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/
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.
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,…”
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/
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!
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/
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/
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/
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
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.
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.
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?
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/
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/
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?
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”.
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..
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.
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.