Well, this looks like the news we’ve been waiting on…..all indications are that there is an agreement on extending and expanding the Homebuyer Tax Credit until the end of April, 2010.
The compromise also allows for the credit to be available to any homebuyer that is in contract by the April 30, 2010 deadline as long as they close escrow by June 30th, 2010.
The expansion of the credit includes increasing the income limits to $125,000 for single tax payer and $225,000 to couples filing joint tax returns.
A reduced credit of $6,500 is going to be available if they have lived in their homes for the last 5 years and are “buying up” to a larger principle residence.
Does this mean that it’s a done deal? No, not exactly, but I would call it a 99.987% sure thing at this point!
A possible timeline for getting this bill into law is hinted at in several stories like this one from the SFGate website
The San Francisco Chronicle reports what I have heard from several other sources that:
The Compromise bill could be attached to a bill that seeks to extend unemployment benefits. The unemployment bill could be voted on as early as Thursday or else early next week, says Jim Manley, a spokesman for Reid.
The home tax credit bill could also be moved as a stand-alone measure. The full Senate as well as the House would have to approve it before it could become law.
Here’s a collection of the buzz that’s been on the wire all night Wednesday:
New From the Associated Press
WASHINGTON — Senators agreed Wednesday to extend a popular tax credit for first-time homebuyers and to offer a reduced credit to some repeat buyers.
The tax credit provides up to $8,000 to first-time homebuyers but is set to expire at the end of November.
News From CNN.com
Senate sources told CNN they have tentatively agreed to extend that $8,000 credit for first-time buyers until the end of April.
News From Business Week
* First-time buyers could continue to claim up to $8,000. But existing homeowners who have lived in their home for five years could receive up to $6,500 if they trade up to a larger principal residence.
* The full credit would be limited to buyers who earn less than $125,000 a year and for married couples with annual incomes up to $225,000.
* The credit could only be used for homes selling for $800,000 or less.
* Contracts must be signed by April 30, 2010 and sales must close by June 30.
The Washington Post reported on Wednesday that home sales tumbled in September, citing possibly economic and strange foreclosure markets in the West and possibly even the anticipation of the extension of the Homebuyer Tax Credit
But it could also reflect the waning impact of an $8,000 tax credit for first-time home buyers, which expires Nov. 30, economists said. Data on new-home sales reflect a signed contract but not a completed sale. And some potential buyers may have been concerned that they would not complete their deal before the tax credit expires, some economists said.
Well, I for one am glad that it appears the anticipation and wait are almost over. We will keep an eye on things here and let you know once it’s signed into law and set in stone.
For all you fence sitters out there…..this aint easy street for ya. Expect a lot of competition with other buyers trying to close escrow by the end of this (tax filing) year and especially by April 30th, 2010. It’s not that far away!
Other articles about this topic that might interest you:
- UPDATE: Homebuyer Tax Credit, Unemployment Bill Advances in Senate So far, I’m not eating any crow. There have been no reports about changes to the Homebuyer Tax Credit, it...
- Federal Homebuyer Tax Credit News: $15,000 and No First Time Buyer or Income Limits? June 10th, 2009 – Federal Homebuyer Tax Credit News – Source: Bloomberg.com A Non-partisan effort is being made to reintroduce...
- Slide Show: A Complete Guide to the Extended and Expanded Homebuyer Tax Credit If you missed the live Webinar – “A Compete Guide to the Extended and Expanded Homebuyer Tax Credit”, no worries...
Chris "Doc" Apodaca
Jeff Brown – BawldGuy
Scott Schang
{ 14 comments… read them below or add one }
My wife and I sold our residence in February of 2008 after about 2 years on the market and then just bought a replacement home in July of 2009…is there a way for this tax credit to benefit us? I looked at it before our July purchase and felt that we did not qualify due to having previously owned a home…is there a retroactive way for us to benefit? Mike
Hi Mike,
I can only speak from my experiences of going through the “extension and expansion” of this tax credit the last time. My best guess would be that if you’ve already purchased your new home (July of 2009) that you would not be eligible. When they changed the credit from $7,500 that had to be paid off to $8,000 that did need to be paid off…it was not retroactive.
Sorry I don’t have good news, but I’m confident it’s an accurate answer.
Hi Scott,
I’ve been in my first home for five years this November. I would really like to buy a bigger home. Would i have to sale my current home to qualify for this tax credit and can it be used towards my down payment? Do you have any suggestions for me, I have good credit and job history buy no money for a downpayment?
Hi Jamie,
The guidelines for the extension and expansion of the tax credit seem to be agreed upon. It has not been voted into law yet so I think we’ll get more information as to exactly what is required to qualify under this scenario.
I don’t believe you will have to sell your current home, however it is more difficult to qualify for a new home if you still own the other. This is really something we would have to get a lot more information on before I could give you anything close to an accurate answer.
Feel free to call or live chat so that we can get a little more information and maybe present you with some options.
Hi Scott,
Does the new house have to larger in terms of square feet or appraise at higher value? I am interested in buying a second house (that is smaller and appraises for less than my primary; however the purchase price is more) but I am not really buying up. Do you know if the expanded tax credit would apply to a closing in mid-November?
Thanks!
This is a great question Chris, and it just happens to be the million dollar question in regards to buying “up”. If buying up means “value” or “price”, that’s going to be pretty tough if you bought 5 years ago. The extension has not been signed into law yet so there are still some details which we will not know until it’s finalized.
The biggest challenge you may have is getting the purchase of a smaller, owner occupied home past a lender, unless you are selling your current home first.
In regards to when the tax credit would apply, I would imagine that any purchase that closes after the enactment of the law would qualify.
We sold our house in April 2009. We were in that home just shy of a full 5 years by 20 days (buying at the end of April 2004 and selling mid-April 2009). We have been living in an apartment since we sold our house while trying to find a different home. We are scheduled to close on a larger house mid-November. Do you know if we would still be eligible for the tax credit?
Hi Scott,
I have been living in my duplex (owner occupied) for 5 years this October. I also just got married this month and my wife and I plan on building in early spring in Wisconsin. I am interested in applying for the $6,500 repeat home buyers tax credit but i don’t fully understand the deadlines. What do they mean in contract by April 30th? I think I understand that we have to have our house built and financed turn key by the June 30th date but we are not sure about the April deadline? Please Help THANKS
Hi Donna,
Once the final bill is enacted into law we will have many more details about this. I will decipher the details of the new law as soon as it is published.
Hi Todd,
I will comment in more detail about the specifics of the law once it’s approved and published – it’s not quite there yet. My understanding of “Under contract” means that there is a signed purchase agreement and escrow is opened. If you are paying cash for the construction and you already own the land, you may need to occupy the home (have certificate of occupancy from building inspector) before April 30th, 2010.
Again, I’ll let you know as I get more details. Thanks for the question
This is all very good information and I appreciate receiving it. I have already emailed, facebooked, and twittered this information. Tomorrow I will share with more clients! Thank you again. Saundra Allman
My husband and I just sold our home of 9 years in August and closed on the sale of our new house in September. Will we qualify for this new credit as repeat home buyers?
Any info is greatly appreciated.
Thanks.
Hi Amanda,
I cannot answer this question with 100% accurate answer, but I can reflect on the extension and expansion of previous tax credit. My best guess (which will be verified maybe as early as tomorrow) is that the changes will NOT be retroactive to any home that closed prior to the extension becoming law.
I believe that I have read in several places that the $6500 homebuyer tax credit for current owners will NOT be retroactive.