FEATURE

Jan 1 – November 30, 2009
Rules as enacted
February 2009

November 7 – April 30, 2010
Rules as enacted
November 2009

First-time Buyer
Amount of Credit

$8000
($4000 married filing separate)

$8000
($4000 married filing separate)

First-time Buyer
Definition for Eligibility

May not have had an interest in a principal residence for 3 years prior to purchase

Same

Current Homeowner
Amount of Credit

No Provision

$6500
($3250 married filing separate)

Effective Date
Current Owner

No Provision

November 7, 2009

Current Homeowner
Definition for Eligibility

No Provision

Must have used the home sold or being sold as a principal residence consecutively for 5 of the previous 8 years

Termination of Credit

Purchases after November 30, 2009.  (Becomes April 30, 2010 on Date of Enactment.)

Purchases after April 30, 2010

Binding Contract Rule

None

So long as a written binding contract to purchase is in effect on April 30, 2010, the purchaser will have until July 1, 2010 to close.

Income Limits
(Note: Increased income limits are effective as of date of enactment of bill)

$75,000 – single
$150,000 – married
Additional $20,000 phase out

$125,000 – single
$225,000 – married
Additional $20,000 phase out

Limitation on Cost of Purchased Home

None

$800,000
November 7, 2009

Purchase by a Dependent

No Provision

Ineligible
November 7, 2009

Anti-fraud Rule

None

Purchaser must attach documentation of purchase to tax return

Question:

Answer:

Existing homeowner credit: Must the new house cost more than the old house?
No. Thus, 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. On October 25, 2009, I signed a contract to purchase a new home. I have lived in my current home for more than 5 consecutive years and am within the new income limits. I will go to settlement on November 20. If President Obama has signed the bill by the time I go to settlement, will I qualify for the new $6500 tax credit?
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.  I will be covered, however, by the new income limits. If the new rules have been signed into law by the time I go to settlement, will I be eligible for a credit?
Yes. The new income limitations go into effect as soon as the President has signed the bill.  The income limit and other eligibility rules will look to your status as of the date of purchase, which is 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 a fair amount of equity in my home.  I have found a home with a nonnegotiable price of $825,000.  Will I be able to use any of the $6500 tax credit?
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?
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 John and his wife bought a home in 2000 and lived there until 2008 when he got a divorce. Whether John 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?
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.

For all other states where such HFA programs do not exist the tax credit may not be used to fund the 3.5 percent down payment required for FHA loans. As always, the 3.5 percent down payment may be a gift from a family member, employer or nonprofit, charitable organization. FHA-approved nonprofit organizations and FHA-approved lenders may monetize the tax credit for down payments in excess of 3.5 percent, closing costs and interest rate buy downs. Mortgage industry leaders have indicated that this type of product may not be immediately available to consumers.

In conjunction with an IdaMortgage loan, a subordinate loan will be offered to qualified first-time home buyers a maximum of 5% of the sales price up to $7,000, not to exceed 100% combined loan to value. A fee will be charged of $250 with $150 refunded upon repayment of the loan on or before the loan due date. The loan will accrue interest at 3.0% with a due date of July 1, 2010. The Tax Credit Second Loan is expected to be paid off from the borrower’s tax refund obtained through the application of the federal tax credit. Borrower must be a first-time home buyer and qualify for an IdaMortgage loan.

"Welcome Home Idaho". Idaho REALTORS® will pay off the interest for first-time buyers using IdaMortgage program.