These frequently asked questions have been taken directly from the NAR Government Affairs Division website.
Question: Existing homeowner credit: Must the new house cost more than the old house?
Answer: No; Individuals who move from a high cost area to a lower cost area who meet all eligibility requirements will qualify for the $6500 credit. So will homeowners who are downsizing.
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. Will I qualify for the new $6500 credit?
Answer: Yes. The exiting homeowner credit goes into effect for purchases after the date of enactment (when the bill was signed – November 7th, 2009. There is no reference to the date of contract for the new credit. T he provision looks solely to the date of purchase, which is generally the date of settlement.
Question: I am a first-time homebuyer who was not within the income limits at the time I entered into my contract to purchase on October 30, 2009. Since the limits have changed, am I eligible for the credit even though I have already closed on my purchase?
Answer: Yes. the new income limitations went into effect as soon as the President signed the bill. The income limit and other eligibility rules will look to your status as of the date of the purchase.
Question: I am an eligible existing homeowner. I have a fair amount of equity in my home. I have found a home with a non-negotiable price of $825,000. Will I be able to use any of the $6500 credit?
Answer: No. The $800,000 cap on the cost of the purchased home is firm at $800,000. Any amount above the $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 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. Becuase if you lived in the home for mor than 5 consectutive years of the previous 8, you will qualify fo rhte $6500 credit. For example, say John and his wife bought a home in 2000 and lived there until 2008 when they got a divorce. Whether John has been renting or has 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 consectutive 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 in the last 3 years does not 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 was signed, the November 30 date disappeared. SO, as long as the contract settles before June 30, 2010, the purchaser will be eligible for the credit.
If you have other questions that aren’t covered here, please, by all means, call me at 908-432-0318 or email me at jennifer@jenniferblanchard.com. All inquiries are confidential!
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