Orlando Florida - Homebuyer Tax Credit Changes

Many times when change occurs, it brings confusion. But the changes to the existing homebuyer tax credit law is a positive change for future home buyers. But in order to take advantage of this positive change, one must first understand the new legislation.

Here are some of the most frequently asked questions on the changes to the Homebuyer Tax Credit

Must the new house cost more than the old house? Answer: No. For example, individuals who move from a high cost area to a lower cost area who meet all eligibility requirements will qualify for the $6500 credit.

I am an existing homeowner, lived in my current home for 5+ consecutive years, and within the new income limits. The closing on my new home will occur November 18 and President Obama has signed the bill, will I qualify for the new $6500 tax credit? Answer: Yes. The existing homeowner credit goes into effect for purchases after the date of enactment (when the bill is signed). There is no reference to the date of contract for the new credit. The provision looks solely to the date of purchase, which is generally the date of settlement.

I am a first time homebuyer but was not within the prior income limits at the time I entered into my contract to purchase on October 30, 2009. But I will be within the new limits of income in the new legislation. If the new rules have been signed into law by the time I go to settlement, will I be eligible for a credit? Answer: Yes. The new income limitations go into effect as soon President Obama has signed the bill. The income limit and other eligibility rules will look to your status as of the date of purchase (the settlement date). So if the new rules have been signed when you go to settlement, you should be eligible for the credit (or a portion of the credit if you're within the phaseout range).

I am an eligible existing homeowner. I have found a home with a nonnegotiable price of $825,000. Will I be able to use any of the $6500 tax credit? Answer: No. The $800,000 cap on the cost of the purchased home is firm at $800,000. Any amount above $800,000 makes the home ineligible for any portion of the credit. The $800,000 is an absolute ceiling.

I owned my home for 10 years, but sold it two years ago year and have been renting since. If I purchase a home, will I be eligible for the $6500 tax credit if I meet all the other eligibility tests? Answer: Yes. Because you lived in the home for more than 5 consecutive years of the previous 8, you will qualify for the $6500 credit. For example, Say Pat and his wife Michelle bought a home in 2000 and lived there until 2008 when he got a divorce. Whether Pat has been renting or bought in the interim, he WOULD INDEED be eligible for the credit because he owned a home and occupied it as his principal residence for 5 consecutive years out of the last 8 years. The keyword here is "consecutive." As long as he lived in that house for 5 years straight what he did since 3 years doesn't impact eligibility.

I am an eligible first time homebuyer. I entered into a contract to purchase on November 1, 2009. Do I have to go to closing before December 1? How does the extension date affect me? Answer: You do not have to close before December 1. Once the legislation has been signed, it will be as if the Nov 30 date had never existed. Therefore, so long as the contract settles before April 30 (or July 1, worst case), the purchaser will be eligible for the credit.

If you are an existing homeowner or future home buyer, take advantage of this tremendous Buyers market we are currently in. When you add up the below market prices, historically low interest rates, and the new federal government tax credit there has never been a better time to own a home or upgrade your current home. Think about it!