Quick! Go Buy a New Home! New $6,500 Homebuyer Tax Credit for Existing Owners and $8,000 for First-Timers Gets Extended

The lawmakers have acted. There is now a $6,500 tax credit for current homeowners to go out and buy another home. You no longer have to be a first-timer to take advantage of the homebuyer credit. Trade up, baby! And as predicted by yours truly, Congress has also extended the $8,000 first-time homebuyer tax credit. I guess it’s good time to be looking for a home. But not so fast. There are some details to go over:

Amount of the Credit and Important Dates

As I write this, President Obama is likely signing the bill, which he’s promised to do. So don’t do anything until the bill becomes law if you’re a current homeowner looking to use the $6,500.

If you’re a first-time homebuyer and you were worried about not making the November deadline, you can breathe easy. You still qualify for up to $8,000 in tax credits. In addition, as was mentioned above, people who have owned their homes at least five years qualify for up to $6,500 in credits. I personally have been in my home for a measly three years. So I’m the guy caught in the middle paying his tax who’s not getting a piece of the action here.

Okay, enough of my sob story, here are the important dates involved with the new credit and the extension. It’s easy. The dates are the same for both. Your purchase must be secured by April 30, 2010 and your closings must be finalized by June 30, 2010.

Income Limits

Hold your horses, Richie Rich. You can’t partake. Here are the income limits that Congress says is fair: If you’re a single taxpayers with an adjusted gross income under $125,000 you are eligible for the credit’s full benefits. Joint filers must earn AGI of under $225,000 to get in on the action. If you have an income of up to $145,000 (single) or $245,000 (joint) may receive partial homebuyer tax credits. That’s what you call “phase outs” there folks.

Other Rules that Apply

There are some other rules you might want to be aware of:

  • Only those homes that are $800,000 and under are eligible for the tax credit.
  • Members of the military serving outside the United States for more than 90 days will have until June 30, 2011, to qualify for the tax credit.
  • The program is expected to cost the federal government $10.8 billion.

I’ll mostly leave it to you to decide whether this is a positive thing or not. But I tend to think that while this is a windfall for some people, it’s just another prop up for our Economy as a whole.

Get $3,000 More by Using UpromiseUpromise members who buy or sell their home through Century 21, Coldwell Banker or ERA Real Estate can earn up to $3,000. Combine that with the $8,000 First-time Homebuyer or $6,500 Move-Up or Repeat Home Buyer tax credits, and Upromise members can save more than $10,000. Sign up for Upromise.

Let me hear your thoughts about this new $6,500 tax credit in the comments below…

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Last Edited: January 20, 2012 @ 1:00 pm
About Philip Taylor

Philip Taylor, aka "PT", is a husband and father of two. He created PT Money back in 2007 to share his thoughts on money and to meet others passionate about managing their finances. All the content on this blog is original, and created or edited by PT. Read more about Philip Taylor, and be sure to connect with him on Twitter, Facebook, or view the Philip Taylor+ Google profile.

Comments

  1. Mr. Not the Jet Set says:

    Certainly, if you are in the market for a house, a $6500 or $8000 tax credit is not unwelcome.

    What I don’t like about this, is the same as what I didn’t like about Cash for Clunkers – they will drive people to buy large items that they otherwise would have no business doing. I would hope that the new sensitivity around the lending industry would keep the majority of that from happening.

    The trouble comes when you are in the market for a house because of the credit. It’s like buying stuff at the grocery store just because you have a coupon.

  2. John Cannata says:

    Well put together. This was something we have been waiting for and it was finally signed off on Friday. I personally haven’t put together a posts with the details, but I need to for my readers as well.

    Anyway, I have read your post before and thought I’d finally take a moment to respond.

  3. Anthony Eller says:

    My wife and I are going to take advantage of the $6500 we are down sizing.We are moving to the next Parish over in Louisiana taxes will be cut in half and insurance cut in half also.I hear you should file revised 2008 income tax return? What will this do for me instead of using $6500 credit on 2009 tax return? We will be driving 12 miles further each day a little inconvenient.
    Thank you I look forward to your reply
    Tony

  4. I am looking at purchasing a home before this deadline. I have heard some people that says they have been waiting for over 4 months on the check and have yet to receive it. I was wondering if all cases are like this and what are ways to speed up the process? I ask this because I will need that return to pay off my truck so it will be easier for me and my fiance to afford the mortgage payments and other utility bills that come with owning a home. Thanks for any help you can provide