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1765 Como Park Blvd.
Depew, NY 14043

Frequently Asked Questions on the Homebuyer Tax Credit Changes

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 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 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 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 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 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. 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.

New York’s REALTORS applaud members of the NY House delegation for their leadership on homebuyer tax credit extension

On behalf of the 56,000 members of the New York State Association of REALTORS, today I express our sincere gratitude to the 28 US House of Representatives members from New York for their vision and leadership in addressing the continued recovery of our housing industry and, ultimately, our economy.

Yesterday, New York’s 28 representatives voted to approve the extension and expansion of the homebuyer tax credit that was included in a wide-ranging piece of House legislation that extended unemployment benefits. Our Congressional Delegation has a long-history of supporting REALTOR issues, and none in recent history has been more important than this tax credit.  REALTORS know that the tax credit is working to revitalize the housing market and position it to once again lead our economic recovery.

The legislation extends the availability of the tax credit to purchases before May 1, 2010. Prospective purchasers with binding contracts in place as of April 30, 2010 will be allowed an additional 60 days to complete the transaction. The credit will remain $8,000 for first-time buyers, while repeat buyers who purchase between December 1, 2009 and May 1, 2010 will be eligible for a credit of $6,500. Repeat buyers must have lived in their homes consecutively for 5 of the previous 8 years. Income limits are expanded to $125,000 on a single return and $225,000 on a joint return.

We are hopeful that President Obama will sign it into law in the coming days.

Dear Home Buyer!

I am VERY excited to report that Congress has answered our call to extend and expand the homebuyer tax credit!                          

Both the House and the Senate have passed an unemployment insurance bill, which includes an amendment that expands and extends the tax credit.  That bill will be sent to President Obama for his signature in the next day or so.

I wanted to update you all on the status of the first-time buyer credit being extended.  In an nutshell, it’s close and it may be improved.  

There apparently is an agreement on the details of an expanded and extended credit.  No vote has occurred yet.  The issue is now caught up in Senate procedural matters.  However, there is optimism that it will be resolved this week.  The provision would still have to be passed by the House. 

Below are the details of the proposed new tax credit program.

*         First-time homebuyers will continue at $8,000  — same definition
as current law.

*         Tax credit for “move up” purchasers will be up to $6500

*   Must have used previous home as a principal residence for 5 of the 8
previous years.

*         Income limits increased and are the same for first-time and “move
up” purchasers : $125,000 for single filers/$225,000 for joint filers

*         Limitation on eligible home prices has been increased to $800,000

*         Time Frame:    December 1, 2009 to April 30, 2010 plus 60 day
extension if binding contract is in place by April 30, 2010

*         Anti-fraud measures have been added
 
We will keep you posted!  As always, we appreciate your support and your business referrals.  If you have any questions or comments, contact ma at: jgreiner@r-house.com