Move Up Home Buyers Tax Credit

The New $6,500 federal tax credit for so-called “move up” home buyers is available now.

This means that if you fit the key criteria – you’ve owned and resided in your current home for a consecutive five out of the past eight years, and your adjusted household income doesn’t exceed $125,000 if you file taxes singly, $225,000 if you are married filing jointly – you can claim the credit as soon as you close on a qualifying house.

There is no “move up” requirement in the new credit. In fact, homeowners who plan to down size into a smaller dwelling may prove to be significant users of the credit.

Sign a contract by April 30 and close by the June 30 expiration date.

Some other key features of the $6,500 credit you ought to know about:

• Whatever you intend to purchase, the house cannot cost more than $800,000
• The replacement house must become your main home. There is no requirement in the legislation that you sell your current home. You could rent it out, turn it into a second home, or list it for sale later in 2010 when prices might be higher. If you plan to retain it, however, make sure you move into the new house on the day you close so that there is no question it was your principal residence at that time.
• Homebuyers in 2009 – those who go to closing after Nov. 6 but no later than Dec 31 – can claim the $6,500 credit on the 2009 federal tax returns. Similarly, eligible purchasers in 2010 will be able to file for the credit on the 2009 returns or 2010 returns. Talk to your tax advisor regarding timing decisions, which may be affected by your household income applicable to a given year.
• Be sure to view my 11-10-09 post:  Government Home Buyers Credit Extended & Expanded

Del Mar real estate