Following are many of the most popular questions about changes made to the Homebuyer Tax Credit.

Remember, homeowners who’ve lived in the home for 5 out of the past 8 years now are eligible for a tax credit up to $6500… Have you called yet to get your home on the market? It’s free money…

Here are some of the most frequently asked questions on the changes to the Homebuyer Tax Credit:

Question: Existing homeowner credit: Must the new home cost more than my old home?

Answer: No. If you move from a high cost area to a lower cost area you still meet the eligibility requirements for the $6,500 credit. 

Question: I’m an existing homeowner. On October 25, 2009, I signed a contract to purchase a new home. I’ve lived in my current home for more than 5 consecutive years and am within the new income limits. I went to closing on November 20. I accepted the offer before the bill was signed, but my closing happened after the signing took place. Do I still qualify for the new $6,500 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 closing.

Question:I’m a first-time homebuyer, but was not within the prior income limits at the time I entered into my contract to purchase on October 30, 2009. I’ll be covered, however, by the new income limits. Because the new rules will have been signed into law by the time I close on my home, will I be eligible for a credit?

Answer: Yes. The new income limitations go into effect as soon as the President signed the bill. The income limit and other eligibility rules will look to your status as of the date of purchase, with is the closing date.

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 $6,500 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 and have been renting since. If I purchase a home, will I be eligible for the $6,500 tax credit if I meet all the eligibility tests?

Answer: Yes. Because you lived in the home for more than 5 consecutive years of the previous 8, you’ll qualify for the $6,500 credit. For example, say Cathy and her husband bought a home in 2000 and lived there until 2008 when they divorced. Whether Cathy has been renting or bought in the interim, she WOULD INDEED be eligible for the credit because she owned a home and occupied it as her principal residence for 5 consecutive years out of the last 8 years. The keyword here is “consecutive.” As long as she lived in that home for 5 years straight what she’s done since doesn’t impact her eligibility.

Question:I’m an eligible first-time homebuyer. I entered into a contract to purchase on November 1, 2009. Did I have to go to closing before December 1? How does the extension affect me?

Answer: You did not have to close before December 1. Once the legislation was signed, it was as if the November 30 date never existed. Therefore, as long as the contract settles before April 30, 2010 (or July 1, worst case), the purchaser will be eligible for the credit.

Photo Credit

Similar Posts:

• First-Time Homebuyers: Receive a $7500 Tax Credit for Your Wisconsin Rapids Home Purchase
• Why Foreclosures Will Cost You More Than There Worth
• What is the difference between a mortgage pre-qualification and pre-approval?
• Alanis Morissette said it best…
• Wisconsin Rapids Real Estate Market Report for November 2008