$6500 home-buyer tax credit for current homeowners

Reprinted by permission from http://www.christianpf.com/.

by Bob on October 29, 2009

Apparently all the talk about the $8000 first-time homebuyer tax credit being extended and expanded is coming to pass. According to a USA Today article…

“Senators agreed to extend the existing tax credit for first-time home buyers while offering a reduced credit of up to $6,500 to repeat buyers who have owned their current homes for at least five years”

Obama seems to be fully behind the extension of the tax credit, so it is will likely be finalized very soon. The proposed bill would extend the current $8000 tax credit for new homebuyers from it’s current end date of November 30th, 2009 to April 30th 2010.

A different type of deadline
Just to clarify, they are discussing changing how the credit deadline works. Currently, you have to close on your home purchase by November 30th to be eligible. But under the new plan…

“The Senate agreement stipulates that buyers must have a sales contract on a house by April 30 to be eligible, but it gives them an additional 60 days to close the purchase. Looked at one way, the effective deadline of the credit under this agreement is actually the end of June.” (USNews)

Rules for current homeowners
As mentioned above, it would also allow current homeowners to get in the game by offering them $6500 if they have been in their current house for at least 5 years.

“The current credit prevents home buyers who have owned a primary residence within the past three years from claiming the credit. The agreement, however, would allow current homeowners to claim up to $6,500 as long as the property they are vacating has been their primary residence for at least five years.”

If you are a current homeowner looking to get in on the $6500, it would likely have an effective date of December 1st, 2009.

Income restrictions
As with the first round of the credit, it is not open to higher-income earners. It is open to higher earners than the first round (originally it was $75,000/single and $150,000/joint). Single filers making more than $125,000 and married couples making $225,000 or more aren’t eligible either. And if you have been eye-balling a million dollar house, that isn’t eligible either.  “Homes that cost more than $800,000 aren’t eligible for the credit.”

A few other points about the credit worth mentioning…
You can’t use the cash to buy a vacation home. Only primary residences are eligible.
Also you must be at least 18 years old to be eligible. Doing the research for this article I found a story of a 4 year old that claimed the credit.
The current tax credit has cost taxpayers about $8 Billion. And BusinessWeek estimates that the new one will cost us $10.8 billion.

So if you are are a current homeowner – is $6500 enough to get you thinking about buying another house?