Jose Rodriguez of Lodi works on the concrete foundation of a home at Westshore new home community in Sacraamento. California homebuilders, buoyed by the demand for an $8,000 homebuyer tax credit that began in March. Now the program has been extended to homeowners with five years in their current residence.
(Newscom)Photos (1 of 1)
What the $6,500 homebuyer tax credit means for you
By David Grant | 11.05.09
For answers to several questions raised by comments and questions on this article, see our subsequent report.
During the first round of the government’s homebuyer tax-credit program, only first-time purchasers could qualify for up to $8,000 in tax credits. But this time, many current homeowners could get in on the deal, too.
On Thursday, the House and Senate passed an extension of the popular homebuyer program that would allow people who have owned their homes for at least five years to buy a new home and get up to $6,500 off their tax bill. Why the switch?
The move may be aimed at luring higher-end buyers into the real estate market, says Kevin Cottrell, a principal and cofounder of Kelsey Cottrell Realty in St. Louis. During the initial incentive program, which ends Nov. 30, over 70 percent of the contracts his firm inked were under $300,000, and 90 percent were under $400,000, the lower end of the real-estate spectrum. By extending the credit to current homeowners, the federal government is aiming to move a more upscale segment of the market into “a more normal cycle of buying and selling,” where people might move to a better home every seven or eight years, Mr. Cottrell says. The five-year ownership requirement discourages people from flipping houses the way they did during the real estate bubble.
President Obama is expected to sign the bill quickly. Here’s what it means for you:
– First-time homebuyers still qualify for up to $8,000 in tax credits; those who have owned their homes at least five years qualify for up to $6,500 in credits.
– Purchases must be secured by April 30, 2010 and closings finalized by June 30.
– Single taxpayers with an adjusted gross income under $125,000 (under $225,000 for joint filers) are eligible for the credit’s full benefits. Those with incomes up to $145,000 (single) or $245,000 (joint) may receive partial credits.
– Homes worth $800,000 and under are eligible for the program.
– Members of the military serving outside the United States for more than 90 days will have until June 30, 2011, to qualify for he incentive.
– The program is expected to cost the federal government $10.8 billion in lost taxes.
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See also:
Home-buyer tax credit: more questions answered
After dismal jobs report, unemployment rate could hit postwar high
Highest unemployment rate in 26 years: Obama’s jobs challenge
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— David Grant is a Monitor contributor. Love the incentive? Hate the incentive? Want to chime in? Do so on Twitter.
Comments
2. Melanie | 11.05.09
I want the government to forgive the $7,500 rebate loan that I received for the purchase of my home in 2008. I don’t feel that it is right that many home buyers were given a loan that they must pay back rather than an outright rebate.
3. Garry | 11.05.09
I fit into the new purchase $6,500 tax credit category. I close on my new home purchase tomorrow (11/6/09) will I qualify.
4. Rachel | 11.05.09
It is too bad that for those people who chose to sell their higher priced homes and move into a more affordable home rather than take a loan modification are left out of this tax credit. We felt a moral responsability that if we had to take a loan modification, we simply needed to downsize. There is no reason for taxpayers to absorb the cost of our inability to continue to live a more lavish lifestyle. We sold our home at no profit and purchased one for less than half the price. Guess we won’t qualify for this expanded 6,500.00 tax credit. darn.
5. debbie | 11.05.09
what about homeownrs who have managed to hang on to their homes through all of this economy crisis and it isnt easy to do. we should get a break too so we can take a breath for a minute
6. Jorge | 11.05.09
When does the program start? I already signed a contract, it closes in December & have owned our house for 11 yrs… Do we qualify for the $6500 credit?
7. Jeff | 11.05.09
We sold our house in February 2009 and will be closing on a new home purchase on December 18, 2009?. We were in our prior house over 5 years. Since we sold prior to the bill passing but are buying after the bill passes do we qualify for the $6500 credit?
8. John Carlson | 11.05.09
My wife & I JUST missed the cut-off date to qualify for the First Time Homeowners Rebate - I recommend they do a “Grandfather” clause and rewind the date a little further back - THIS would allow MORE homeowners to KEEP the homes they recently purchased PRIOR to the bank dilemma and credit crunch and THEN allow more homeowners to invest in the possibility of purchasing more properties (possibly rental properties). Just a suggestion, but what the heck do I know about economics and Politics!
9. CKSHYDOG | 11.05.09
What about the people who have already sold their homes this year and upgraded? The new bill is going forward. I bought a home in May 2009. Will I be elgible?
10. cynthia | 11.05.09
i really like this bill, now i dosn’t feel like people that’s ben in there house before 2008 are not being pushed or left out.
11. rhonda | 11.05.09
we have the end dates of this 6500 tax credit, but what about the start dates of it. Is it retro-active to January 1st 2009? before that? or does it start from the day it is signed?
12. Melissa | 11.05.09
I am really curious if the $6500 credit will be retroactive, and haven’t found that answer anywhere yet. My husband and I were transferred from TX to IN over the summer for his job. We had owned our home in TX for 11 years. We closed on our new IN home in August 2009. If the tax credit will be retroactive, we qualify in every other way. Anyone know if we will qualify for this tax credit, or if we’re going to get taken for $6500 just because we bought a few months too soon??
13. amanda | 11.05.09
So why don’t they put something in there for the military for the 6500 sometime of us are not able to stay at one home for 5 years with orders of the military we are ordered to move so we can’t get the 8000 if we have already owned a previous home, and we can’t get the 6500 due to us not having our current house due to us not having our previous house for 5 years and having to move for the military job.
14. Chris | 11.05.09
I am just curious. I sold my first house of 7 years this past July. I am currently building a new house and it is scheduled to be finished in the next few weeks. If I officially close on it in December can I qualify for the $6500 or did just fall through both cracks?
15. Arthur | 11.05.09
Hi,
Would you know if I bought a house in May of 2009, would I be eligible for the new 6500 tax break?
Thanks,
Arthur
16. Qingshou Huang | 11.05.09
Do you need to purchase the house after 12/1/09 to enjoy $6500 credits for the second home buyer?
17. Jeri | 11.05.09
What about those of us who bought our homes 4 years ago, or 20 years ago. We have been making our monthly payments. Sometimes struggling to make the payments but making them. I think maybe the people who are current on their mortgages, trying to keep their bills paid should get some kind of a tax credit. Maybe a credit to upgrade the home they are already living in. Cash up front not after a purchase is made like the energy credit.
18. dave lipscomb | 11.05.09
i have lived in my house since ‘95 and bought a new one that closed on 8/1/09. rented out the older one. will i be eligeable…is it going to be retro active, or am i S.O.L.??? respond to akathedaver@gmail.com if you know the answer. thanks…
19. Tinh Nguyen | 11.06.09
if i bought the house in Mar-2009. can i get tax credit for $6500 as second house.
thanks
Tinh
20. bob | 11.06.09
Man, you people have become so spoiled by our government. if you bought BEFORE the tax credit, too bad. If yo bought 15 yrs ago and you are complaining about payments, please stop. it’s not the government,s job to give you free money . why stop at home buyers? heck, just give every a refund on all the taxes they’ve ever paid!!!!
21. Jeff | 11.06.09
We purchased our home in May 2009 and lived in our orig home for over 5year. Are we eligible for the $6500 crdt
22. Kelly | 11.06.09
I purchased a condo in August 06 and luckily sold it in June 08 (thankfully before the complete fall of the market). I am about to purchase a new home. Did I fall through the cracks on both of these offers? I did own a home part of the last three years but am currently renting. It seems that I am one of the unlucky that were smart enough to sell before needing to foreclose or short sell but now am not eligible… any thoughts? Is there a loophole for me?
23. Chris | 11.06.09
Not fair is what I say! We sold our house September 1, 2009 & bought again…where is my tax credit?! The people who bought our house got one & now EVERYONE is entitled?! Not fair!
24. avery | 11.06.09
My wife and I sold our home that we have owned for 2.5 years this past September 2009 and are currently renting. If we purchased a home prior to April 2010 do we qualify for the $6,500?
25. Jamie White | 11.06.09
They need to backdate the $6500 tax credit as far back as when the $8000 came into effect.
26. Fifi | 11.06.09
What if I am paying cash for the house I’m buying? Do I qualify then? The HUD-1 settlement statement that I am supposed to attach to my tax return is all about loans.
Also, what if the house I’m buying costs less (but is worth much more) than what my current house is worth? The new one is larger & in a much better neighborhood, but is currently distressed. We will be updating the utilities and then moving in.
I qualify in all other areas.
27. Richard Teran | 11.06.09
To all who sold before the prices dropped - you probably reaped more than $6,500 of realized equity gain by selling smart. That’s better than needing a government handout. Also - just as the government interference of the past ten years has brought about all the current foreclosures, this one will as well. Hold tight, save your money - buy for pennies on the dollar in a few years.
28. kylie | 11.06.09
so what does it mean for the seller? do i keep my house on the market over the holidays, or take it off for a short while then list again in feburary as planned?
29. Joanne | 11.06.09
Melissa, I have been reading a few sites and it likes we are getting taken for the $6,500. This is not retroactive, meaning that those of us who bought houses this summer are not going to see a dime. My husband and I are currently paying two mortgages while we wait for our old house (that we have owned for over 5 years) to sell. This is very frustrating.
30. stephani | 11.06.09
The bill was signed today 11/06/2009. After it was signed I closed on my house at 3:15p.m which was after the signing. Will I qualify for the 6500 tax credit
31. glollar | 11.06.09
We bought our home April 1, 2008, first home we had bought since we had been renting for 5 years since our home had burned. Do we miss out all together since it was before April 8, 2009 by these few days. Thanks for any answers
32. Scott | 11.06.09
We hope to close on a house in December and will have lived in our current house for 4 years and 9 months. If you count it as parts of years we come to 5 though… 2005, 2006, 2007, 2008 and 2009. Which way is the proper way to count?
33. Chris | 11.06.09
My ouse is only 3yrs. old.Would I qualify if I bought a new house? I have been a home owner since 96.
35. Frank | 11.06.09
My wife and I currently own my wife’s child hood home. We purchased it shortly after graduating college in 2006. Although we have not owned it for 5 years, it has been her “primary residence”.
Do you think we qualify, or do you have to have owned your home for 5 years?
36. Martin | 11.06.09
What about the other people who have been deemed unworthy? Those buying their first home but disqualified because they are buying it from a family member?
37. Martin | 11.06.09
What about those who have previously been disqualfied because they’re buying from a family member? I’ll guess we’re still screwed out of it. Still waiting for a reasonable explaination why this disqualifies. No one has yet to provide me with any explanation, let alone a reasonable one.
38. su ve | 11.07.09
We bought our first house in 2003 and sold in 2005 and for the second time we bought house in 2005 and rented it a month ago. We lived in our previous house 3.5 years and in the first one for 2 years, a comined 5.5 years of homeownership. Will we qualify for the $6500 tax credit?
39. mark | 11.07.09
everybody,,looks for a free,,handout,,thats where are country has become,,but nobody knows,,all these free handouts,,arent free,,we all pay for it,,,eventually,,we are becomeing a third world nation,,with no substance,,just,a welfare,state
40. sjeanwatson@suddenlink.net | 11.07.09
I am 65 and downsizing ,so I’m buying a less expensive house will I qualify for the tax credit.
41. Anni | 11.07.09
I have owned my home for 33 years, I have no intentions of selling, just would like to make a few repairs. $6500 would go a long way in doing so.
Can I qualify for any of these “hand outs” ?
42. su ve | 11.07.09
Mark, you really sound like you are frustrated, me too. we dont qualify for nothing since we did everything right and still paying our mortgage, not being able to qualify for first timer, repeat and income limit, but I have to foot the bill for others who did the mistakes and trying to see if I can get some make good of anything that we are being peanlized for nothing.
43. Janos | 11.07.09
The $6500 program begins on 12/1/09 - so you will have to close after that to qualify.
44. Nick Chiechi | 11.07.09
We have lived in our last home for 31 years, we sold it in May 2009,and purchased a new home in May 2009, do we qualify for the $6500 tax credit? Thanks
45. LA | 11.07.09
We qualify on all aspects. Our household income is around $238K, what percentage of the $6500 would we receive?
46. Dennis | 11.08.09
Question anyone…if you’re an existing home owner and buy another home and do not sell your prior home right away, then how can you declare the $6500 tax credit on your new principal residence when you haven’t sold your prior principal residence and when you do sell it, the excludable gains will come from that house as the principal residence you have sold assuming you sell it within the allowable period after you move out of it…..so in a nut shell, if you declare the new home a principle residence immediately upon move-in, it sounds like it will hamper your ability to exclude the gains on your prior home when you sell it…I’M CONFUSED
47. Rachel | 11.09.09
My husband is in the military. We were stationed in Baytown, TX and bought and owned a home there in 2004 and used it as our primary residence until July 2008 when the military transferred us to Lincoln, NE. We were unable to sell our house so we are currently renting it out. In April of 2009 we bought a primary residence here in Lincoln. Do we qualify for either credit with proof of military orders?
48. Laura | 11.09.09
Jeri, et. al, who are complaining about having bought a house years ago, and not qualifying for this credit, and saying you should get a tax break: hello, you already do! All homeowners get a tax deduction for interest paid on their main residence. Renters get nothing, even though they pay property taxes indirectly through their rent. You’re hardly being cheated on your taxes!
49. Brent | 11.11.09
Is there any one who can help I can’t find this answer anywhere. We just sold our home which we lived in for 5 years and 6 months. Can my in-laws cosign if my wife and I are a not first time home buyers but in the (Move-up repeat home buyer) tax credit bracket?? I realize that the First time home buyer credit applies with a cosign but what about our situation being the Move-up repeat home buyer $6,500 tax credit? Thanks in advance for responding to this question as we sign and cosign this week and want to make sure we are still eligible for the full credit with a cosign. And yes, we would be the Only residents of the home.
50. Josh | 11.11.09
This is ridiculous. How about some consistency, Washington? Everything for the tax year of 2009 ates to January, except this bill. I was screwed out of the “first-time homowner” credit because my wife owned her own home in the past. Now, I’m being screwed out of the “repeat-buyer credit” because I puchsed the home in April. This is the most assinine plane I’ve ever seen. If you introduce a tax credit in 2009, allow it for any 2009 claims. Period.
51. Mortgage loan modification Experts | 11.11.09
Wonderful post! I believe it better to have a lawyer by your side when it comes to modifying your loan. They are great at renegotiating your terms with the lender.
52. Gary Labuski | 11.12.09
Gentlemen,
1).Would the $6,500 tax credit apply to a home purchased in Setp.’09.
2).Also, can a person who has previously owned a home & has resided for 5.5 yrs. qualify for the $6,500 tax credit.
3).In addition would the credit of $6,500 apply to owning and living at two consecutive residents over the period of 5.5 yrs.
53. walker | 11.12.09
what about me the guy that bust his rear to make his payments on time in my new home before all this started. and will starve to do so. wheres my tax credits? I was hoping it was 6500 for anyone that bought a home in the last five years period!! But its for them to to buy more housing. I have to be poor or rich to get anything it looks like…
54. David | 11.13.09
This is simply horrendous public policy, but what’s new.
Apparently our elected leaders have absolutely no clue as to the importance of fairness in governance. Start passing a bunch of ad hoc give-aways and you can be damn sure that you are going to destroy public faith in government.
This is hardly the pragmatism I expected from the Professor-in-Chief.
The boomers just can’t stop raping our nation’s future. There are plenty of nice people between the ages of 45-64, but history is to be very unkind to the generation as a whole.
55. John | 11.14.09
Hello, I just bought a new house and closed in Sept. of 2009. I owned my other house for eight years and lived their until I moved into my new house on October 24, 2009. I have not sold the old house but the new house is my primary residence. How do you find out if you qualify for this 6,500 credit. Looking at some of the post on this site it seems that the government have screwed a lot of repeated home buyers who bought their new homes prior to their new bill. They should do something to include everyone from Jan. 2009.
56. James | 11.14.09
People don’t need a giveway to help subsidize a purchase today, when prices are rock bottom. We purchased our home in January, 2008 and get nothing from this or from last year’s incentive program, although we have seen our home value plummet. Those of us who bought BEFORE the bubble was deflated are the ones who are really hemmoraging money. And it’s completely legit for us to complain as we will have to pay for this in the form of taxes. (At least the 2008 version had to be repaid. This year’s version is nothing less than a giveaway.)
57. Andrea | 11.16.09
I settled on my new house on March 13, 2009 and lived in my other house for 13 years. Would I qualify for the $6500 tax credit?
Thanks
58. Dean | 11.17.09
1st- All of you people asking questions about,”do I qualify for this,” etc., Did you even bother to notice that no one is answering? Ask your tax professionals, H&R Block, or JH will be able to answer this!
2nd- I don’t think anyone who was responsible enough to buy within their means, and has been able to keep your home through all of this will ever get any credit for doing it, so pat yourself on the back, and DO Not pay any of the closing costs if you are selling your home, let the homebuyer use their
“charity” money to cover their own butts! Don’t sell unless you absoutly have to, the market will come back eventually, and then you can reap the reward of doing the responible thing, that’s what this tax credit is for, to bring the market back, just like cash for clunkers. I didn’t get a retroactive credit for the car I bought in 2006, I’m not crying about it! I’ve owned my home since 2001, we make less than 45k per year, and we knew the housing boom would screw a lot of people, so we stayed put, and we are still able to get loans, credit, etc. That is our reward!
59. Becky | 11.19.09
I am in the military and was stationed overseas for 3 years…I have not been able to own a home for more then 5 years, we move around WAY too much! Is there any exceptions for the military folks???
60. Pamela | 11.20.09
I purchased my home in August 05, and was planning on purchasing and closing on a home by the end of April, at that point I would have been in this house for 4yrs 8 months, would I be allowed the $6500.00 or is it set in stone that it must be 5yrs to 8yrs. We are taking a huge loss on this house as it is, because of the time we purchased it in.
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1. anon | 11.05.09
If I build my own house, can I qualify?
“To combat fraud, a HUD-1 Settlement Statement will have to be attached to the tax return to secure the credit”
Where do I get a HUD-1 if I plan on buying a piece of land and hiring a contractor to build it?