A Primer for the Homebuyer Tax Credit Extension

The Lancaster County Association of REALTORS® Government Affairs Department, headed up by Frank Christoffel, IV, passed this Q&A along regarding the latest information on the potential extension of the homebuyer tax credit which includes an existing homebuyer credit that was not part of the first bill.

The House of Representatives passed the extension yesterday by a vote of 403-12 after passing the Senate the previous night 98-0.  The new provisions will take effect as soon as President Obama signs the bill.

Here are some of the specifics regarding eligibility requirements:

1.  Existing homeowner credit:  Must the new house cost more than the old house?   

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.  

2.  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? 

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.

Read more of this post