Homebuyer Tax Credit FAQ's

Question: Existing homeowner credit: Must the new house cost more than the old house?
Answer: 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.

Question: 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?
Answer: 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.

Question: 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?
Answer: 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).

Question: I am an eligible existing homeowner. I have a fair amount ofequity 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?
Answer: 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.

Question: 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?
Answer: 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.

Question: 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?
Answer: 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.

Homebuyer Tax Credit extended to May 2010

Buy a home before May 1 and collect up to $6,500 from the government. If you're a first-time homebuyer, get up to $8,000. The House voted 403-12 Thursday to expand the tax credit for homebuyers. The bill, which also extends unemployment benefits and expands a tax break for money-losing businesses, finally goes to President Barack Obama, who plans to sign it Friday.

First-time homebuyers have been getting tax credits of up to $8,000 since January as part of the economic stimulus package. With the credit scheduled to expire at the end of November, the House voted to extend it into the spring. The best news is that it has been expanded to people who already own homes!

Buyers who have owned their current homes at least five years would be eligible, subject to income limits, for tax credits of up to $6,500. First-time homebuyers and buyers who haven't owned homes in the previous three years still qualify for up to $8,000.

Response from Senator John McCain regarding homebuyer tax credit

October 18, 2009





Ms. Evette Cecena


Tempe, AZ 85282-4721



Dear Ms. Cecena:



Thank you for contacting me about the real estate market. I appreciate knowing your views on this important issue.

There is a justifiable feeling of concern across America today regarding the ongoing situation with the housing market. Millions of Americans are desperate for assistance as they bear the heavy burden of trying to keep their family homes. The pain of the foreclosure crisis is felt by those who have lost their homes and by their neighbors as well.

In an effort to address this problem and the nation's larger financial problems, the Senate passed several bills aimed at providing relief and jumpstarting the economy. Specifically, the Housing and Economic Recovery Act of 2008, which specifically targets the real estate crisis, became law on July 30, 2008. While not a perfect bill, it does include a number of provisions that can help our housing market, for both mortgage borrowers and lenders, now and in the future.

On March 4, 2009, the President announced the "Making Home Affordable" program which is designed to help 9 million borrowers by refinancing their mortgages. Specifically, this program offers qualified participants the option to refinance or modify their current loan if their mortgage was being held by Fannie Mae or Freddie Mac. For more information, including further qualifications, as well as a self assessment tool to view your mortgage refinance eligibility under the "Making Home Affordable" program, you can visit the following government website: http://makinghomeaffordable.gov/



Additionally, on May 6, 2009, the President signed P.L. 111-22, the Helping Families Save Their Homes Act of 2009. This law expands the eligibility for the Hope for Homeowners program and offers $300 billion in aid to homeowners, enabling more people to qualify for financial relief. It also modifies the federal Homelessness and Rapid Re-Housing Program to allow occupants leasing foreclosed property to remain on the premises for the remainder of their lease and permitting those without a lease to stay on the property for ninety days after foreclosure without risk of eviction. Please be assured that I will continue to monitor this critical issue and will work to ensure the federal government takes appropriate action to deliver needed assistance to home owners.

Thank you again for sharing your thoughts with me. Please feel free to contact me on this or any other matter of concern.











Sincerely,





John McCain

United States Senator



JM/dba