Frequently Asked Questions Concerning The 2009/2010 Federal Homebuyer Tax Credit
Thursday, December 03, 2009
Here are some of the more frequently asked questions
concerning the 2009 / 2010 Federal Homebuyer Tax Credit
Question: How much is the credit?
Answer: Up to $8,000 for first time Buyers ($4,000 if married and filing separately), with a $75,000 income limit for a single person and $150,000 for a married couple. For a ‘repeat Buyer’ the credit is up to $6,500 ($3,250 if married and filing separately). Additionally, the income limit is $125,000 for a single person and $225,000 for a married couple. For both, there is a $20,000 ‘phase-out’.
Question: I am an existing homeowner and am looking to move soon. Must the home I buy cost more than the old home I will be selling?
Answer: No.
Question: I am a first time homebuyer waiting to close on the purchase of my home. This year, my income is lower than the income limits set forth in the Tax Credit Bill. We will close by the end of November 2009. However, I just got a new job and my income for 2010 will exceed the income limits stated in the Bill. Am I still eligible for the credit?
Answer: Yes. The income limit and other eligibility rules will look to your status as of the Closing Date. So you should be eligible for the credit (or a portion of the credit if you’re within the phase-out range).
Question: I am an eligible existing homeowner. I have a fair amount of equity in my home. I have found a home where the Seller will not agree to a price lower than $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 and have been renting since. If I buy now, will I be eligible for the $6500 tax credit if I meet 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 2007 when they got a divorce. It would not matter if John has been renting since the divorce; he would 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”.
Question: I am an eligible first time 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. Since the ‘new’ legislation is in effect, it is as if the previous, November 30 cut-off date never existed. So as long as the contract closes before April 30 (or July 1, worst case), you will be eligible for the credit.
- Scott Askew
Posted in: Intown Atlanta Real Estate News