Homebuyer Tax Credit Extended To June 2010, Woot!
As anticipated, President Obama signed the 8,000 first-time homebuyer tax credit extension into law on Friday. You can now collect the credit if your home purchase is complete by June 30, 2010. But wait, there's more! The extension also offers a tax credit for people who are purchasing a new residence, but aren't first-time homeowners.
The key, of course, is that the newly purchased home needs to be a primary residence—no rental properties or vacation homes, thank you. Current homeowners within the income guidelines can receive a $6,500 credit after purchasing a new home—new homeowners will still receive $8,000.
Expanded First-Time Home Buyer Tax Credit Becomes Law [U.S. News & World Report]
(Photo: nicolas.boullosa)
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Comments:
@Skankingmike: the way the rules had been written before if one spouse has owned a home in the last three years and the other spouse hasn't, then even if the spouse who hasn't is the only name on the new deed, the credit doesn't apply.
from what i have heard, the details like that haven't changed
i love that pic. tumbeleweed tiny houses are quite cool. i thought about one before i realized i have too much stuff
Was the 7K deal offered before Obama's term switched from "loan" to "free"?
Wow!!! More free money from the government. Working is for idiots when you can just buy houses.
"Current homeowners within the income guidelines _and who have lived in their current home for five consecutive years (out of the past eight years)_ can receive a $6,500 credit after purchasing a new home."
It's a substantial distinction and one that disqualifies many home buyers.
@laserjobs: Lots of cities are giving away even more to tear down houses. Collecting 40k and subcontracting to 2 guys with a rented excavator and dump truck for 10k sounds like more fun.
I have a question about the consecutive 5 years that I can't find the answer for anywhere - maybe a trusty Consumerist commenter can find the info....
Does 5 consecutive years mean 5 years, to the day, or am I safe if I filed as a homeowner on 5 consecutive years of tax returns? I think I'm just a month shy of 5 years, but I did file on 5 years of tax returns...
@catskyfire:
Free? You mean the tax credit isn't a loan anymore, it's a handout? That's BS. I got the homebuyer's credit last year and I have to pay it back. =\
@catastrophegirl: Oh, I hadn't heard of these--thanks for the alert! I love the design of small-space living, but yes, conceptually I lack the discipline.
@laserjobs: You realize that it has similar tax treatment to the interest on a mortgate. It needs to be your primary residence.
@Skankingmike: I think that would be a Garn Act exception anyway...so you'd probably end up with people trying to get you to transfer the original mortgage.
I'm not sure if they could make you do it, but it's one of those things they keep track of...so as I think out loud, I think they'd probably say the same thing if you tried to do it to an immediate relative (parent/child/sibling) as well.
Ah - found an article on fraudulent claims - under who does not qualify:
They are purchasing residences from close relatives, including spouses, parents, grandparents, children or grandchildren.
Does this apply to traditional home purchases (ie..mortgage) or can it also apply to a home purchase through land contract?
@hillsrovey: You probably need to talk to a tax accountant for sure. It would probably be worth the hour to gain the 6500 benefit (or know you wouldn't qualify for sure).
The rule basically says this:
If you have owned and lived in a home for at least five consecutive years of the last eight years, you could qualify for a $6,500 tax credit, if you buy a new home between now and April 30.
I'm not sure why it wouldn't count if you'll be in 5 years by April 30th, but who knows? The LA Times article had that quote.
@catastrophegirl: The Tumbleweed is my dream house - I have the property bought, now I just have to line up the $$ for the construction!
I had the exact same question; early adopters are always screwed. Enjoy your free money everyone, while I'm paying mine back @ $500/year.
@Stephmo: Thanks - I got up off the couch and checked my records, and like I thought, owned my home less than a month shy of 5 years (2003-2008) - renting now... been house-hunting for months. I'll check with a tax guy because we did file as homeowners on 6 years of consecutive tax returns...
@Stephmo: that's the one silver lining for gay/lesbian couples...since federal law doesn't recognize the union, those individuals are in the clear should they sell to the other.
@WraithSama: The first tax credit (7k, for purchasing a house LAST year) was a loan. The 8k one this year (and it's extension) is free money.
@Skankingmike: it's a great question though if you consider the fraud investigations going on for the credit already - some of those situations may be exactly like what you described.
@Tambar: may i suggest reading [www.tinyfreehouse.com]
of course if you are going to be a while raising construction funds you could probably also build a
[small-scale.net]
to live in on site while building the tumbleweed [although cob building is not fast]
Love the Tumbleweed homes. Would own one if I didn't have to use this pesky wheelchair. (Of course my chair is small, a Quickie GPV sports chair.) As for the tax, we have something similar here in Canada (First time homeowners tax credit or the HBTC), unfortunately I'm currently renting (a small house.....lol) and I am not in the market yet for a new home. (Maybe in 5-10 yrs we'll see.)
I'm still hoping they will change the rules for the first homebuyers credit and not make us pay it back...all the other ones are 'free' if you stay in your house for 5 years.
They also expanded the income limits with this new bill as well. Which I'm sure in some geographies seems rather insane (the limit is now $125k for a single individual and $225k for a married couple)
In more expensive coastal areas it makes sense because you couldn't really buy a house on the old $150k limit without stretching your finances according to the classical debt to income ratios.
I'm wondering if this new tax credit will apply to my situation.. My father purchased a house to resell for a profit. I chose to purchase it from him. We're in the process of getting this thru. The problem with the tax credit as it WAS is that you can't be purchasing it from a family member. Is this restriction present in the newly extended form?
@coffeeculture: Someone asked the taxgirl the same question -
I imagine if
a) Your state has no domestic partnership law/recognition
b) You've taken no advantage of anything that previously required you to declare your domestic partnership (i.e. insurance benefits through a company)
c) Your state doesn't recognize same-sex marriage
Of course, though, she offers the caveat of saying that it's all first-blush yes and not in concrete, blah blah.
Too late for the homebuyers who just bought my parents house, the sale recorded last Thursday.
Housing prices just jumped $8000. The average person can now afford $8000 more house so asking prices will rise accordingly. But now you get to pay property tax and interest on the higher value.
@Wireless Joe: Yeah, that's pissed off a lot of people. Overall, there weren't *that* many people that used the $7500 credit, so the govt could write it off fairly cheap.
Until that happens, we're screwed and get to pay it back $500 per year. And since the tax tables for married couples are so screwed up, we're likely to wind up *owing* despite buying the house.
I'm wondering if this will simply bring out a whole new crop of house flippers and speculators.
@catastrophegirl: Reminds me of the A-frame my wife owned before I met her. It was so small that she kept her washer and dryer in a shed out back!
@MaytagRepairman: Did you spend a lot of time in that shed, waiting for the washer/dryer to break? Or were you scandalized because she owned a non-Maytag washer?
@pot_roast: You didn't have to take the money. The government was not holding a knife to your neck, demanding, "Take this interest free loan, OR ELSE! muahahahahaha!" ... or were they?
Dun-dun-duuuuuuun!
@JeffM: Yeah, the good news: I make more than the income limit. The bad news, I make more than the income limit.
In most places, not a big deal, but I live in the D.C. area, where it's enough salary to live in a 50-year-old townhouse.
Oh well. I hope everyone enjoys my salary subsidizing *YOUR* home purchases.
Yet another BS scheme by the Obamunists that only applies to people who can't afford the additional debt.
Cash for Clunkers (think of how many had a clunker for a reason, eh?)
New House Tax Credit (but not for those of you who actually worked hard and have a good salary; let's just give it to people who might have a harder time paying).
This is like offering vinegar to the parched.
Yet another BS scheme by the Obamunists that only applies to people who can't afford the additional debt."
Yeah, preach on brother! If you're not making more than $125K/yr (the new upper limit) You shouldn't be buying a house. (BTW Less than 5% of american workers make more than $100,000/year)
"(think of how many had a clunker for a reason, eh?)"
It could be the ppl who bought SUV's during the boom and now are siting junk that nobody wants to buy because they get 12mpg.
The number one car traded in...The Ford Explorer.
You are probably some bitter Kiyosaki acolyte who bough at the peak, and now has negative equity.
More Haterade® will not quench your thirst.
except for that pesky rule that states you must stay in your home for "X years" or forfeit the rebate.
@hotdogsunrise: That is true, but it still rather sucks that the -next- year's buyers get more and without a payback schedule.
The furthering of this credit just puts me off of buying a house for another year or so. Yes, I only make ~$30,000 a year, but I can afford to buy a house of about $100,000 on a 30 year fixed rate mortgage. With housing values dropping like a rock, and living in Michigan, working in a stable industry with actual growth prospects, I don't have a problem with buying. With the tax credit, it's hard to get a true value of a house now. I have a friend who closed on her house, first time, on Friday. Last year, the same kind of house in the same neighborhood was going for above 100k, this year, she paid, after the credit, just under 100k. Without the credit, would she still have bought? Yes, but not in the same neighborhood. It's not new construction that's taking this credit near me, it's 50 year old homes under $100,000.
Scenario:
Husband owns house they need some quick cash. Husband sells house to wife for exact amount owed on it, no lawyers needed no inspection in most cases, simply a brokerage fee (which many banks don't even charge) no Realtor's fee. Just a sale and transfer. can the wife then receive the first time credit of 8k. (incomes are lower than required).