December 2, 2009

In addition to extending the tax credit available to first-time homebuyer's the IRS has now expanded the program to existing homeowners. The qualifications are as follows:

You must have maintained the same principal residence for any 5 consecutive year period during the 8 year period ending on the date of purchasing the new home.

  • The home purchase must be after November 6, 2009 and closed prior to July 1, 2010, with the home under contract by May 1, 2010.
  • The purchase price cannot exceed $800,000.
  • The full credit is available to singles with modified adjusted gross income up to $125,000 and $225,000 for joint filers.
  • The purchaser must be at least 18 years old and cannot be a dependant.
  • The credit is 10% of the purchase price up to a maximum of $6,500 ( if married filing separately limited to $3,250 ).
This is a terrific opportunity for "empty nesters" who are looking to downsize. You now have the opportunity to take advantage of two tax breaks at once. In addition to the refundable credit of $6,500 you can also exclude part or all of the profit made from selling your old home. Singles can exclude $250,000 ( $500,000 for joint filers ). Although, there is no requirement to sell your existing home to qualify for this credit, you must live in the new home for 36 months to avoid recapture of the credit. This is definitely something to consider in the coming months.