Can The Move-Up Buyer Tax Credit Help You?
November 19th, 2009 categories: Economic Recovery, For Buyers, For Homeowners, Housing Market, Mortgage Info, Real Estate News, Taxes
You probably read a lot earlier this month about the first-time homebuyer tax credit. That’s because Congress approved an extension of this important measure that provides first-time buyers an $8,000 tax credit when they purchase a house. Many in the real estate community, including myself, believe that that this tax credit has helped provide a significant boost to housing sales. That’s why we were so excited to learn that the credit wouldn’t expire at midnight on Nov. 30, as it was originally scheduled to do.
But amid all the press about the first-time buyer credit, you might have overlooked the significance of another housing measure that Congress also approved in early November: the so-called move-up buyer tax credit.
This tax credit provides $6,500 to anyone buying a new house who isn’t a first-time buyer. It’s another great financial incentive for homebuyers.
National real estate writer Kenneth Harney recently wrote an excellent column explaining this new housing credit. It’s a good summary of the credit.
Harney explains that the new credit, which took effect as soon as President Obama signed the bill creating it on Nov. 6, is available to homebuyers who have owned and lived in their current residences for a consecutive five out of the last eight years.
Your adjusted household income can’t exceed $125,000 if you file your taxes singly or $225,000 if you are married and filing jointly if you want to claim the entire tax credit. You might be able to qualify for a partial tax credit if your income is higher than those limits. But if your adjusted gross income is $145,000 and more and you are a single filer, you won’t qualify for any part of the credit. If you are married and filing jointly, you won’t get any credit if your modified adjusted gross income is $245,000 or more.
Harney also points out that the home you are purchasing can’t cost more than $800,000, and that it must become your main residence. However, you should be aware that you don’t have to sell your current house to qualify for the move-up buyer credit. You can keep that house and rent it out if you’d like. Just make sure, as Harney advises, to move out of your current home as soon as you close on your new house or condominium.
