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The $6,500 Tax Credit ~ How does a current home owner qualify?

By
Real Estate Agent with RE/MAX Advantage 335893

How does a current home owner qualify for the $6,500 credit?
Buyers must have lived in their homes for at least five out of the last eight years. The home they buy must become their primary residence, but buyers don't have to sell their previous home. They can use the previous home as a rental or a second home and still claim the credit.

Does the new home have to be more expensive than the one the buyer currently owns?
No. It is fine to use it to downsize. If the property sells for more than $800,000, the buyers don't qualify.

Can buyers who are building a new home claim the credit?
Yes, although the contract must be in place by April 30 and the buyer must move in by July 1.

Can buyers claim the credit if they purchase a home from a relative?
No. The legislation prohibits taxpayers from claiming the credit if the sale is between "related parties," including parent, grandparent, child, or grandchild.

Posted by

Roy Giordano - Top Real Estate Expert
RE/MAX Central, Marlboro, Manalapan, Freehold, Old Bridge NJ - Marlboro, NJ
Top Agent Marlboro NJ, Marlboro/Manalapan Homes

Good blog, that seems to clear up the tax credit for the existing home owner.

Thanks for posting

Nov 27, 2009 02:51 AM
Donna Sweeney
Traverse City, MI

I often wondered about non-married couples who own a home together?  If two non-married people own a home together for 5 years, sell it and go their separate ways would they both be eligible for the tax credit if their incomes were under the single maximum rate?  If these same two people don't go their separate ways but buy a second house together can only one of them apply for the tax credit?  I assume only one tax credit per home applies, not per unmarried person. 

Also, I know the new home the existing homeowner purchases has to become their primary residence, but is there also a 3 year minimum occupancy needed for this tax credit like the New Home Owner Tax Credit?

There are so many "What if" scenarios that the current information released on this tax credit does not cover.  Can you recommend a good website to find all the answers?

Dec 16, 2009 02:25 AM
Rob & Jeannie Steward - Realtors®
RE/MAX Advantage - Nashville, TN
We Work TWICE As Hard For You! - Ashton Group

I think the IRS is still working out the new code. I'm still waiting for the details.

Dec 18, 2009 04:26 AM
Donna Sweeney
Traverse City, MI

That is what I thought.  Usually I am pretty good about finding the answers, but this time I came up with nothing. 

Ironically, last week I ran into a couple where this question was asked.  They were an unmarried couple who wanted to buy a house together and wondered about the tax credit.  I told them to talk to a tax professional.

Thanks!

Dec 26, 2009 08:40 AM
Anonymous
David Beeman

Bought a home Jan. 06, 2010 (closed Jan. 06, 2010) in Arizona. When does it become my primary home? I presently live in Alaska, a no state income tax state. Would like to do a large IRA Roth Coversion while still a resident of no state taxes in Alaska, then move to Arizona for a minimum of 6 months and one day for 2010 at least, clasiming the $6500 tax credit,( we have owned and occupied our home in Alaska for 10+ years) and become an Arizona resident "upon move in and physically arrive/move to Arizona "of the purchased home? or will the state of Arizona ( I know confusing it with the Federal Primary home RULES) closed on Jan.06, 2010 (Commonly State Tax rules are tied or calculated from your Federal Tax Return) BLah Blah Blah  When does the newly purchased home (Vacant) in Arizona become our primary residence as far as the IRS is concerned? Any Thoughts?

Jan 22, 2010 06:22 PM
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