Tax Credit Update – Senate voted 9701 today shortly after noon to end debate on H.R. 3548 (The Unemployment Compensation Extension Act of 2009) which contains the amendment extending and expanding the tax credit….Next step is for the Senate to vote on passage of the bill with the amendment…this may happen tomorrow night or Friday…I have complete info in a post at

    http://realestateconsumernews.com/financing/home-buyer-tax-credit-extension-update/

  • UPDATE: At 5:28 p.m. by a vote of 98 to 0 the Senate Passed H.R. 3548 – It now will go to the House where it is expected to pass and then go to the President for him to sign into law. Complete details at:

    http://realestateconsumernews.com/financing/home-buyer-tax-credit-extension-update/

  • CCK

    We have lived in my first home for more than 5 years and bought a condo in Sept, 2009 and will close on another condo this month. Do we quality for this tax break? If so, one or both? Do we need to finance them to qualify?

    Thanks.

  • CCK – Here is the part of the bill passed by the Senate that discusses the credit for previous homeowners – I’m not sure if the condo you are buying is going to be your principal residence, but it appears it would need to be in order to qualify…If you want to see the entire bill as passed by the Senate, I just added links to the entire bill as well as to just the home-buyer tax credit section of the bill my latest update on the tax credit at:

    http://realestateconsumernews.com/financing/home-buyer-tax-credit-extension-update/
    `(6) EXCEPTION FOR LONG-TIME RESIDENTS OF SAME PRINCIPAL RESIDENCE- In the case of an individual (and, if married, such individual’s spouse) who has owned and used the same residence as such individual’s principal residence for any 5-consecutive-year period during the 8-year period ending on the date of the purchase of a subsequent principal residence, such individual shall be treated as a first-time homebuyer for purposes of this section with respect to the purchase of such subsequent residence.’.

  • Homebuyer Tax Credit Update: The House of Representatives just passed the bill by a vote of 403 to 12. It is now headed to the President for his signature..he is expected to sign today or tomorrow which then puts the extension and expansion of the tax credit into law. I have complete details as well as links to the bill in a post at:

    http://realestateconsumernews.com/financing/home-buyer-tax-credit-extension-update-house-passes-bill-on-to-president-for-approval/

  • Eric

    Quick Question – If I didn’t qualify for the first-time home buyer credit initially (income to high) BUT I do qualify under the expanded income limits (now $125k for individual) and I close November 30th on a single family home, will I be able to get the FULL $8,000 tax credit now? Thanks for your help.

  • DAvid
    Unfortunately I think you are right…the bill has the following effective dates…the income limits are in section (c) which appears to be covered in (1) below meaning the income limits only change for purchases after enactment of the bill….I also have copied section (c) at the bottom in case you wish to review..
    Dennis

    (j) Effective Dates-

    (1) IN GENERAL- The amendments made by subsections (b), (c), (d), and (g) shall apply to residences purchased after the date of the enactment of this Act.

    (2) EXTENSIONS- The amendments made by subsections (a), (f), and (i) shall apply to residences purchased after November 30, 2009.

    (3) WAIVER OF RECAPTURE- The amendment made by subsection (e) shall apply to dispositions and cessations after December 31, 2008.

    (4) MATHEMATICAL ERROR AUTHORITY- The amendments made by subsection (h) shall apply to returns for taxable years ending on or after April 9, 2008.

    (c) Modification of Dollar and Income Limitations-

    (1) DOLLAR LIMITATION- Subsection (b)(1) of section 36 of the Internal Revenue Code of 1986 is amended by adding at the end the following new subparagraph:

    ‘(D) SPECIAL RULE FOR LONG-TIME RESIDENTS OF SAME PRINCIPAL RESIDENCE- In the case of a taxpayer to whom a credit under subsection (a) is allowed by reason of subsection (c)(6), subparagraphs (A), (B), and (C) shall be applied by substituting ‘$6,500’ for ‘$8,000’ and ‘$3,250’ for ‘$4,000’.’.
    ++++++++
    (2) INCOME LIMITATION- Subsection (b)(2)(A)(i)(II) of section 36 of such Code is amended by striking ‘$75,000 ($150,000’ and inserting ‘$125,000 ($225,000’.

  • oops…meant Eric, not David

  • Tax Credit Update – I updated my post to include a link to FAQ’s on the new credit..Also there have been a lot of good questions and answers on the topic which are there also…link to the update is:
    http://realestateconsumernews.com/financing/home-buyer-tax-credit-extension-update-house-passes-bill-on-to-president-for-approval/

    Most frequently asked question with an answer from the National Association of Realtors is:

    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
    (when the bill is 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

  • DAW

    WHAT IS THE LOGIC OF FIVE YEARS, WOUL IT NOT MAKE SENSE TO ENHANCE THE MARKETPLACE TO OPEN THIS TO ANY HOME BUYER. I WOULD THINK THAT AS QUALIFIED HOME BUYER TEND TO MOVE UP TO LARGER/MORE EXPENSIVE HOMES THIS WOULD PROVIDE FOR MORE AFFORDABLE STARTER HOME. I KNOW OF PEOPLE WHO WILL FALL BETWEEN THE CRACK. WAS THIS INTENTIONAL BY THE SENATE OR AN OVERSITE.

  • RJ

    The real people getting screwed are the ones who meet the requirements, but closed before today …

    Seems like the long time homeowner credit should be retroactive to reward those who helped stimulate the economy this summer or spring. Not just those who do so in a 6 month period starting today.

  • mlP

    I am closing on my house on dec 23 2009, last year i made 121,000 and this year i will make around 150,000 can i still receive the tax credit. if so how?

  • MSH

    So…I owned my previous home for 7 years and closed on a new home on Oct. 15th. Does this mean I will not get the new credit ($6500) even though I meet all the requirements simply because I bought too early??

    Thanks

  • Unfortunately that is true…the credit for existing homeowners did not go into effect until Nov 6th…

  • OK, now that the tax credit extension and expansion has passed I have to be fair and published a post today from Ted Gayer of Brookings Institute who suggests this was a bad idea….I’m obviously in favor of the credits, but Ted has made some interesting points and I like to be fair to both sides….if you want to read what he has to say it is at:
    http://realestateconsumernews.com/financing/and-now-for-the-other-side-of-the-coin-on-the-home-buyer-tax-credit/

  • James

    I read this on http://www.federalhousingtaxcredit.com/faq1.php#11.

    Any home that will be used as a principal residence will qualify for the credit, provided the home is purchased for a price less than or equal to $800,000.

    Does that mean if I purchase a home more than $800,000, will I still qualify for the tax credit?

  • James, There is a limitation on the cost of the replacement residence (or first-time residence) of $800,000..therefore your purchase price must be equal to that or less to qualify (I assume the value could be anything, so if you can snag a house that is worth 1.2 Mil but pay only $800,000 you are good to go)…. It seems clear if you are paying over $800,000 for the house you do not qualify for any credit…

    There is a ton of info and resources in both a post I did last week as well as in the 150+ questions and answers that followed in the comments…if you have other questions you may want to check it out..it’s at:

    http://realestateconsumernews.com/financing/home-buyer-tax-credit-extension-update-house-passes-bill-on-to-president-for-approval/

  • brian

    so – once again – i get the raw end of the deal?
    Long Story Short:
    Bought new house in May of 09
    Ammended taxes to claim $8k rebate
    denied because we owned and lived in a trailer (in a commercial park where i owned NO LAND or paid LOT RENT, and NEVER owned a deed)
    Been argueing with IRS for money
    New law comes, and I now meet the criteria
    however, i need to have bought AFTER novemeber 6th?
    The official IRS web-site makes NO mention of that. where does this information come from? why can we not get SIMPLE answers?

  • Joe

    I have question. My uncle died and left every thing to be divided among 4 relatives (Nessi’s & nephews). The house is up for sale because it was not left to any one person so my question is. I’m a nephew and want to buy the house (second time home buyer) from the “estate” and all the money from the sale of the house will go back into estate, so can I claim the tax credit for buying it even though it was from my relatives “estate”.

  • david

    If I previously owned a home and sold it and then 2 years and 10 months later bought a new home……can I qualify for the tax credit?

  • Joe,
    Wow, this one is really a challenge…I’ll admit, I don’t have an answer…I’m thinking the answer is no, but not sure…I have updated an earlier post I did on the topic and there are about 160+ comments with questions and answers covering a variety of issues you may want to read through..I also links on my post to IRS info on the credits as well as FAQ’s from the Realtors- the post is at:

    http://realestateconsumernews.com/financing/home-buyer-tax-credit-extension-update-house-passes-bill-on-to-president-for-approval/

  • David,
    You may want to check out the post I referred to in my prior answer to Joe as well, but your question is a little easier…

    It sounds like you are cutting it close…assuming you lived in your prior home for at least 5 consecutive years and you purchase and close on a replacement primary home with in 2 momths you should qualify for the credit as long as you meet the rest of the qualifications…The key for you is your closing date on your new home cannot be one 1 day beyond three years after you sold you prior house that you lived in for 5 years..

  • david

    Thank you for the reply…..to clarify…..I did not own my previous home for 5 years. I sold in in Nov 06 and close on my new home August 28, 2009.

  • Joe

    I talked to the IRS yesterday and they said I would be able to claim the credit.
    They said if it were a lineal relation then you could not.
    Lineal relation as she put it is Grandfather, Grandmother, Brother, Sister, Grandson, Son or Daughter.
    IRS ph#1-800-829-4933
    You better have an hr to kill when you call because you will be pushing buttons and put on hold before you ever talk to someone.
    That’s only if you hit the right buttons the first time.

  • Tracy

    My question is my husband and I just purchased a home,(closing December 9th) however because I currently own a home that is for sale, he was the only one listed on the mortage. I have lived in my home for the past seven years. SO my question is since I am his wife and we file joint tax returns even though I am not listed on the new mortage do I qualify for the tax credit, and since I am his wife? Of course the $6500.00 as a second time buyer.

  • Darrin

    My question is and you might have answerd already. I sold in Jan.07. lived in it for 4yrs. Purchased a new home in April 09. So that means I’m a dead duck for the credit?

  • Darrin,
    Unfortunately you are correct…the tax credit for long-term existing homeowners did not go into effect until the bill became law which was Nov 6, 2009…Therefore only purchases after that are going to qualify…
    There is complete info on the tax credit, including a lot of good questions and answers as well as resources in a post I did at:
    http://realestateconsumernews.com/financing/home-buyer-tax-credit-extension-update-house-passes-bill-on-to-president-for-approval/

  • i read that if you purchase a home >$800k, you are not eligible for the extended tax credit.

    it would be nice for families who live in a metropolitan city like new york or san francisco to be eligible by this bill too.

    i live in nyc and have been saving for five years for my first home. it’s a slap in the face that i am not eligible for the first home owners tax credit.

  • I’m a 45 year old divorced father of four. In January of 2006 I quit claimed all interest in the home my ex wife and I owned and lived in. Three and one half years later, I was debating whether to renew my annual lease on an affordable apartment in a convenient location. My landlord, a realtor, told me I’d be crazy NOT to take advantage of the new first time home buyer credit being offered.

    I looked into it. I clearly qualified as a first time home buyer. I knew of a nice little house for sale in a neighborhood I liked. I didn’t have much money for a down payment though. I heard of a local bank offering to lend downpayment money to borrowers qualifying for the first time home buyer credit. Everything was lining up! I got pre-qualified, made an offer, got it accepted, and scheduled a closing.

    In June of 2009 I became a home owner. I paid $65,000 for the house. I borrowed the 10% downpayment in a balloon loan- to be paid when the tax credit came in 6 to 8 weeks. This may seem like the kind of borrowing that got the country into trouble, but the house appraised well above the purchase price, and with the $6500 credit, I’d be in a great equity position in no time!

    Two months later I’d heard nothing from the IRS. I went online to check the status. It showed nothing. I called a toll-free number and was put on hold for twenty minutes! You never get those minutes of your life back!

    Three months later I called again. I learned that the IRS was overwhelmed by applications for this first time home buyer credit. The Economic Stimulus was doing some stimulating. Things were backed up. The balloon loan came due. I extended it for another six weeks, (at 13%)

    Four months later I got a letter from the IRS. My credit was denied. Their records showed that I’d owned a home within the three year period preceding the purchase of the qualifying home. Their records were wrong, but that didn’t matter much. the letter was final. My only option, it stated, was to appeal in federal tax court!

    What???? Once I settled down, I began researching. I found phone numbers that got me directly to IRS agents. (See the page: IRS contacts) I made calls and surprised a few bureaucrats. I also filled out a form to procure an IRS tax advocate. If you are having trouble getting your credit, click here to FILL OUT THIS FORM: !!

    I got them to reopen my case. I called my advocate every week. I felt like, maybe she was helping- maybe she was pacifying be to get me off the phone.

    Six months later, I closed out the year with a report from the IRS. The advocate had told me nothing of the report landing in my mail box- the report informing me that A. My First Time Home Buyer Credit was denied. B. A review of my 2008 tax filing revealed an underpayment of $1600.00!

    Wow! Both items were in error. Try telling the IRS that!

    I’ve since refinanced the balloon loan into a second mortgage. Now I’m paying two loans and property taxes, and utilities, AND maintenance! Thanks Obama. You dangled a carrot. I jumped from my affordable apartment. The carrot got yanked away and here I am. The irony of a first time home buyer home going into foreclosure is rich and tragic.

    Have I quit fighting? No Way!

    1. I contacted my U.S. Congressional representative. I encourage anyone having trouble of this sort to do the same. After signing a release of information, the office of my congressman will be advocating for me. A file stamped: CONGRESSIONAL INTEREST might just float to the top of the pile.

    2. I submitted paper copies of all documentation directly to the agent who signed the report, along with a letter summarizing my situation and itemizing the documents included.

    3. I submitted paper copies of all documentation directly to the taxpayer advocate assigned to my case.

  • Michael

    I’m a 29 year old who just purchased my first home, officially on 12-29-09. However, the original purchase agreement was signed in the first week of October and given to the lawyer. Here is my issue…..I bought the house from my parents. In the original bill, a family sale was not an issue. But, in the revised bill of November 7th, a family sale is disqualified for this refund. Since the original purchase agreement was signed back in October, am I under the regulations of the first bill??? And will I still receive the 10% refund??? Any comments would be greatly appreciated. Thanks…….Michael

  • Trevor

    Michael,
    The first bill still had the relative stipulation in it also. I know because I’m in the same situation as you. It looks like were out $8k.

  • Jason

    Goodluck getting the credit. I filed in July of 2009 have yet to receive a dime of my money. Every time I call I am on hold for 30 minutes then I am told it is still pending. Looking forward to the fair-tax.

  • Jason
    You may want to check out a post I just did on the tax credit form as well as info just released from the IRS on claiming the credit..The IRS has addressed the time-line of the tax credits in this..The post is at:

    http://realestateconsumernews.com/home-buyers/irs-releases-instructions-on-how-to-claim-homebuyer-tax-credit/

    good luck,

  • Before anyone decides to file an amended return for the first time home buyer credit, consider the fact that the IRS is currently turning them around in about SIX MONTHS!!

  • warren surritte

    i thought that the gov. was going to get the money back to you quick so you could pay your closing coasts,but i quess it is like everthing else in the obama world they just out andout lie.

  • Werner

    Any information about if the first-time home buyers extension will go beyond the 4/30/2010 date?

  • Kimberly

    We bought a home in October of 2009. My husbands father passed away so the home was in an estate. We purchased the home from the estate of his father. I know that we can not purchase a home from a family member directly but since this was from the estate are we still eligible for the tax credit?

  • Chuck

    I am ready to sign a purchase contract with a builder (March 22, 2010). Can I still get the tax credit if the house is not complete by June 30th?

  • Jose

    Do you think they’ll extended it again for after April 30th, 2010?

  • For anyone thinking that they might want to buy, I suggest reading the tips on http://www.firsthomeexperience.com, there is lots of great info on the site to help first time buyers.

  • charles

    is there going to be another extention on the tax credit that ends 4-30-2010 or another proposal for another tax credit.

  • Didi

    I’m in the same boat with several of you wondering if the credit will be extended beyond the April 30th deadline. I hope they do but at the same time I’m doubtful it will be extended. The Senate is currently on spring recess and wont be returning until the end of April right before the credit deadline. Hopefully they will issue a new tax credit and have it run through the end of 2010?

  • Cordeleann

    It sounds great, in theory. The reality is, the govnmt doesn’t want to give us the money. It feels like they are trying to trick people into buying houses. “oh, look at the shiny 8Gs!” Then once you are stuck with the mortgage, “oh, syke. We were only kidding. what? you really need the money? well lets see if I can find some around here somewhere, come back in a couple months.” . . . a few more months. . . . and a few more. . . .Give us our money!

  • The contract has to be executed by April 30th, 2010 but home buyers have until June 30, 2010 to close on the property and no you cannot take the $8,000 before the closing. If you do the IRS will ask for the money back in the future plus a penalty. If the bank will loan on the property you could do the repairs after the closing with the tax credit. Just file a tax amendment to your 2009 taxes. File 1040X form (amendment form) with form 5405 for 8000 Tax credit. On aother note I centanly hope the Government will extend the Tax Credit. Homes are still being foreclosed on and our market has far from recovered.

  • Good news…there is a chance Congress will extend the deadline to close on the purchase of a new home to September 30, 2010 from June 30,2010…Read all about it at:

    http://realestateconsumernews.com/home-buyers/closing-deadline-for-homebuyer-tax-credits-may-be-extended/

  • Steve

    My wife has owned her home for eight years now and we have both been living there. I am not on the title or the mortgage of that home. Recently, I purchased a new home but she is not on the title or the mortgage of that one. We do file taxes jointly. Would we be eligible for the 6500 tax credit?

  • Good news…the Senate passed an amendment yesterday that would extend the deadline to close on home purchases for the homebuyer tax credit to September 30th (does NOT extend the April 30th deadline to enter into a contract to buy though)…I have all the info, including links to the bills, in a post at:

    http://realestateconsumernews.com/home-buyers/senate-passes-key-amendment-to-extend-closing-deadline-for-homebuyer-tax-credit/

  • tobi

    My now husband bought a house in Dec 2005. We were not married at the time he purchased it. We are now married and I have bought a house for our principal residency that I had in contract on 04/19/2010 and closed on the home on 06/11/2010. Do I qualify for anything or am I basially up the creek?

  • Tobi, You didn’t say when you got married, but assuming you were married on 4/19/10 when you purchased this new home I don’t think yo qualify for the credit…you would not be a “first-time” buyer because you had owned a home within the 3 year period prior (I’m assuming your husband retained ownership of the house he bought in 2005 at least past 4/19/07 and you did not qualify as a “long-term owner” as the house your husband bought was not owned and used as a primary residence for 5 years….complete info is in an article I wrote and includes a link to an IRS page that you may find helpful at:

    http://realestateconsumernews.com/home-buyers/new-updated-info-from-irs-on-homebuyer-tax-credit/

  • Tobi

    Hi. Thanks for your response to earlier question. To clarify my husband bought house before we were married in Dec 2005 we were married in June 2006. I have no legal claim to his house. Does this help me any?

  • The way I read it unfortunately no…if you go to the IRS site link in the article in my previous response you should find a link to either “questions” or “FAQ’s” and in that section there are scenarios…I think there is one similar to yours..

  • maggie

    did the extension for the september deadline get passed? or is it still june 30th

  • Mike

    Is there any likelihood that they will do this credit again? Especially with hoe the housing market fell drastically.