First Time Homebuyer Tax Credit: Old versus New
The Law is in effect and this is an overview about old vs. new. It is not complete, though, and is always advised to talk to a tax consultant.
The old law will be terminated on November 30, 2009 – the new law is in effect November 7, 2009 and is going to end April 30, 2010. Therefore, if you want to take advantage of the tax credit, you need to act now. Let’s have a look, what is old? What is new?
1. First-time Buyer Amount of Credit? Remains the same, $8,000 0r $4,000 married, filing separate.
2. Definition First-time Buyer definition for eligibility? Remains the same, must not have had an interest in a principal residence for 3 years prior to purchase.
3. Current Homeowner Amount of Credit? This has changed. Old: No Provision. New: $6,500 or $3,500 married, filing separately.
4. Effective Date Current Owner? Old: No Provision. New: November 7, 2009.
5. Current Homeowner Definition for Eligibility? Old: Now provision. New: must have used the home sold or being sold as a principal residence consecutively for 5 of the previous years.
6. Termination of Credit? Old: Purchases after November 30, becomes April 30, 2010 on Date of enactment. New: Purchases after April 30, 2010.
7. Binding contract rule? Old: None. New: So long as a written binding contract to purchase is in effect on April 30, 2010, the purchaser will have until July 1, 2010 to close.
8. Income Limits (Note: Increased income limits are effective as of date of enacted bill).
Old: $75,000-single, $150,000-married, additional $20,000 phase out. New: $125,000-single, $225,000-married, additional $25,000 phase out.
9. Limitation on Cost of Purchasing Home? Old: None. New: $800,000 November 7, 2009.
10. Purchase by a Dependent? Old: No Provision. New: Ineligible November 7, 2009.
11. Anti-fraud Rule? Old: None. New: Purchaser must attach documentation of purchase to his tax return.
If buyer currently owns a home and is going to keep that home as his second home, or if it has not sold ….. buyer is out of luck. He is not eligible for the $6,500.
Source: National Association of REALTORS