Congress's extension and expansion of the $8,000 tax credit through next June 30 should take the pressure off first time home buyers who've been rushing to close deals before the November 30 deadline.
That deadline is now gone. Everybody's got until next June 30 to settle on their purchases.
But here's something in the expanded program that hasn't gotten much attention: The new $6,500 federal tax credit for so-called "move up" buyers took effect immediately upon enactment.
That means that potentially hundreds of thousands of Americans who fit the key ownership and income criteria for the new credit are eligible for it … right now.
What are those tests?
Number one: You have to have owned and used your current home as your principal residence for five consecutive years out the past eight;
Number two: Your adjusted household annual income cannot exceed $125,000 if you file taxes as a single, or $225,000 if you are married filing jointly.
To qualify, you've got to sign a contract to purchase a replacement residence before next April 30, and go to closing on it by June 30, 2010.
That's potentially huge for all sorts of people who never thought of themselves as qualifying for a tax credit under any circumstances, because they've owned a home for years.
Here are some other useful facts about the revised credit program:
- Although the $6,500 feature has been labeled the "move up” credit, there is nothing in the law forcing anybody to buy a bigger or costlier house. You can downsize or upsize and still get the credit.
For example, one Treasury investigation found 500 claims for the credit were submitted by kids under four years of age!
Other audits have documented violations of rules against purchases of homes from relatives, and the requirement that purchasers must not have owned a principal residence any time during the preceding three years.
In other cases, investigators found that no purchase had taken place! The whole thing was a fraud.
This time around, the IRS plans to evaluate credit claims much closely, up front.