Figuring out the home-buyer tax credit

Is there a home-buying tax credit in your future?

Columnist Kathy M. Kristof details the changes that will allow millions of additional people to take advantage of the $8,000 tax credit for first-time home purchasers, under legislation signed Friday by President Obama. The new law raises the income restrictions for first-timers, creates a $6,500 credit for longtime homeowners and launches more-accommodating rules for members of the military.

The fine print, particularly for current homeowners, can be more than a little confusing.

If you have owned and lived in a home for at least five consecutive years of the last eight years, you could qualify for a $6,500 tax credit, if you buy a new home between now and April 30.

The "five-of-eight" requirement means that this credit could accommodate people who lost their homes in the last year or two to foreclosure or even sold a house and didn't immediately replace it, said John. W. Roth, senior tax analyst with CCH Inc., a Riverwoods, Ill., publisher of tax information.

Would you have to sell your residence for it to qualify for the $6,500 credit, if you wanted to buy a new one? Not necessarily, Roth said. The home you purchase must become your principal residence, so you would have to move there. But nothing in the law says you cannot keep your existing residence as a second home or rental, he said.

If you do choose to sell your existing residence, you need to pay close attention to how much you earn on that sale, Stretch said. That's because taxable profits from the sale of your residence will be added to your other earnings to determine whether your adjusted gross income exceeds the allowable thresholds.

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-- Nancy Rivera Brooks

 

Comments

[mrincomestream]

"There's a sucker born every minute" P.T. Barnum

More stimulating the economy by selling things to each other....has no one figured it out...that doesn't work.

Why is the taxpayer on the hook for this gimmick....? Has anyone thought to ask...?

What's wrong with the business media in this country?

And this is priceless....I'm at a loss for words...

"Would you have to sell your residence for it to qualify for the $6,500 credit, if you wanted to buy a new one? Not necessarily, Roth said. The home you purchase must become your principal residence, so you would have to move there. But nothing in the law says you cannot keep your existing residence as a second home or rental, he said."

[Timothy]

You're not the only one outraged, mrincomestream. If you scoop a bunch of water from the shallow end of a pool, and then dump it in the deep end, does the water level rise? Stimulus pushers say "yes."

In that case, since Cash for Clunkers was such a great leap forward, why not go all the way, have the government buy up a bunch of residential properties and burn them to the ground? That would clear up some of that pesky inventory overhang and stimulate loads of new jobs, all at the trivial cost of a bunch of freshly printed green paper which is becoming more worthless by the day.

In all honesty, anybody who takes this pathetic $6,500/$8,000 inducement to trap themselves in a 30-year, grossly overleveraged speculation bet 0n overpriced real estate will receive their reality check no later than the next wave of mortgage rate resets in 2010-2011.

[Becky]

So, I'm confused on the Long time home buyer information. My situation... We've owned our previous house for 10 years & lived in it for all 10 years. Sold it in July 09 & bought a new house in September 09 which is now our primary house. We also make less than the income cutoff for this credit. So are we able to claim this credit or did we need to have not lived in our old house for the last 3 years to receive this???