The $6,500 Move-Up / Repeat Home Buyer Tax Credit at a Glance

1. To be eligible to claim the tax credit, buyers must have owned and lived in their previous home for five consecutive years out of the last eight years.
2. The tax credit does not have to be repaid unless the home is sold or ceases to be used as the buyer’s principal residence within three years after the initial purchase.
3. The tax credit is equal to 10 percent of the home’s purchase price up to a maximum of $6,500.
4. The tax credit applies only to homes priced at $800,000 or less.
5. The credit is available for homes purchased after November 6, 2009 and on or before April 30, 2010. However, in cases where a binding sales contract is signed by April 30, 2010, the home purchase qualifies provided it is completed by June 30, 2010.
6. Single taxpayers with incomes up to $125,000 and married couples with incomes up to $225,000 qualify for the full tax credit.

Related posts:

1. Funding Caps Removed for Fannie and Freddie
2. First Time Home Buyer Definition
3. Steps to Readying the Purchase of Your First Home

And, existing home sales are rising quite well:

As you can see, there has been a very nice pick up in home sales compared to this point last year.  Now, a lot of that has to do with the $8000 tax credit for first time home buyers; but anecdotally there is a nice pick up of move-up buyer home sales as well.  And, with the recent introduction of the $6500 tax credit for move-up buyers, that trend should continue as well.

While more homes are moving, prices are dropping in general.  Or, perhaps the opposite is true, that because home prices are so far down, buyers are beginning to come out and explore their options.

Does all of this point to a housing rebound?  Too early to tell if Atlanta will move from a buyer’s market back to a seller’s market in the near future.  A LOT of that will depend on the movement of mortgage interest rates.  And rates are pointing upward, although probably not until late Spring.

So, if you are in the market for a home, my best guess currently is that you should act on that and lock in a rate prior to April, 2010.

Related posts:

1. Atlanta Housing Rise or Fall When Government Stops Subsidizing Mortgage Rates
2. Atlanta: Now We Will See ARM’s Rise
3. Why Now Is The Time to Buy Your First Home in Atlanta

Well, no.  My definition of not having owned a home in the past 3 years was simply calendar years.  So if you sold a home in October of 2006, then rented, and are now closing on a new home in November of 2009, then you qualify for the tax credit as a first time home buyer.  And, I was wrong.

Here is an email that I received from a recent client that I helped to finance a home:

I do have some unfortuante news relating to the First Time Homebuyer Credit. The IRS has denied my refund be cause I owned a home for one or two months in 2006. They require 3 full “tax years” to re-qualify. So, even though I qualified as a FTHB for the loan, I did not qualify for the tax refund.    - Will

Turns out, the IRS defines the three years as being three tax filing years, not calendar years.  An important and potentially expensive distinction.  Now, for the $6500 tax credit for move-up buyers, you need to have lived in your home for 5 of the last 8 years.  That seems more cut and dried, and not so open to interpretation.  However, I wonder if you live in the home from December, 2004 to present, if the IRS would interpret that as 5 tax years as well?

I will try to get the answer, and post it here.

Related posts:

1. $6500 Tax Credit, If You’ve Lived in Your Home 5 Years
2. Tax Credits at a Glance
3. Existing Home Sales Rise – Even Around Atlanta

The details:

1. Must be a primary residence
2. Max income limits to qualify of $125K single, and $225K for a couple filing jointly (with pro-rated tax credit for $20K above those limits)
3. The home purchased must be under an $800K purchase price to qualify
4. Be under contract by April 30, 2010, and close on that home within 60 days of April 30.

Related posts:

1. $8000 Tax Credit Extended, Expanded
2. First Time Home Buyer Definition
3. Existing Home Sales Rise – Even Around Atlanta