National Association of REALTORS® Government Affairs Division 500 New Jersey Avenue, NW,
WashingtonDC,
20001
Here are
some of the most frequently asked questions on the changes to the Homebuyer Tax
Credit
Question:
Existing homeowner credit: Must the new house cost more than the old house?
Answer: No. Thus, for example, individuals who move from a high
cost area to a lower cost area who meet all eligibility requirements will
qualify for the $6500 credit.
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.
Question:
I am a firsttime homebuyer but was not within the prior income limits at the
time I entered into my contract to purchase on October 30, 2009. I will be
covered, however, by the new income limits. If the new rules have been signed
into law by the time I go to settlement, will I be eligible for a credit?
Answer: Yes. The new income limitations go into effect as soon as
the President has signed the bill. The income limit and other eligibility rules
will look to your status as of the date of purchase, which is the settlement date.
So if the new rules have been signed when you go to settlement, you should be
eligible for the credit (or a portion of the credit if you're within the
phaseout range).
Question:
I am an eligible existing homeowner. I have a fair amount of equity in my home.
I have found a home with a nonnegotiable price of $825,000. Will I be able to
use any of the $6500 tax credit?
Answer: No. The $800,000 cap on the cost of the purchased home is
firm at $800,000. Any amount above $800,000 makes the home ineligible for any
portion of the credit. The $800,000 is an absolute ceiling.
Question:
I owned my home for 10 years, but sold it two years ago year and have been
renting since. If I purchase a home, will I be eligible for the $6500 tax
credit if I meet all the other eligibility tests?
Answer: Yes. Because you lived in the home for more than 5
consecutive years of the previous 8, you will qualify for the $6500 credit. For
example, Say John and his wife bought a home in 2000 and lived there until 2008
when he got a divorce. Whether John has been renting or bought in the interim,
he WOULD INDEED be eligible for the credit because he owned a home and occupied
it as his principal residence for 5 consecutive years out of the last 8 years.
The keyword here is "consecutive." As long as he lived in that house
for 5 years straight what he did since 3 years doesn't impact eligibility.
Question:
I am an eligible firsttime homebuyer. I entered into a contract to purchase on November
1, 2009. Do I have to go to closing before December 1? How does the extension
date affect me?
Answer: You do not have to close before December 1. Once the
legislation has been signed, it will be as if the Nov 30 date had never
existed. Therefore, so long as the contract settles before April 30 (or July 1,
worst case), the purchaser will be eligible for the credit.
FIRST-TIME HOMEBUYER TAX
CREDIT (2009 Credit)
As Modified in the American
Recovery and Reinvestment Act
Major Modifications Shaded - February
2009
FEATURE
CREDIT AS CREATED JULY 2008
APPLIES TO ALL QUALIFIED PURCHASES ON OR AFTER APRIL
9, 2008
REVISED CREDIT –
EFFECTIVE FOR PURCHASES ON OR AFTER JANUARY 1, 2009
AND BEFORE DECEMBER 1, 2009
Amount of Credit
Lesser of 10 percent of
cost of home or $7500
Maximum credit amount
increased to $8000
Eligible Property
Any single family residence
(including condos, co-ops, townhouses) that will be used as a principal
residence.
No change
All principal residences
eligible.
Refundable
Yes.Reduces (or can eliminate) income tax
liability for the year of purchase.Any unused amount of tax credit refunded to purchaser.
No change
Purchasers will continue to
receive refund for unused amount when tax return is filed.
Income Limit
Yes.Full amount of credit available for
individuals with adjusted gross income of no more than $75,000 ($150,000 on a
joint return).Phases out above those
caps ($95,000 and $170,000).
No change
Same income limits continue
to apply.
First-time Homebuyer Only
Yes.Purchaser (and purchaser’s spouse) may not
have owned a principal residence in 3 years previous to purchase.
No change
Still available for
first-time purchasers only.Three-year
rule continues to apply.
Revenue Bond Financing
No credit allowed if home
financed with state/local bond funding.
Purchasers who utilize
revenue bond financing can use credit.
Repayment
Yes.Portion (6.67% of credit or $500) to be
repaid each year for 15 years, starting with 2010 tax filing.
No repayment for purchases
on or after January 1, 2009 and before December 1, 2009
Recapture
If home sold before 15-year
repayment period ends, then outstanding balance of repayment amount
recaptured on sale.
If home is sold within
three years of purchase, entire amount of credit is recaptured on sale.Applies only to homes purchased in 2009.
Termination
July 1, 2009
(But note program changes
for 2009)
December 1, 2009
Effective Date
Purchases on or after April
9, 2008 and before January 1, 2009.Repayment to begin for 2010 tax year.
All revisions are effective
as of January 1, 2009
The above information is provided to assist a client in estimating the new tax credit. Information is deemed reliable but not guaranteed. Neither the broker nor the agent provides tax or legal advice and client should seek competent legal and tax advice. The above is not a guaranty by the broker. Actual terms and conditions control.
Disclaimer: All information deemed reliable but not guaranteed. All properties are subject to prior sale, change or withdrawal. Neither listing broker(s) or information provider(s) shall be responsible for any typographical errors, misinformation, misprints and shall be held totally harmless. Listing(s) information is provided for consumers personal, non-commercial use and may not be used for any purpose other than to identify prospective properties consumers may be interested in purchasing. Information on this site was last updated 11/20/2009. The listing information on this page last changed on 11/20/2009. The data relating to real estate for sale on this website comes in part from the Internet Data Exchange program of MRED MLS (last updated Fri 11/20/2009 12:00:00 AM EST) or GNIAR MLS (last updated Fri 11/20/2009 12:00:00 AM EST) or Kankakee MLS (last updated Fri 11/20/2009 12:00:00 AM EST) or Daytona MLS (last updated Fri 11/20/2009 12:00:00 AM EST). Real estate listings held by brokerage firms other than McColly Real Estate may be marked with the Internet Data Exchange logo and detailed information about those properties will include the name of the listing broker(s) when required by the MLS. All rights reserved. -- Greater Northwest Indiana Association of REALTORS®, Inc. Multiple Listing Service IDX data is copyrighted 2009 by the Greater Northwest Indiana Association of REALTORS®, Inc. All rights reserved. Privacy Policy
