Home-buyer & Move-up credits are bigger and better.
Although this sounds sensationalistic, this is greatest of the home buyer assistance to come out of congress in years. The Worker, Homeownership and Business Assistance Act of 2009 extends and expand the first-time home-buyer credit allowed. The rules extend the cutoff dates to homes under contract by April 30, 2010 and closing no later than June 30, 2010.
However,the most exciting news is the “Move-Up†credit of $6500 for existing homeowners. Don’t let the name fool you. This applies to many situations where existing home owners (owned & resided in the same home 5 of the last 8 years) who acquire a new primary residence.
There is no requirement to buy a more expensive home or to sell your existing home! You can keep your existing home and use it as a second home, convert it to a rent house and still qualify for the credit. If you have to move for a job,and relocate your family, but don’t want to sell in a down market, this will help you.  If you find a screaming deal on a home you want to make your new primary residence this will help you.  If you want to downsize, and move into a smaller, more efficient home, this will help you.
The Rules: To get the clearest understanding of the rules you should consult a tax professional but here are some general guides. See IRS form 5405 .
For this one, the close must take place after Nov.6, 2009 with the same cutoff dates as the first-time home buyer credit.
The income limitations are now more generous as well. Eligible income limitations for both credits are $125,000 for singles and $250,000 for married filers, up from $75K & $150K . The credit is %10 of cost and the home cannot cost more than $800,000. Additionally, now a copy of the HUD-1 must be submitted with a copy of the tax return.
Due to prior abuse, there is a new senate requirement on the IRS to more closely scrutinize the credits claimed. Sales between closer related parties, to minors or those claimed as dependents on other’s returns are ineligible. While this bill is the third and biggest home buying credit to come out in recent years, some of it’s primary authors insist there will be no more. All political and budget indications are that this ride is about over as well.
Michael White, Austin CPA
2 Responses
Conversation