The new $6,500 federal tax credit for “move up” home buyers has been getting second billing to the original $8,000 credit for first-time purchasers. But take a look. This $6,500 credit for current homeowners just might have your name on it.
How does it work? When will it be available?
The new credit is available now. It took effect Nov. 6, the day President Obama signed the legislation. This means that if you fit the key criteria – you’ve owned and resided in your current home for five consecutive years out of the past eight years, and your adjusted household income doesn’t exceed $125,000 if you file as a single taxpayer, $225,000 if you are married filing jointly – you can claim the credit as soon as you close on a qualifying home.
That could be next week, next month or next spring. There is no actual move-up requirement in the new credit. In fact, homeowners who plan to downsize may prove to be significant users of the credit, along with people who are relocating because of employment changes. Search our website at the areas of San Diego county or the zip codes you are interested in, to see the available housing for sale. Also check the foreclosure properties. You will find excellent values there. You should also consider looking in the areas of Spring Valley, El Cajon, Lemon Grove, Encanto and Paradise Hills. You will find exceptional prices for homes in these areas.
If you fit the criteria and are considering buying another home sometime in the coming year, you might want to speed up the process and sign a contract by April 30 and close by the June 30 expiration date. Think of it this way: If the government is willing to give you $6,500 to act a little faster than you had originally planned, hey, why not?
Other key features of the $6,500 credit:
- The home cannot cost more than $800,000.
- The replacement home must become your main residence. There is no requirement in the legislation that you sell your current home. You could rent it out, turn it into a second home or list it for sale later in 2010 when prices might be higher. If you plan to retain it, however, make sure you move into the new house on the day you close so that there is no question it was your principal residence at that time. And if you do decide to sell it, don’t forget we give rebates to sellers of up to 50% of the selling price!
Like the first-time-buyer credit, the $6,500 version permits a broad range of dwelling types for your purchase. These include newly constructed or existing single-family homes, condominiums, manufactured or mobile homes, and boats that function as your principal residence. You cannot claim the credit if you are buying a second home or an investment property.
Purchase transactions among immediate family members are prohibited.
Home buyers who go to closing between Nov. 6 and Dec. 31 can claim the $6,500 credit on their 2009 federal tax returns or amend their 2008 returns. Similarly, eligible purchasers in 2010 will be able to file for the credit on their 2009 or 2010 returns.
Talk to your tax adviser regarding timing, which may be affected by your household income applicable to a given year.
If you aren’t sure whether you can make the deadlines established for the new credit – a binding contract by April 30 and a settlement by June 30 – do not assume that Congress will provide another extension. All the political and budgetary signs point the other way, and some of the primary authors of the credit insist that this is it – no more extensions next year. Take them at their word
. Call me if you have questions, or if you are ready to sell or purchase a home.
Gloria M. Baker