$6500 and $8000 New and Repeat Home buyer Tax Credit
Congress has extended the popular $8000 tax credit and opted to begin a new $6500 tax credit for home buyers who already own a new home. Here are all the details regarding who qualifies and who doesn’t.
The $8000 new home buyer credit
First time home buyers will be eligible for up to $8000 in the form of a refundable tax credit. Just as before, the tax credit scales 10% of the homes value, up to $8000. To qualify, home buyers must not have owned a home for the previous three years.
The $6500 Repeat Home buyer Tax Credit
The $6500 home buyer tax credit is a new addition to the original plan. The $6500 credit scales 10% of the value of the home. Home buyers must have lived in their homes for at least 5 years to claim the tax credit. The new provision will not take effect until December 1, 2009.
When do the Home buyer Tax Credits End?
The home buyer tax credits will both expire on April 30, 2010. However, those who are under contract before April 30 will be able to qualify as long as the sale is completed within 60 days. Though Congress has been quick to extend this program in the past, this will be the third generation tax credit and congressional support is waning. Very few congressmen expect that a fourth generation home buyer tax credit will be made available, so take advantage while you can.
Income limits
The tax credit is only available for single filers who make $125,000 or less, and $225,000 or less for married couples. Homes that are sold for a market price of $800,000 or above will not qualify for the tax credit, so it is unlikely that high priced real estate will see any sudden bump in demand due to the new program. $8000, or 1% is hardly incentive to get high net-worth home buyers shopping. There may be some increase however slight, as the income limits have been upped from $75,000 and $150,000 for single filers and married couples respectively.
FHA Down Payment
Just like the last program, the home buyer tax credit can be used on the down payment on a home, giving cash strapped home buyers the ability to make a hefty down payment on a new home without breaking the bank. FHA loans require a minimum down payment of 3%, so most home buyers should be able to make the minimum by simply applying the home buyer tax credit as a down payment.
Want to know anything else?
Have any questions? Leave a comment below and I’ll expand this article with a Q and A!
I heard earlier that home improvement projects (remodeling a kitchen, adding insulation, a new garage, etc.) would qualify for the $6500.00 repeat homebuyers tax credit. I have not read anywhere about this possibility. Was it dropped from the final bill?
my ex husband and i owned a home for 10 yrs. then he bought me out. i rented a house for 2 yrs. but now am the owner of my own home (bought in feb. 2009) am i qualified for the $6000.00 rebate, and if so, how do i go about it?
George: The tax credit will not apply to remodeling or adding on to an existing home. The credit only applies to the purchase of another home with another address. You cannot receive the home buyer’s tax credit for new additions, unfortunately.
Cindi: You do not qualify for the rebate because the home was not purchased after December 1, 2009. The repeat home buyers tax credit of $6500 does not apply to previous purchases, only those made after the provision begins December 1, 2009.
We told a house we had owned & lived in 9 years in Aug. We moved into a house we had built for us Nov 7. Will we be eligible for the repeat buyer tax credit? How do we prove when we moved in?
My inlaws just bought a $ 50,000 home in a mobile home park.
Does a mobile home qualify as a ” house ” for the first time buyer’s tax credit?
Thanks,
Dan
My daughter got the 2008 $7500 tax credit. Will she need to re-pay this?
I have owned my home since 2002. I got married in April 2009, and put the house on the market. It is under contract now scheduled to close Nov.25. My wife and I are under contract to build a new home scheduled to close end of March 2010. Since I owned the home before we were married and am selling after we’re married, do we qualify for the $6500 repeat home buyer credit? Note, our incomes do meet the qualifications listed. Thank you!
May daughter and I owned a condo together that we are in the process of sellling (Owned for 7 years). She and I just bought a house together in August 2009 but she got married in September. Can she and I sell the house to her and her new husband (he would be a first time home buyer) and would they qualify for one or both credits offered?
I bought a house in July 2005 - I am in the military so I was forced to move after living in the house for 4 years. I still own the home and am renting it out. Is there a provision for military members and the typical inability to live in one place for 5 years? Also, I know is says live in for 5 years….but how about just own for five years?
My situation is similar to Aaron Smith’s. I owned my home since 2001, put it up for sale 8/11/2009, sold it 6 days later, and settled on it 9/21/2009. My husband and I got married in 11/2008 and he moved into the home with me at that time. (Although we lived together in the home, his name was never on the deed or mortgage.) We are are currently renting while we’re waiting for our new home to be built (went under contract 10/09). It’s scheduled to be done 2/2010. Will we qualify for the $6500 credit?
Jordan,
Any comments to all of our questions since your last response?
Aaron Smith
Jill
As you did not buy the home after December 1, you will not qualify for the $6500 repeat home buyer tax credit.
Dan Tewell
Yes, mobile homes do qualify and at a purchasing price of $50000 your inlaws will receive a $5000 refundable new homebuyers tax credit.
Debra
Yes, the $7500 2008 new homebuyers tax credit does require that it be repaid via tax returns. There is no payment for the first two filing years, however, she will have to pay $500 for the next 15 years following the first two. Though it does have to be repaid, a $7500 interest free loan over 17 years is still a great deal!
Aaron Smith
It appears that you will not qualify because the sale is expected to close November 25 and the new program does not start until December 1. You may actually qualify for the $8000 new homebuyer tax credit if the new home is put solely in your wife’s name, who I assume didn’t own a home. I would talk to a mortgage company to find out about my suggestion, though it looks like you won’t qualify for the $6500 program.
Rose Ann
Like Aaron that is an IRS gray area and I would suggest to you to seek out professional advice.
Casey
Unfortunately I have not read anything that would allow an exemption for military. As it stands, the bill requires you to live in the home for 5 years so as to prevent investors taking advantage of the tax credit.
Eva
Unfortunately you will not qualify because you did not go into the contract after the date of December 1.
YOU MAKE REFERENCE TO DECEMBER 1 AS THE PURCHASE DATE TO QUALIFY FOR THE REPEAT HOMEBUYER CREDIT OF $6,500. OTHER ARTICLES AND NEWS SOURCES ARE SAYING IN THEIR ARTICLES THAT AFTER NOVEMBER 6 IS THE QUALIFYING DATE OF PURCHASE FOR REPEAT HOMEBUYERS. PLEASE CHECK ON THIS AND RESPOND.
I was married and my husband and I bought a house, VA loan in 2002. Our divorced was final November of 2007. I purchased a house in April of 2009 first time in my own name, although I owned a home by marriage and it was a goverment loan through the VA do I qualify for the 2008 tax credit?
Do we qualify for the repeat buyer credit? My husband owned his home from 1997-10/2007, we sold it (gt married after the sale) rented for a few months, then bought a very small temporary house (my first house) until we could find what we wanted. We have now found the house we will be in permanently, and will close Dec. 15th. Do we still qualify despite the “transition house” we bought? We bought this house 1 month before the first time home buyers tax credit (closed 2/08), so did not get that. My husband was in the old house for 5 of the past 8 years, but I rented before we were married. Help! The IRS site doesn’t help very much in determining elgibilty.
When it says repeat home buyer does that mean you have to sell house number one and buy house number two or can you remain in your current home and buy and additional home and still receive the credit?
Also, does the home have to be owned by individuals or can it be put in a trust with the trustees still getting the credit?
Please clarify the effective date for the $6500 home buyer tax credit for existing home owners. Most sites are saying it’s effective Nov 7, 2009. Your article says it’s effective Dec 1, 2009.
The extension for the original home buyer tax credit is effective Dec 1, (originally set to expire Nov 30).
The expansion (including the $6500 tax credit for existing home owners)is supposed to be effective after it’s signed into law, which would be Nov 7.
I will have owned my home for 5 years in August of 2010. If I purchase a home before April 30 in 2010 will I qualify for the 6500 dollar credit seeing it is in the same tax year that I will have been in my primary home.
First-Time Homebuyer Credit
@Jordan
Wall Street Journal says new purchases after November 6 (the date the bill was passed) qualifies for the $6500 dollar credit to existing homeowners. When checking the IRS website, no date is mentioned at all other that purchases made in 2009. So which is it?
My husband and I owned a home in Colorado from 1997-2004 (7 consecutive years) we sold that home in 2004 and bought an interium home (2004-2006) also in Colorado till we could retire to Florida. We retired and moved to Florida and eventually bought a mobile home (owned the mobile rented the lot) in a 55+ retirement community in April 2007 (we rented for a short while from 2006 till we purchased the mobile home) We separted in 2008 and the divorce was final January 14 2009 (I was on the title of the mobile home from April 2007 through December 2008) I have moved to Missouri now living with my mother. Do I qualify for anything?
With respect to the $6500 homebuyer credit, is there an effective date for the Agreement of Sale? For instance, if the Agr of Sale was executed prior to November 6, but the property closes before 4/30/2010, assuming all other eligibility requirements are met, can the homebuyer credit be claimed?
Thanks in advance for your assistance. I look forward to your reply.
Does the December 1st date for the 6500 tax credit apply to contract date or closing date? We put in a contract on 11/14/09 but will not close until December 31st. thanks
I have lived in my home for over 5 years, but only owned it for 3 years. My fiance and I are closing on our new home Dec 4th. She has lived with me for 3 years. We will be married before Dec.4th: My current home is in my name. Our new home will be in both our names. She has not owned a home in over 8 years. Will we qualify for either the $6500 or $8000 credit? (We are within the purchase price limit and income limits)We are buying the home via an FHA loan. Are we eligible to use the credit(if we qualify) for the 3.5% down payment? Home owners agreed to pay the $6600 in closing costs. If you need more info, please let me know. THank you for your help.
My husband & I owned a home for 28 years. We were legally separated August 28,2009. He bought me out at that time. I plan to buy a home after Jan. 1, 2010. As long as I close by the deadline would I be eligible for the $6500.00 tax credit?
I spoke with a case worker in my Missouri Senators office and he states that the repeat home buyers provision is effective as of the date of the laws enactment, November 6, 2009. Please verify and respond as to what source you are getting the December 1, 2009 date from.
I WAS DIVORCED IN APRIL 2006. FROM THE DIVORCE I GOT THE HOUSE, WHICH I HAD TO TAKE OVER THE MORGAGE ON. WILL THIS QULIFY ME FOR THE TAX CREDIT?
My retired 80-year old mother with no income just bought a house near us, repeat buyer, was in previous house over20 years. Will she qualify for the repeat-buyer tax credit? And if so, since she has no income to file income taxes on, how does she file to get the tax credit? Thanks for any help!
Question on the $6500 tax credit, does that mean they have to sell their previous primary residence to qualify? That quesiton is coming up and it is not clear if they have to sell or not.
Can the first time homebuyer and repeat homebuyer credit be claimed for the same property?
My girlfriend and I will be selling our house and buying our new one in mid December. Our current house is only in my name, I lived in it six years, but the new one will be in both our names. I know she’ll qualify for the first time homebuyer credit, but I’m not sure if I can claim the repeat home buyer credit for the same property.
If a married man buys a home, his wife used to own one that she had to short sale after being widowed, does he qualify for a tax credit on the new plan? He never owned the short sale home with his wife.
With the $6,500 tax credit, does your current home need to be sold in order to quality or could it be used as a rental?
In Aug 07 I purchased a mobile in a park (leased land) , it has a vin#, a DMV Title, and was not permanently affixed to the land except for water, sewer and elec hook-up. I did not take any Federal Tax write off’s as I paid cash, however I did deduct the city’s personal property tax. I sold the mobile in June of 09 and in July of 09 purchased a new home for $250,000.
In my research, I can not find where the irs considered a mobile as personal property and/or vehicle, however have come across several sites that state that if it was the above, it would not qualify as a home and I would qualify for the new home owner credit. Can you please clarify this for me? I know that a mobile does qualify as a new home, just don’t know if it was considered a home prior to this.
Currently have owned our existing home for 5+ years and are looking to purchase a new primary home. We will be keeping our existing home to use as a vacation home for summer. Would we be eligible for the $6500 credit or would we need to sell our existing home to qualify?
i have currently lived in my home for 4 years and 6 months. it will be 5 years may 2010. does the $6500 credit go year to date?
I have leased a home for the past year. Prior to that I had lived in a townhome for 10 years. Do I qualify for the $6500.00 tax credit and if I do how would I apply.
I have lived in my home for over 5 years and my girlfriend has lived in her condo for over 5 years as well. We are looking to sell them both and build a home. Will we both get the 6,500 credit by selling and building a home together?
I purchased a property with a construction loan in November 2008. The property was a foreclosure and required extensive renovation in order to be inhabitable. I have owned my current home for six years. In February 2010 the construction loan will end. I will have the new property appraised and move to permanent financing. The new property will be my primary residence. Will I qualify for the $6500 tax credit under the premise that I was operating under a construction loan on December 1, 2009 and entered permanent financing during the tax credit extension period?
Hey Jordan, Are you still with us?
I bought a house and owned it for 12yrs, it was forclosed on in June, 2007….I now want to purchase another home that we will close Dec 2009 so am I eligible for the $6500 tax credit since I have owned a house for more than 5yrs? Thank you.
I PURCHASED A MODULAR HOME IN MAY? I OWNED MY PREVIOUS HOME MORE THAN 5 YEARS. DO I QUALIFY FOR THE $6500.00 STIMULUS?
I have a question about the $6500 tax credit. In December 2004 we bought a home on a landcontract. As of December 12, 2009 we have refinanced our home through a mortage company. The title has not been in our name prior to refinancing it, but we have paid our own income taxes. Would we get the $6500? Thanks for your help!!
We would qualify for the 6500 tax credit if november 3, 2009 is an acceptable date. Our new home was recorded on this date, but we did not move until november 18. There are some gray areas, and a lot of confusion.
I would really appreciate knowing.
Thank you
andi
My wife and I bought a house in May of 2001 and sold it in September of 2008. We started renting at that time. We entered into a construction to perm loan back in March. The house was finished in the first week of December and we signed the loan modification where we entered the permanent mortgage on Dec. 21st. Would we qualify for the 6500 tax credit.
i HAVE PURCHASE A NEW PRIMARY HOME IN FLORIDA.I don’t know if i will like it. What are the rules on tax credit If I want to sell in a year or two. This is the $6500. tax credit.
HELP NEEDED… I moved into my house in 2003 - changed ownership from my parents to me in 2004 (technically no money changed hands - land given via gift and home shown on paper as purchased)…
Husband moved in 2004 (his name was never on property)— we married in 2006 — he has never owned a home…
We sold our house and closed on that property Oct 30th 2009 and bought and closed on our current home Oct 31st (as you see 7 stupid days before law)…
Are we eligible for ANYTHING?????????
My husband and I owned a home for six years. We just sold it Sept. 30th. and purchased a new home Oct. 1, 2009. Do we qualify for the 6500 tax credit Or any credit at all?
What happened to the A part of the “Q&A”?
2 questions
1. Do you have to sell your current home & buy a another to qualify for the $6500.00 tax credit or just buy another home without selling?
2. I recently heard that there is a $6500.00 tax credit for investors. Is that true & if so, how does it work?
My husband and I are considering purchasing a condo in Florida as a second home. We are considering the possibility of renting it out. Are we entitled to any sort of a tax credit? I appreciate any information…
@Debra
UPDATE: I called IRS and I do not qualify for the new home owner credit. Apparently as long as the mobile had a toilet, kitchen and a bed and you lived in it as your main home during the prior 3 years, it is considered a home.
I PURCHASED A VACATION HOME IN JUNE 2009. DO I QUALIFY FOR THE $6500 TAX CREDIT? H J WEINSHEIMER
Is there a new 5405 form available for the $6500 tax credit, or due we
modify the old form by changing $8,000 to$6500. I qualify and need to file as soon as possible ???
My husband and I owned our home until the end of Oct losing it to a bankrupcy. We were in the home for approx 14 years before we lost it. We are in the middle of a land contract with somebody and are planning on
purchasing the home ourselves as soon as we can pay off taxes still ownrd by our business. If we purchase the home bofore the deadline we we qualify for the $6500 tax credit?
Will I qualify for 6500.00 rebate? Bought our first house in 2001 and sold it in oct. 2007. Rented while waiing to build. Construction loan began on May 1, 2009 and converted to 20 yr mortgage on Dec. 1, 2009 with first payment due on Jan 1, 2010.
My now husband, then boyfriend moved in with me in December of 2003 but I didn’t add him to the title of our home until we were married in September of 2005. Will we qualify for the $6,500 repeat homebuyer credit if we purchase a new home by April 30th?
Also, same question as Ted, are you required to sell your current home, or can that become a rental property?
We are interested in purchasing a home on the block we already reside.
Eventually we hope my mom will live there right not she lives in Chgo.
Do I qualify for the rebate above. Also what is an LLC and would I benefit purchasing that way with my mom’s name on that
I am an existing homeowner and have lived in it for 15 years with my spouse. I also own another home that my son lives in and it was purchased 11/10/2007. Do I qualify for the $6500 tax credit??
I husband and I are separated and have filed for divorce. It will not be final until mid-April. We owned our home together from Jan 04 - Dec 09. When we sold it, he bought a new house and filed for the $6500 credit. I am staying in an apartment temporarily but have a contract on a house. I will likely close at the end of February. Will I have any problems filing for the $6500 tax credit?
Good run down in article but the comments really help flush out the subject fully so something for anyone here. Thanks for the post! I will link to this to help our customers.
My husband and I lived in a home from 1998-2007. We sold it and bought another home and have lived here for 3 years. We are about to purchase another home and rent our current home. Would we be available for the $6500 credit?
I am interested in the $6500 made available to any homeowner buying a house. I have read numerous articles but still have a couple of questions. Questions: Can it be used for a second home? How is the money applied or made available to you. I read that it could be added to one’s down payment. However my real estate person thinks that it is only taken off of one’s Income Tax. Please clarify for me if you would be so kind.
IS THEY ANY WAY TO BE ELIGIBLE IF A HOME WAS PURCHASED SEPT 2008…WE PURCHASED A NEW HOME THEN AFTER LIVING IN AN OLDER HOME FOR 6 YEARS???
My husband and I purchased a new home in Aug 2009. Do we qualify for the new $6500.00 credit? Will we need to amend our 2008 taxes?
my wife and i got married in 08, my wife has owned the home for more than five years, i moved in with her in january of 05, so i have lived there for just over five years now, we sold our house this month and we just agreed to buy a house today and both will close april 1st, do we qualify for the tax credit, the house in in her name and how do we prove that i have lived there for five years
If we close on a home March 1, 2010, do we count that on our 2009 taxes or wait til we file 2010 taxes next year?
@Ted
@andy
My dad, 68, has lived in his condo for 20 years. He is retired and pays no income taxes. If he purchases a new home will he qualify for the $6,500 tax credit?
My wife and I purchased a home in April of 2009, this is our second home. We had a home that we purchased back in 1996 in Washington state and had to sell in 2008 when we moved to Colorado. My question is are we eligible for the $6,500.00 tax credit for second time home buyers?
Hi,
I could really use the 6500 credit. I bought my home in 12/2006. previous to that I have owned real estate since 1992. I guess there is no way to get around the 5 year rule? my realtor kept telling me I am eligble. Seems he is wrong?
thanks Sandra
Here’s a twist I can’t seem to find the answer. I own a different home, a moble home where I pay a lot rent, in-between my 5-year home and my new home, all within the last 8 years. And I still co-owner of the first home. I don’t see anything that says the 5-year home has to be the most recent house. I can’t decide if I should quailify?
My husband and I got married October 2009. Both of us own houses that we have each had as our principal residence for the last 6 years. We are selling both houses and buying a new house. Do we qualify for the repeat buyer tax credit?
We sold our home of 26 years in 07/09. We got a construction loan in October to build a home. We don’t officially take possession of the house until 03/10. The construction loan will be converted to a mortgage loan at that time. Would we qualify? The construction loan was in October, but we don’t actually buy the finished home until March!
We have been in our current home for 3 years and have owned different houses for the past 10 years. Do we qualify for the 6500?
Hi,
Does the $6,500 tax credit have to be applied for prior to closing or can it be obtained after closing on the property? My daughter purchased their 1st home in March 2003 and they lived until they sold the property in September 2008, they lived with us for 17 months while looking for a new home, they closed on their new 2nd home on Jan. 25, 2010. Do they qualify for the $6,500 tax credit? Thanks, Vicki Calderon
Have been in current home for 7 years. Looking to buy a 2nd home in another state very soon.
Q: Does the 2nd home HAVE to be our primary residence ?
Q: When would we have to close by, to receive the $6500 tax credit.
I previously owned a home from 2000 and sold it 6-4-07. I have been living in a house my son owns and have rented from him since 7-1-07. I have now purchased a new home and will take possession of it 4-17-2010. Do I qualify for either the new home $8,000 or the $6,5000 tax refund or credit?
My husband and I purchased a home in October 2004 which has been our primary residence for all of that time. Do we qualify for any of these programs?