More on Homebuyer Tax Credit Changes

Lots of questions are coming in about the changes to the Homebuyers Tax Credit! This is great news for buyers and sellers in the Rochester marketplace. We are providing Nothnagle agents with a wealth of resources and information about the changes to the tax credit so they can be prepared to help you. In the interim, we’ve compiled a list of FAQ’s to help you better understand the new tax credit provisions.

I signed a contract to purchase a home on October 1, 2009 (prior to enactment of the new rules). My anticipated closing date is December 15, 2009 (after original deadline). Will I qualify for the tax credit?

YES! The new rules go into effect on the day the President signed the bill. It’s as if the November 30th deadline never existed. It does not matter when you entered into the contract, what matters is the closing date. Further, in the above scenario if the person is a not first-time buyer and meets the income and residency requirement, they too will qualify for up to a $6500 credit regardless of when they entered into the contract (a first-time buyer will qualify for up to $8,000).

Must the new house cost more than the old house?

NO!

I am a first-time buyer but was not within the prior income limits at the time I entered into my contract. I do fall within the new higher income limits. When I go to closing later this year, will I be eligible for the tax credit?

YES! The new income limitations ($125,000 (single)/ $225,000 (married)) take effect as soon as the President signs the bill into law. As long as your closing date occurs after the enactment date, you will be eligible.

I owned my home for 10 years, but sold it two years ago and am currently renting. If I purchase a home, will I be eligible for the $6500 tax credit if I meet all the other eligibility requirements?

YES! Because you lived in the home for more than 5 consecutive years of the previous 8, you will qualify. Regardless if you rent or bought another home, you qualify because you owned a home and occupied it as a principal residence for 5 consecutive years out of the last 8. The key word is “consecutive.”

I am an eligible existing homeowner. I have found a home with a non-negotiable price of $825,000. Will I be able to use any of the $6500 tax credit?

NO. The $800,000 cap on the cost of the purchased home is firm. Any amount above $800,000 makes the home ineligible for any portion of the credit.

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