Profile picture for Buffbalt

Sold my home in July 08 and rented since. Am I eligible for the $6500 credit on a new purchase?

I sold my previous residence which I had lived in for 7 years in July of 2008. I moved to another state and have rented since then.  We are looking to purchase another home in the beginning of 2010.  Can I claim the $6500 tax credit if a contract is signed by April 30, 2010?
  • November 05 2009 - Annapolis
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Answers (5)

Yes - you meet the 5 years out of 8 requirement as long as it was your "primary" residence.  If you meet the income (<$225 MFJ) and purchase price (<$800k) requirements, and settle by 7/1/2010, you got it.  $6,500 is for MFJ - Married Filing Joint.

This credit is claimed on the tax return for the year of purchase, however current regs have a couple of options to get it earlier.  Guidance is forthcoming - will probably be the same, ie. if you settle by 4/15/2010, can claim on 2009 tax return.

Steve Masengale, CPA   www.sgmpa.com
  • November 14 2009
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What we saw from the current Tax Credit program is that specific questions always arise that are not necessarily covered under the language of the law. 

In those situations, the IRS will issue an interpretation of the law as they are the gatekeepers of the money. Time will tell what the IRS will determine once the law goes into effect in the next several days.
  • November 05 2009
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Here is part of the senate bills language pertaining to your question about qualifying for the $6,500.  Again, we need to wait until the house passes the bill to see if any changes are made.  I hope this helps.

`(6) EXCEPTION FOR LONG-TIME RESIDENTS OF SAME PRINCIPAL RESIDENCE- In the case of an individual (and, if married, such individual's spouse) who has owned and used the same residence as such individual's principal residence for any 5-consecutive-year period during the 8-year period ending on the date of the purchase of a subsequent principal residence, such individual shall be treated as a first-time homebuyer for purposes of this section with respect to the purchase of such subsequent residence.'.


(c) Modification of Dollar and Income Limitations-


(1) DOLLAR LIMITATION- Subsection (b)(1) of section 36 of the Internal Revenue Code of 1986 is amended by adding at the end the following new subparagraph:


`(D) SPECIAL RULE FOR LONG-TIME RESIDENTS OF SAME PRINCIPAL RESIDENCE- In the case of a taxpayer to whom a credit under subsection (a) is allowed by reason of subsection (c)(6), subparagraphs (A), (B), and (C) shall be applied by substituting `$6,500' for `$8,000' and `$3,250' for `$4,000'.'.


(2) INCOME LIMITATION- Subsection (b)(2)(A)(i)(II) of section 36 of such Code is amended by striking `$75,000 ($150,000' and inserting `$125,000 ($225,000'.


(d) Limitation on Purchase Price of Residence- Subsection (b) of section 36 of the Internal Revenue Code of 1986 is amended by adding at the end the following new paragraph:


`(3) LIMITATION BASED ON PURCHASE PRICE- No credit shall be allowed under subsection (a) for the purchase of any residence if the purchase price of such residence exceeds $800,000.'.
  • November 05 2009
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Profile picture for sunnyview
The details are not final so no one can tell you. Last I read, the proposed $6500 was for current homeowners that had owned their home for at least 5 of the last 8 years. The details are still unclear so you have to wait until the final version is passed to know if you will qualify or not.
  • November 05 2009
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As you know the senate voted in favor of extending the tax credit extension yesterday and hopefully the house will vote today.  The bill could be singed as early as tomorrow.  Honestly I will have to look at the details of the bill.  As I understand it a homeowner would have to live in their home for 5 years in order to take advantage of the credit.   We will have to look to see if there are any exceptions for those that have owned for 5 years but do not currently own.  I can give you further details as they become available.
  • November 05 2009
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