When President Obama signed the economic stimulus package 2009 as a way of renewing a depressed economy, the major attraction in the package was an $8000 tax credit for first-time home buyers. However many people felt that the tax credit was not enough to revive the economy since it left out a significant portion of people who had already owned homes before and were moving up or relocating to a new place. In November 2009, President Barack Obama signed the Worker, Home ownership, and Business Assistance Act of 2009 which extended the first time home buyer tax credit and offered a $6500 homeowner tax credit to existing homeowners.
Who qualifies for the $6500 Tax Homeowner Credit?
In order to be eligible for the $6500 tax credit, an existing home buyer must have lived in his/her primary residence for five consecutive years out of the past eight years. According to IRS, home buyers must buy or enter into a binding contract to buy a principal residence after Nov. 6, 2009, and on or before Apr 30, 2010 to be eligible for the tax credit. They are also eligible if they sign a binding contract and close on the new home on or before Sept 30, 2010.
To be eligible for the long-time homeowner credit, a home buyer must be 18 years or more by the closing date and the total purchase price of the home cannot be more than $800,000.
Some Points to Remember When Considering Eligibility for the $6500 Tax Credit
- According to IRS, to be eligible for the $6500 tax credit both spouses must have owned and used the same previous principal residence for five consecutive years.
- A home owner who already owns a home but is buying a second home to be used as the primary residence is eligible for the tax credit if he satisfy all the other criteria.
- The full credit will be available to taxpayers with Modified Adjusted Gross Income up to $75,000, or $150,000 for married couples filing jointly. Those with MAGI between $75,000 and $95,000, or $150,000 and $170,000 for joint filers, are eligible for a reduced credit.
- The new law gives members of the Armed Forces and certain federal employees serving outside the U.S. an extra year to buy a principal residence in the United States. To qualify for the credit they must buy or enter into a binding contract to buy a home by April 30, 2011, and settle on the home purchase by June 30, 2011.
- First-Time Homebuyer Credit Extended https://www.irs.gov/newsroom/article/0,,id=215791,00.html
- First-Time Homebuyer Credit https://www.irs.gov/newsroom/article/0,,id=204671,00.html
- First-Time Homebuyer Credit Questions and Answers https://www.irs.gov/newsroom/article/0,,id=206293,00.html
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