Home Buyer Tax Credit Information Resources

By: • Tue, Nov 10 2009, 2:02 PM

We've been getting a lot of questions about the particulars of the Home Buyer Tax Credit Extension. While I wish we could take credit for the abundance of information below, we can't. However, we can point you towards the source. We hope you find these resources useful.

The NAR has been all over the legislation. Below is a list of questions and links to the NAR's answers.

The Basics of the Extended Home Buyer Tax Credit 2009/2010

Who Qualifies for the Extended Credit?
Which Properties are Eligible?
How Much is Available?
How is a Buyer's Credit Amount Determined?
If a Buyer's Income Exceeds the Limits, Can they Still Get a Credit?
Can a Buyer Still Qualify If They Close After April 30, 2009?
Will the Tax Credit Need to Be Repaid?

HERE are answers to the above questions.

How to Get the Extended Home Buyer Tax Credit.

1. Close on your home purchase between November 7, 2009 and April 30, 2010, or have a binding written contract by April 30, 2010 and close by July 1, 2010.

2. Decide whether to:

Apply the credit to your 2009 tax return, filed on or before April 15, 2010;
file an amended 2009 return; or,
apply the credit on your 2010 return, filed on or before April 15, 2011.

Attach documentation of purchase to your return.

What Documentation Proves the Purchase?
When Do I Apply For the Tax Credit?
How to Apply on Your 2009 Taxes

HERE are answers to the above questions.

What about the 2009 First Time Home Buyer Tax Credit?

Who Qualifies for the Credit?
Which Properties are Eligible?
How Much is Available?
How is a Buyer's Credit Amount Determined?
If a Buyer's Income Exceeds the Limits, Can They Still Get a Credit?
Can a Buyer Still Qualify If They Close After April 30, 2009?
Will the Tax Credit Need to Be Repaid?

HERE are answers to the above questions

HERE is a chart comparing the Original Home Buyer Tax Credit to the Extended Tax Credit

Below is a list of frequently asked questions published by the NAR. HERE is the original.

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

Answer: 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.

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 home buyer 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 phaseout 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 home buyer. 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.

The IRS has also updated their site to include information about the new legislation. HERE is a link.