Existing Homeowners to Be Eligible for Tax Credit

Nov. 5, 2008. Much to the glee of builders, bankers, and real estate agents, the bill to extend the tax credit for new home buyers was passed by both the House and the Senate. President Obama is expected to sign the legislation very soon.

But wait, there’s even better news! Under the new law existing homeowners, not just first-time buyers, will be eligible. The legislation is expected to help keep recent economic momentum going, perhaps not at Cash for Clunkers levels, but positive nevertheless.

The National Association of Homebuilders (NAHB) was very pleased with the news. NAHB Chairman Joe Robson commented: “We commend lawmakers for acting in a bipartisan manner to extend the first-time home buyer tax credit beyond its Nov. 30 deadline and expand it to a wider group of home buyers. The tax credit has proven to be a powerful economic incentive. Today’s action by Congress will further stabilize housing and the economy by creating new jobs, stimulating home sales, reducing foreclosures, cutting excess inventories and stabilizing home prices.”

The new law continues the $8,000 credit for new home buyers who purchase their homes by April 30 and close on them by June 30, 2010. A new twist is that now existing homeowners buying a new home as their principle residence are also eligible for a tax credit, $6,500 in their case. The new bill expands income eligibility to individuals making up to $125,000 and $225,000 for couples. Existing homeowners will have had to have lived in their old homes for at least 5 consecutive years out of the last 8.

Bottom Line:
If you were thinking about buying your retirement home but were on the fence, and you have income you would like a credit against, this might be just the incentive to pry you off. Buy early and avoid the rush!