Here are some of the most frequently asked questions on the changes to the Homebuyer Tax Credit

   Question: Existing homeowner credit: Must the new house cost more than the old house? 

   Answer: No. Thus, for example, individuals who move from a high cost area to a lower cost

   area who meet all eligibility requirements will qualify for the $6500 credit.

 

   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. If President

   Obama has signed the bill by the time I go to settlement, will I qualify for the new $6500

   tax credit?

    Answer: Yes. The existing homeowner credit goes into effect for purchases after the date of

   enactment (when the bill is signed). There is no reference to the date of contract for the new

   credit. The provision looks solely to the date of purchase, which is generally the date of

   settlement.

 

   Question: I am a firsttime homebuyer but was not within the prior income limits at the time

   I entered into my contract to purchase on October 30, 2009. I will be covered, however, by

   the new income limits. If the new rules have been signed into law by the time I go to

   settlement, will I be eligible for a credit?

    Answer: Yes. The new income limitations go into effect as soon as the President has signed the

   bill. The income limit and other eligibility rules will look to your status as of the date of purchase,

   which is the settlement date. So if the new rules have been signed when you go to settlement,

   you should be eligible for the credit (or a portion of the credit if you're within the phase out range).

 

   Question: I am an eligible existing homeowner. I have a fair amount of equity in my home.

   I have found a home with a nonnegotiable price of $825,000. Will I be able to use any of

   the $6500 tax credit?

    Answer: No. The $800,000 cap on the cost of the purchased home is firm at $800,000. Any

   amount above $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 year 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. Because you lived in the home for more than 5 consecutive years of the previous

   8, you will qualify for the $6500 credit. For example, Say John and his wife bought a home in

   2000 and lived there until 2008 when he got a divorce. Whether John has been renting or

   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 consecutive 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 since 3 years doesn't impact eligibility.

 

   Question: I am an eligible firsttime 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 has been signed, it

   will be as if the Nov 30 date had never existed. Therefore, so long as the contract settles before

   April 30 (or July 1, worst case), the purchaser will be eligible for the credit.

 

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