Martin Soto of Sacramento works for Brazil Quality Roofing on a new home in Sacramento, construction buoyed by the demand for a homebuyer tax credit that began in March. Here is a stab at answering several questions about the new $6500 homebuyer tax credit.
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Home-buyer tax credit: more questions answered
By David Grant | 11.06.09
When Congress moved extended the first-time home-buyer tax credit Thursday, it also allowed existing homeowners to participate in the program. After reporting on who the new program would help, readers already in the process of selling and buying homes had questions. Although we don’t know the specifics of any particular case, here are some answers based on general principles.
Jorge: “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 $6,500 credit?”
Answer: You qualify, says Robert Dietz, economist for the National Association of Home Builders. The bill will become law when the president signs it, which was expected to be Nov. 6. In general, Mr. Dietz says, home buyers who close on their house after the bill is signed qualify.
Melissa: “My husband and I were transferred from (Texas) to (Indiana) over the summer for his job. We had owned our home in (Texas) for 11 years. We closed on our new (Indiana) 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 $6,500 just because we bought a few months too soon?”
Answer: Unfortunately, the bill has no “grandfather” clause, Mr. Dietz says. “If you’re an existing homeowner, and they’ve closed prior to the date of enactment, when the president signs the legislation, they simply do not qualify.”
Chris: “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 $6,500 or did [I] just fall through both cracks?”
Answer: It depends. If Chris (and those in his situation) are purchasing the lot from the builder and close after the bill is signed, they should be eligible, Dietz says. If instead the home buyer owns the lot, he or she will have to occupy the building before the bill’s sunset date of April 30, 2010.
And one questions you didn’t ask:
Question: How many Americans will qualify for the existing home owner credit?
Answer: Dietz estimates that 70 percent of American homeowners could qualify for the credit.
For a PDF document of a chart comparing the original incentive to the new program, see here.
_____
Also see:
What the $6,500 homebuyer tax credit means for you
After dismal jobs report, unemployment rate could hit postwar high
Highest unemployment rate in 26 years: Obama’s jobs challenge
_____
— David Grant is a Monitor contributor. Continue the conversation – and questions – on Twitter.
Comments
2. patrick | 11.06.09
once bill is signed. what steps do we take to claim the tax credit or do we have to wait for tax time next year?
3. Louise | 11.06.09
If you sold your house in November 08 and lived in that house for 11 years and are currently building another house will you qaulify for the 6500 credit? The land the house is being built on is owned by the homeowner and they are paying cash as they go to build the new house.
4. harry malkasian | 11.06.09
I purchased a home in Feb of 2005. I had owned my house for over 32 years,do I qualify. If so will I still qualify if I do my income tax in mid Feb,2010,which is 2 weeks after the 5 year closing date. There is no way I can do them within the 5 year period because of when I receive my W2.
Thanks
Harry
5. Alyson | 11.06.09
We previously had a mobile home for 9 years but lived in a park. We built a new home and closed on our home in August 2009. Would we qualify under the new $6500 since they are extending the current law? Thanks~
6. Michele | 11.06.09
Hi, My husband and I sold our house, which we resided in for 5.5 years in April and we have been renting since. We would have an offer on a house now (short-sale) so may not close until February. Would we qualify… as we are not currently owners, but renters. It’s a little confusing with some of the wording, when it says “you must have occupied the home you owned for 5 of the last 8 years”. This almost seems to include renters, as well…
7. Jim Norbuta | 11.06.09
David,
You are really on top of things. Your post is the first to confirm information about the bill.
We are truly BLESSED. We have a family we have been working with for a very long time, who are closing on their new home today.
Also, we have some information on our website to protect home buyers’ negotiating power:
We’re adding you to our favorites.
Many Blessings,
Jim & Joan
8. Janet | 11.06.09
I am a married woman who prior to marriage owned my own home. I sold it 7 years ago. Then my husband bought a home 7 years ago and It was solely owned my him. Then in 2008 I paid off his house and was added to the title as joint tenancy. Does our home qualify for the $6500 tax credit?
9. Deborah Caminita | 11.06.09
I believe this new tax credit of $6500.00 is unfair. Certain people just happen to fall thru the cracks continously. I just purchased a new home in April 2009 and because I already owned a home, I could not qualify for the $8,000.00 tax credit. And now you are saying that there is a $6500.00 tax credit for people that have owned their homes for at least 5 years but I would not be entitled for that tax credit either because this new tax credit does not get signed until Nov. 6th. Talk about unfair, that is!!!
10. Carole | 11.06.09
I’m in the process of getting a divorce; my husband gets the house and I want to buy a condo. Will I qualify for the tax credit?
11. Michael | 11.06.09
How to calculate 5 years. From the closing date when I bought to closing date when I sell?
12. Steven | 11.06.09
How about the individual that sold his house last year(was in it for the 5 years), is currently in an apt, but will be buying a house in the Dec 1 to April 30 time frame….
Does he Qualify????
13. Bart | 11.06.09
I bought my house in march of 2008. Do I qualify? I’m only 25 and I’m new to all this. Someone please explain.
14. Mike | 11.06.09
We are building a new home as a replacement home for a house we have lived in for the past 9 years. We have already signed a contract for the house, and we will soon close on his new house (after the bill has been signed into law). We were told by our lender that because we own the lot we would not be eligible. Is this the case?
Thanks,
Mike
15. James | 11.06.09
Is the new tax credit for people that already own a home, Is there an amount that you have to spend to get the whole $6,500 and do Manufactured home count?
16. Mike | 11.06.09
We are purchasing a new house and qualify for the step-up home credit for most conditions. Due to an abnormal income in tax year 2009, we would not qualify due to income limits. With this expanded law, can you still apply the credit towards an amended 2008 return, or should we delay escrow to 2010?
17. Tom | 11.06.09
For first time Homebuyer credit of 8000K, I understand the modified adjusted gross income level (for single filer) was raised from 75K to 125K. If I purchased a condo on 27 OCT 09 (one week prior to new law being signed today on 06 NOV 09) will I be eligible for 8K at the 125K ceiling?
18. Jessica | 11.06.09
My husband and I just sold our house in March 2009 and have been renting until he was settled in a new job. We are now ready to purchase another home. We owned our last house 3 years 8 months and prior to that owned two separate houses totaling 8 years. Would we qualify for the tax credit?
19. DianaJupiter | 11.06.09
I am in the exact position of Jon - the number one question almost to the date! I wanna make sure I qualift or I will postpone ny closing–also, when do we get the money? When we do our taxes for next year or can we put it in earlier?
20. Darryl | 11.06.09
What is the starting point of the contract and the bill?
–The date the contract was written?
or
–The date the contract is closed?
–The December 1,2009?
or
–The date the President signs the bill?
21. D | 11.06.09
I agree with the #9 comment. The cracks are huge! We sold out home in 2005 and rented till 2007. We purchased a small condo just to be able to own something solid for out family of 4. To many renters loosing where they live, due to the landlord not able to pay the mortgage. We have been in our condo for 2.5 years. We do not qualify for FTHB, and yet we do not qualify for the revamped credit. I would love to know where they got the 70% figure. From what it sounds like, those who over spent on their houses and have made it this far with out forclosure will again get the biggeest break. Reset and rewrite the mortgage on house they can’t afford. Then give them another break.. a credit if they buy again.
22. ken | 11.06.09
This is bull i owned a house just sold Oct 08. my wife bought a house in her name we did not get the credit because i m married to her and owned a house by myself no she is a first time buyer and we don’t qualify for it becuse i owned a house…….and know this new credit we loose again!!!!!so much red tape what a joke!!!!!!
23. peter | 11.06.09
YOU ARE GIVING INCORRECT INFORMATION. YOU MUST CLOSE AFTER 12/1/2009.
READ THE BILL HERE.
24. BETH | 11.06.09
Does anyone know if the 5 years is tax years or actual years. I bought my previous home in September of 05 and sold it in May of 08. Lived there for 4 years 8 months. Claimed interest on Taxes for 5 years. Will I qualify for the $6500?
26. Amy Scott | 11.06.09
Question- I purchased my house in 2006, later added my boyfriend to the title but not the mortage. In 2009, he refianced the house in his name and left me on the title but not on the mortage. We want to sell the house a buy a new one. Would he qualify for the tax credits if he didn’t claim the intrest on the house this year?
27. Cox | 11.06.09
We built a home and closed on it last December(09). Do we qualify for the tax credit?
28. LaVonne | 11.06.09
We lived in a mobile home we owned for 25 years. Due to the widening of a major highway and the service road planned to come through our property, we had to move. The Department of Transportation bought our home which in turn the money was used for a brand new 2009 Mobile Home set up for us on another piece of property. It’s completely paid for. Do we quality for a tax credit? We have just recently (a week ago) finished moving to our new home. All of this has occurred from April to November of 2009.
29. Anthony Gallaher | 11.06.09
We purchased our home january of 2008, do we qualify for any thing under this program?
30. mischelle | 11.06.09
we bought our house in 06 and refinanced it 10-09 will we quolify for the tax credit?
31. Frank | 11.06.09
I closed on October 29th and get nothing. When did paying your taxes become like going to a casino? Wait, that would be more predictable…
32. greynolds | 11.06.09
I am a realtor and just closed a home on Oct.10 2009. So am I to assume there will be no $6500.00 tax credit? This is just not fair!
33. Taxpayer | 11.06.09
This free money is great. How about if we just mail everyone in the USA $1 million? Everything will be better then, right?
34. Would-be Buyer | 11.06.09
I was hoping to get a better deal buying a house after Dec 1, 2009 when the old bribe (I mean credit) expired. But since congress & the president have seen fit to continue bribing people $8,000 to buy a house, I would now have to pay more to buy. And probably more than $8,000 more. Thanks, federal government. Not!
35. Melissa | 11.06.09
We haven’t sold our last house yet that we lived in for 7 years. But we already closed on our current home on October 9th. So I’m assuming that we will not qualify for this tax credit. This tax credit really should be made retroactive for the entire 2009 calendar year.
36. Dan | 11.06.09
I feel the pain of falling thru the cracks. But the purpose of the bill is to stimulate the real-estate market in the FUTURE, not to treat everyone fairly. A significant portion of the fund would be gone immediately without any impact on the market if the bill includes everyone who has just bought their houses this year.
37. Heidi | 11.06.09
Real estate agent looking for clarification: I have buyer clients that are moving up to a new home which will become their primary residence. However, they are not selling their first home….. does the credit apply to second homes? … don’t think it was intended to but if not specifically stated in the law it could be a very big loophole… anyone knows for sure, pls. email me at coache@net1plus.com Thank you,
38. Liz | 11.06.09
We sold our last house in August 2009 (owned since 2004) and just closed on our new house on October 14th. If we had known that there was even a possibility for a tax credit we would have pushed our closing date. How unfortunate!
39. Chris R. | 11.06.09
I am a recipient of Social Security Disability. Me and my wife have been attempting to purchase a house for the past 3 years and have been unable to due to our credit (my disability). With the help of my in-laws loaning us the full amount we were just informed that a house we were trying to purchase was accepted by listing the four of us on the contract. 1st) is my wife and I going to be eligible for the $8,000? And Will my in-laws also be able to get the $6,500 credit (They have there own house of 20 years?)
40. Chucky | 11.06.09
The whole purpose for the tax credit and its extention/expansion is to spur sales that would not happened without it…. most of the the questions here are related to events that have either happened or is happening as we speak. Not that i blame anybody for getting or trying to get a credit on a government program, but it does illustrate that how this program is probably not the best use of taxpayers money for its intended purpose..
41. BackintheUSA | 11.06.09
I’m wanting to buy a home back in Texas, I currently live in the US Virgin Islands. My wife will move back into the home we buy while I finish up work here in the VI. I’m told I would NOT qualify for the tax credit because I file taxes in the VI and my home will be in Texas. The VI tax code is mirrored to the US. Why wouldn’t I qualify then? I meet all other aspects of the credit.
42. Kathie | 11.06.09
How do divorced sponse fare in this equation?
If you build a house and sign for the mortgage in the time period, does that count?
43. jr | 11.06.09
I’ve owned my present home for 6 years. Can I get the $6500 if I buy a second home or an investment property?
44. suresh | 11.06.09
My primary house purchased in 10/23/2003 and still living there. I have a signed contract for a duplex that I am planning to close on 11/23rd. Do i have to live in there ( Primary house/investment ) to claim the tax credit? Do i have to sell my primary house to close the duplex as primary?
Please advise. email : sunkireddy@hotmail.com
45. suresh | 11.06.09
clarification: I am closing a duplex bigger than my primary house on 11/23rd which will become my primary residence. However, i am not selling my first home….. does the credit apply to second homes? … don’t think it was intended to but if not specifically stated in the law it could be a very big loophole… anyone knows for sure, pls. email me at sunkireddy@hotmail.com Thank you,
46. Dennis Weber | 11.07.09
Can I purchase an investment property(single family home) and receive the 6500. tax credit?
47. Danielle | 11.07.09
I hope you are still answering questions on the tax credit. My husband and I bought our first home 5 years ago this month. In Feb. 2009 he was transfered to a new city, we tried and failed to sell our home so we rented it out and since we were un able to sell it we had to rent an apartment in our new city and save money for a down payment on a new home.
We are now in contract on a new home that is scheudled to close Dec. 10th but we still own our old home, now we have owned it for five years. Will we still qualify since we rented it for 9 months of the five years?
48. Bryan Kaiser | 11.07.09
I’m getting started on building a home on a lot I purchased in June. I plan to sell my existing home in the spring. Will I likely qualify for the $6500 credit in this situation?
BK
49. Richard Stanislawski | 11.07.09
My Niece and her husband and I are buying a first time duplex. We will have one contract and one mortgage, but two addresses. Are incomes meet the qualifications, but can we both legally get the $8,000 credit.
Please respnd to
spottedfox@comcast.net
50. Jim | 11.07.09
Cant pick up anything as a second home that eventually I can leave to my kids?
Well, between the non eligbility for Cash For Clunkers and this tidy little sum, I guess some things just aren’t meant to be.
Can’t wait to see what I don’t qualify for next.
51. Laura | 11.08.09
To those who are complaining because “they’ve fallen through the cracks” with both homebuyer credits: if you’re a first time homebuyer with an average middle class income, I feel bad that you missed out on the credits. If you’re a second, third time+ homebuyer, with a substantial income, then no, I don’t think the government should be in the business of helping you buy a home. People buying homes worth $800,000 can qualify for the credit??? Single people earning $125,000 a year can qualify??? Here in Ohio, $800,000 will literally buy you a mansion, on acres of land, in one of the wealthiest and most exclusive suburbs in the state. Those are hardly the type of people who need help buying a home. Come on now, doesn’t any one else see anything wrong with this? I voted for Obama, and do like him so far, but I think he got this one wrong. I understand the need to stimulate the economy, but I don’t think helping wealthy people buy expensive homes is right.
52. Dan W | 11.09.09
I lived in my house for 10yrs.I am closing on my new house on December 10th.
Can I keep my old house and rent it out, and still qualify for the 6500.00 tax credit
53. Cliff | 11.09.09
I have owned my home for 20 years. Do I have to sell it to qualify for the $6500 tax credit or can I buy a new residence, make it my primary home and keep my existing home? Can I rent my existing home?
54. Debbie | 11.09.09
My real estate agent insists that I wont qualify for the second time home buyers credit because I plan to pay 90% in cash on the home I’m purchasing. She says I have to have a minimum of 30K mortgage to qualify. I have read EVERYTHING online about the tax credit requirements and I dont see any where this is supported. What is the true story?
55. Connie | 11.09.09
I am in the USAF and I bought a house on my last duty station in 2004. I planned on living there for a while. I received unexpected orders out of there and purchased a second home in August 2009. It is exteremly unfortunate that I don’t qualify for this $6500 credit, it would have helped me out allot. I wasn’t able to sell my first home with the market being so bad. There should be an exception to this new bill for Military who have to forcefully move. I was bummed when I didn’t qualify for the $8000 credit since I wasn’t a first time home buyer. Now, this new bill is passed which is great. If I would have known about this I would have waited to buy. I just can’t seem to catch a break. Sorry just venting!
56. Tim | 11.09.09
We sold our residence of 7 years in June 09 and bought a lot from the sale of our home in June 09. We signed a bulding contract with a home builder in July, and closed on the construction loan in Sept. Our home is under construction and we will take occupancy sometime in March. Will we qualify based on date of occupancy or miss it because our construction settlement was in September?
57. Morena Samal | 11.10.09
We will close on a new house on 11-23-09 and will put our current house in the market as soon as we move out. Do we qualify for the $6,500 tax credit?
58. Brent | 11.10.09
Can my in-laws cosign if my wife and I are a Move-up repeat home buyer?? I realize that the First time home buyer credit applies with a cosign but what about the Move-up repeat $6,500 tax credit? Thanks in advance for responding to this question as we sign and cosign on Nov. 10th and want to make sure we are still eligible.
59. Kathleen | 11.10.09
Just to try to answer a few questions:
$6500 credit:
Does not apply to second homes or those valued at more than $800,000
You must have lived in your home for 5 of the last 8 years-in other words, if you bought it 8 years ago and sold it 3 years ago, you qualify as long as you lived there 5 years (not 4 years and 364 days)
There have to be applicable dates-I would be upset also if I had closed on a house this past October, but if they make it retroactive for 2009, then what about the people on December 31, 2008? It could go on and on.
New construction-I read that you have to take occupancy by end of April 2010. Hope your builder isn’t delayed.
60. Bonnie | 11.10.09
We closed on a house on November 6, 2009, the same day the president signed the bill. Do we qualify or did we miss it by a day?
61. Jen | 11.10.09
We bought our home on 2/7/05 and are settling on our new home 1/15/10. do we just miss the deadline for 5 years or are we ok since we called the home our primary residence for 5 years?
64. 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.
65. Tom Gordon | 11.12.09
Nowhere does it say that you have to sell your home to qualify for the $6500. Am I to assume that you can keep your current home and just qualify in all other categories to get the $6500?
66. Kelly | 11.13.09
I closed on my new house on October 30th, 2009 after owning my orginal home for 15 years. Do I qualify for the $6,500 tax credit?
67. J. Brad | 11.15.09
Two questions: 1st has two parts: I sold my last home on May 24, 2007. Do I become a first-time homebuyer on May 25, 2010? If so, can I enter into a contract to buy a new home by April 30th and then close between May 25 and June 30 2010 and qualify for the first-time homebuyer credit?
2nd: I am currently renting the home I wish to buy. I am paying for insulation to be installed now, and possibly a metal roof, before winter. Can I take the energy tax credit even if I am not currently the owner? This has been my main home since 2006.
68. Idel | 11.16.09
We are closing on a home in late January when it is completed. We have owned our current home for 14 years. We are not planning on selling our other home as it is paid off in full. Do we qualify for the tax break.
69. roger | 11.17.09
we sold and bought a house in june 2008 and then closed august 2008 so sounds like we get screwed im guessing so i lose again paid for someone to buy a new car and a house and i get nothing but struggling to pay bills the last 6 months beieng laid off be nice if they would give 6500 taxcredit to people who bought and sold a house in the last 5 years
70. Matt | 11.18.09
I own a home. I’m thinking about buying a condo down south, many of which are $10k-15k…how would this credit affect me?
71. Rosie | 11.19.09
Reference $6,500 tax credit. Do I qualify if:
I just went through bankruptcy?
My home of 5 plus years went into foreclosure?
and
the home I am buying will be owner financed and the closing will be through a title company?
72. Stanshell | 11.19.09
So, I own my current home and just purchased another home at the end of September in which we plan to move into soon; however, Obama’s made it impossible once again for me (middle-class citizen) to qualify for these big tax credits everybody’s talking about. I know I sound vain, but this is so unfair.
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1. Jon | 11.06.09
I got into contract 10/15. I plan to close 11/15. Do I need to postpone my closing until 12/1 or will I qualify if I close on 11/15?