Many people want clarification on exactly who is eligible for the new $6,500 homebuyer tax credit. Read on to see whether or not you qualify.
Here are two more recent posts on the matter:
- Tax Credits for Home Buyers and Homeowners
- First-Time Homebuyer Credit – 2009 Returns must be filed on Paper – No eFile
The measure deals primarily with extending and expanding the homebuyer tax credit along with unemployment benefits and business tax credits.
A question looming large on the minds of a lot of many people is whether the $6,500 homebuyer tax credit will be retroactive or not. Meaning, if you purchased your home before the inception of the tax credits, are you eligible for a credit?
Unless Congress has a sweeping change of heart, to the discouragement of many American home owners the answer is NO. As I mentioned in an article earlier, the wording in the bill goes like this, “shall apply to residences purchased after the date of the enactment of this Act.” According to the bill the credit is being expanded to include a $6,500 tax credit to non-first time home buyers who purchase between November 7th, 2009 and May 1st, 2010.
So Exactly WHO gets the $6,500 credit?
- Non-first time home buyers who have lived in their previous residence for at least five out of the last eight years but are selling that home and buying a new home by May 1st, 2010. The new home must be used as a primary residence.
And Exactly WHO gets the $8,000 credit?
- First time home buyers who purchase a home before May 1st, 2010. The new home must be used as a primary residence.
Please note that… any home owner who sells the newly purchased home or ceases to use it as a primary residence within three years of the purchase date must repay the credit. And in both situations the yearly income limits are $125,000 for individuals and $225,000 for couples.
Why Not Make the Homebuyer Tax Credit Retroactive?
When considered from the perspective of why the legislation was enacted in the first place, not extending the tax credit to existing home owners makes perfect sense. They originally extended the credits to new buyers with the purpose of stimulating the housing market. Simply passing the credit on to everyone who has purchased in the last five years would be disastrous and is quite unfeasible.
Will This Stimulate the Economy?
Ultimately the decision to extend these credits was made in order to further stimulate the housing market by encouraging existing home owners to sell their current residence and buy again. Will this have the effect they are hoping for? What do you think?
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