First Time Home Buyer Tax Credit Update
As speculated would happen last week, Congress officially extended and expanded the first-time home buyer tax credit until April 30, 2010. If you want to know specifics on the plan, check out that post, as every detail I highlighted was included in the final version of the bill. I’ve had a few questions about the expansion to existing homeowners part of the bill, so I want to give some more clarity on that part.
Details on the $6,500 Home Buyer Tax Credit Expansion
The new addition to the home buyer tax credit is that buyers who have owned and lived in their current home at least five years out of the last eight will will be eligible for a $6,500 tax credit on the purchase (signed contract) of their new primary residence through the end of April, 2010 (you have until the end of June to close on the house).
The income limits for the existing homeowners is the same as for first-time home buyers – $125,000 for singles and $225,000 for married joint filers.
Is the $6,500 Home Buyer Tax Credit Retroactive?
Contrary to many people’s hopes, the new addition to the home buyer tax credit bill is not retroactive. You must have a signed contract between the dates of November 7, 2009 and April 30, 2010.
Reader Discussion:
- Are you going to take advantage of either the extension OR the expansion of the first time homebuyer tax credit?
- Are you eligible for the tax credit expansion to existing home buyers? Does it make you at least want to look around a little bit?
Related Posts:
Thats great they extended it but it only applies to first time home buyers. A real difference could be made in the housing industry if the government agency applied it to everyone not just first time home buyers.
The $6,500 credit is NOT for first time homebuyers. It is for existing or step-up buyers. I’m not sure it will help the market though. With the way things are going it will likely take more that this to turn the market around.
We bought house last year but we didn’t take advantage of this tax credit because, as much dumb as it may sound, we didn’t wanted to deal with keeping track of this paperwork, etc.
I’m a 45 year old divorced father of four. In January of 2006 I quit claimed all interest in the home my ex wife and I owned and lived in. Three and one half years later, I was debating whether to renew my annual lease on an affordable apartment in a convenient location. My landlord, a realtor, told me I’d be crazy NOT to take advantage of the new first time home buyer credit being offered.
I looked into it. I clearly qualified as a first time home buyer. I knew of a nice little house for sale in a neighborhood I liked. I didn’t have much money for a down payment though. I heard of a local bank offering to lend downpayment money to borrowers qualifying for the first time home buyer credit. Everything was lining up! I got pre-qualified, made an offer, got it accepted, and scheduled a closing.
In June of 2009 I became a home owner. I paid $65,000 for the house. I borrowed the 10% downpayment in a balloon loan- to be paid when the tax credit came in 6 to 8 weeks. This may seem like the kind of borrowing that got the country into trouble, but the house appraised well above the purchase price, and with the $6500 credit, I’d be in a great equity position in no time!
Two months later I’d heard nothing from the IRS. I went online to check the status. It showed nothing. I called a toll-free number and was put on hold for twenty minutes! You never get those minutes of your life back!
Three months later I called again. I learned that the IRS was overwhelmed by applications for this first time home buyer credit. The Economic Stimulus was doing some stimulating. Things were backed up. The balloon loan came due. I extended it for another six weeks, (at 13%)
Four months later I got a letter from the IRS. My credit was denied. Their records showed that I’d owned a home within the three year period preceding the purchase of the qualifying home. Their records were wrong, but that didn’t matter much. the letter was final. My only option, it stated, was to appeal in federal tax court!
What???? Once I settled down, I began researching. I found phone numbers that got me directly to IRS agents. (See the page: IRS contacts) I made calls and surprised a few bureaucrats. I also filled out a form to procure an IRS tax advocate. If you are having trouble getting your credit, click here to FILL OUT THIS FORM: !!
I got them to reopen my case. I called my advocate every week. I felt like, maybe she was helping- maybe she was pacifying be to get me off the phone.
Six months later, I closed out the year with a report from the IRS. The advocate had told me nothing of the report landing in my mail box- the report informing me that A. My First Time Home Buyer Credit was denied. B. A review of my 2008 tax filing revealed an underpayment of $1600.00!
Wow! Both items were in error. Try telling the IRS that!
I’ve since refinanced the balloon loan into a second mortgage. Now I’m paying two loans and property taxes, and utilities, AND maintenance! Thanks Obama. You dangled a carrot. I jumped from my affordable apartment. The carrot got yanked away and here I am. The irony of a first time home buyer home going into foreclosure is rich and tragic.
Have I quit fighting? No Way!
1. I contacted my U.S. Congressional representative. I encourage anyone having trouble of this sort to do the same. After signing a release of information, the office of my congressman will be advocating for me. A file stamped: CONGRESSIONAL INTEREST might just float to the top of the pile.
2. I submitted paper copies of all documentation directly to the agent who signed the report, along with a letter summarizing my situation and itemizing the documents included.
3. I submitted paper copies of all documentation directly to the taxpayer advocate assigned to my case.
I’m newly married and have not previously owned a home. My husband sold his house in January 2009 for a relocation.
Two quetions…
1) Can we partially qualify for the 8,000 first-time buyers tax credit becasue I have not prviously owned a home?
2) If we buy a home of greater value than the home my husband sold in Jan 2009 before April 30,2010 will we qualify for the 6,500 tax credit for step-up-buyers?
Thanks!
My husband quit-claimed the house we had owned for 18 years. I now have it as a result of our divorce. My question is: since I am buying the house myself (new loan, higher in value than originally purchased for), etc. can I qualify for the $6500 credit?
Wow, some interesting stories and questions in the previous comments. Maybe some of the info at http://www.firsthomeexperience.com might help shed some light on the situation for potential 1st time buyers. It pays to do your homework I guess.
PS- for any buyers interested you might want to also look at how to enter the contests on the site, the prize might not be as big as the tax credit, but $4,000 in prizes to the winner sounds pretty good if you ask me.
Thanks to Greg, it’s very in details. I think it would be the great guideline for new buyer.
looked into it. I clearly qualified as a first time home buyer. I knew of a nice little house for sale in a neighborhood I liked. I didn’t have much money for a down payment though. I heard of a local bank offering to lend downpayment money to borrowers qualifying for the first time home buyer credit. Everything was lining up! I got pre-qualified, made an offer, got it accepted, and scheduled a closing.
daizy
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