Who Qualifies for the $6,500 Homebuyer Credit?
We have had lots of reader questions about the homebuyer credit for long-time residents. The blog - and yesterday's column - addressed some of the nagging questions from readers.
Mark Steber, chief tax officer for Jackson Hewitt Tax Service, has graciously answered some more of the housing credit questions here as well as some others:
Q. I purchased a house six months ago. I’ve owned one for 10 years but do not live in it or get rent I allow my parents to live there for free. Are there any deduction possibilities for the new house in California, if that makes a difference?
A. You can deduct the interest and real estate taxes on both homes since they are in your name and you pay the mortgage. If you have not owned a principal residence, the one you live in, during the three years preceding the purchase of your new home, you may qualify for up to $8,000 with the First-Time Homebuyer Credit.
However, keep in mind that there are tax benefits that you may be eligible for if your parents qualify as your dependents by meeting certain requirements:
- You provide more than half of their support financially. You provide more than half of the financial support of their household.
- Their gross income, not including Social Security, VA disability pensions, Railroad Retirement Tier 1, and reinvested earnings from savings or mutual funds and stock is less than $3,650.
- They live in the U.S., Canada, or Mexico. They file a joint tax return to receive a refund only because they have no tax liability.
Q. I am receiving a military pension check once a month. I am having it deposited directly into my IRA rollover account. The IRS says I cannot deposit my monthly military check into an IRA rollover account and defer the taxes. I wonder what IRS ruling that is - can you help me?
A. Internal Revenue Code §408(d)(3)(E) states that no amount of a required distribution may be rolled over into another account. You may contribute the smaller amount of either your earned income or $5,000 ($6,000 if age 50 or older) per taxpayer into your IRA annually. Everything above that amount is an “excess contribution” and subject to an additional tax. You must remove the excess contribution and any earnings prior to April 15, 2010 for 2009, or you will be assessed a penalty and charged interest. The penalty assessment will occur annually until you correct the excess contribution. The information can also be found in IRS Publications 17, 575, and 590, and the IRS publication can be accessed online at www.irs.gov.
Q. I refinanced three years ago and have been taking the deductions on the points I paid divided over 30 years. This year, I refinanced again. Can I deduct the remaining balance on the first refi as well as the points paid for this refi (divided over 30 years)?
A. Yes, you can deduct the remaining points from the first refinance and the pro-rated share of the current refinance this year.
Q. I was married in August 2008. We are buying a new home with a close date of Feb 1st. I qualify for $6,500 as a repeat buyer but my wife has never owned a home. Do we cancel each other out? So we can’t get the $8,000 that she would qualify for and I can’t get the $6,500 that I qualify for? This seems illogical and I would doubt that it was the goal of Congress.
A. The law states that married couples must both meet the qualifications for either version of the credit. Because both versions of the credit have qualifications that you and your wife do not meet (you as a repeat buyer and your wife as a first-time buyer), no credit is available to you at this time.
Q. My husband and I purchased a home with my VA Benefits in 1981. We separated and divorced and the home was foreclosed on in 1984. He has moved on and purchased several homes since. I have not, but now I would like to purchase and want to know if I would be eligible for the tax credit as a first-time homeowner. It has been more then 20 years. What would I be facing? Would I be considered a first time buyer since this purchase would be solely my own?
A. As long as you aren’t married to an individual who does not currently qualify for the credit, you meet the requirement of not owning your principle residence within the three years preceding the purchase of your house.
Q. I have lived in my house the last 10 years and sold and closed on a new home on Nov. 23rd, 2009. I recently married, and my new wife has not lived in a home for 5 consecutive years. Do we qualify for the $6500 tax credit? The question is “Do both husband and wife have to have lived in a house for 5 consecutive years, or only one of the two taxpayers?” If we don’t qualify, it seems like a catch 22. I can’t qualify as a first time home buyer for the $8000 credit and my wife can’t qualify for the $6500 because of not living in a home 5 consecutive years
A. The law states that married couples must both meet the qualifications for either version of the credit. Because both versions of the credit have qualifications that you and your wife do not meet (you as a repeat buyer and your wife as a first-time buyer), no credit is available to you at this time.
Q. I purchased a home in 2003 as a single person. I later got married, and we sold our house in July of 2009. We haven’t found a new home yet and are currently renting until we find one. Are we eligible for the $6,500 credit? We owned the home for 6+ years, but technically at the moment we’re renters.
A. As long as you meet the rule that you owned and lived in the house for five consecutive years out of the eight years preceding the purchase of the new house AND you purchase the house or are under contract to purchase the house before May 1, 2010, you are eligible. If you are under contract to purchase, you must finalize the purchase before July 1, 2010.
Q. I have owned and lived in my house for 6 1/2 years. I have been married for 2 1/2 years. My wife is not on the deed for my first house, but she has been living here for 5 years. Do I qualify for the tax credit if I buy another house with my wife?
A. The law states that married couples must both meet the qualifications for either version of the credit. Because both versions of the credit have qualifications that you and your wife do not meet (you as a repeat buyer and your wife as a first-time buyer), no credit is available to you at this time.
Q. My fiancé does not currently (nor has ever) own a house. I have owned my house for 8 years. If we buy a house together in early 2010 then get married later in 2010, would we be eligible for BOTH the $6,500 repeat homebuyer credit AND the $8000 first time homebuyer credit, only one or the other, or only a portion of both?
A. The law states that married couples must both meet the qualifications for either version of the credit. Because both versions of the credit have qualifications that you and your wife do not meet (you as a repeat buyer and your wife as a first-time buyer), no credit is available to you at this time.
Q. I know this is probably a very popular question, but I really would like to know his answer to this common situation: Is a couple eligible for the $6,500 repeat homebuyer credit when only one spouse owns the house and his name is on the mortgage (house bought prior to couple’s meeting/marriage) and the other spouse has only lived there since they got married (1.5 years ago)?
A. The law states that married couples must both meet the qualifications for either version of the credit. Because both versions of the credit have qualifications that you and your wife do not meet (you as a repeat buyer and your wife as a first-time buyer), no credit is available to you at this time.
Q. I was married in August 2008. We are buying a new home with a close date of Feb 1st. I qualify for $6,500 as a repeat buyer but my wife has never owned a home. Do we cancel each other out? So we can’t get the $8,000 that she would qualify for and I can’t get the $6,500 that I qualify for? This seems illogical and I would doubt that it was the goal of Congress.
A. The law states that married couples must both meet the qualifications for either version of the credit. Because both versions of the credit have qualifications that you and your wife do not meet (you as a repeat buyer and your wife as a first-time buyer), no credit is available at this time.
Q. My husband and I have a question. We closed on our home April 1, 2008 and the start date for the credit was April 8th or 9th I believe, so we missed it by just a few days. So, we were wondering if there is any leniency to that date and if there is any way that we too could receive the tax credit.
A. There is no credit for those home purchases before April 9, 2008.
Q. My husband and I married last January. He had been sole owner of his house for more than five years, and I had been sole owner of my house for about three years. I rented out mine and moved into his. We sold his last month and are closing on a new one next week. If we file jointly, is it possible for us to get some or all of the repeat buyer’s credit on the basis of his eligibility?
A. The law states that married couples must both meet the qualifications for the credit. You do not meet the requirement to have owned and lived in your principle residence for five consecutive years out of the eight years preceding the purchase of your new home.
Q. We have just settled on our house on October 30. We lived in our previous house for over five years and we meet the income requirement. Our new mortgage is an upgrade from our former mortgage. Are we ineligible for any of the $6,500 tax credit?
A. As long as the purchase price of the new house is less than $800,000 and you meet the other qualifications, you should qualify for the credit. As one of our savvy readers noticed, the house was purchased in October and does not qualify for the credit. The $6,500 credit applies to purchases after Nov. 6.
Comments
Do any of your answers change with respect to the repeat homebuyer credit in the situation where both spouses do not qualify for the credit but the new home is purchased solely in the name of the qualifying spouse?
If both spouses don't qualify for the repeat credit, neither of them can get it. There is no credit if one person qualifies and the other doesn't. - ema
Posted by: Ann | December 9, 2009 11:48 AM
Is the $8000 first time home buyer tax credit & the $6500 repeat buyer tax credit based on the purchase amount? For example if a first time buyer purchases a home for $220,000 the tax credit would be 10% of the purchase price or $2200 not $8000, that why the purchase limit is $800,000 to get the maximum tax credit of $8000. Is this correct or not. Please advise. Thanks.
It is based on a percentage of the purchase amount. Ten percent of $220,000 is $22,000, not $2,200. And 10 percent of $800,000 is $80,000, not $8,000. And you work for a mortgage co? - ema
Posted by: Steve Folk | December 9, 2009 12:40 PM
I thought the $6,500 repeat home buyer credit became effective on Nov. 6th. How can you tell the person who wrote in about buying a house on October 30th, that they qualify for the credit?
Good catch, Phoebe. Perhaps Mr. Steber got a bit tired after answering all those questions. The $6,500 credit applies only to purchases after Nov. 6, not before.
Posted by: Phoebe | December 9, 2009 2:43 PM
Does the repeat house credit apply if you own your home and you want to purchase a second home as a rental
property?
No, the new home must be your new principal house. You don't have to sell the old one, though - ema
Posted by: Paul | December 9, 2009 5:31 PM
I bought a house with my husband in Feb, 2002. We divorced in May of 2007, the house was deeded to me. I sold the house in June of 2007. I rented from then until June of 2009 when I bought a house for $250k. Do I qualify for any credits?
Sorry, no. You don't qualify as a first-time homebuyer because you bought another house within a three year period of selling your first one. And you bought a house in June 2009, so you miss out on the $6,500 because the house must be purchased after Nov. 6. - ema
Posted by: Julie | December 9, 2009 6:26 PM
My husband and I bought our first home on Feb 24, 2009. We took the $8000 First Time Homeowner credit with the 2008 federal return. Can we take the $6500 credit in 2009?? or First Time Homeowner credit again in 2009??
Where on the tax supplement forms do we put the new windows, heaters, etc for credit?? All I could find were the big stuff like solar roofs, wind mills, and things business but not homes would have!!!
No, you already got your credit. You can't double dip.
Check the IRS Web site for the forms. - ema
Posted by: Beverly | December 9, 2009 6:42 PM
My wife and I bought a house in 2001, lived in it until 2008 then sold it. We bought another house in March of 2009. Are we eligable for any tax credits?
No. You don't qualify for the first-time homebuyer credit because you had an ownership interest in a house within three years of buying a new one. The $6,500 credit applies to those buying a house after Nov. 6. - eileen
Posted by: Steve | December 9, 2009 8:00 PM
Can I claim the credit if I close before June 2010 base on the fact my spouse has lived in my house since marriage from late 2005 to early 2010? Going by a calendar year?
Sorry, your question is unclear to me. I don't know if you're saying your spouse is no longer in the house or what. And I'm not sure what your asking about the calendar year. - ema
Posted by: jon lightle | December 9, 2009 8:59 PM
my husband and I purchased our home in feb. of 2006 and we still live there. It is our first home. Do we qualify for any credit at all?
No, you bought your house before any of these tax credits were created. - ema.
Posted by: lori | December 9, 2009 10:11 PM
I bought and own home since 1995, it was my personal residence but now is a rental for the last 2.5 years
I rent eleswhere , If I buy
a new personal residence in the next 2 months , can I claim the tax credit?
I believe so, but I will run it by a tax pro to double-check. I've already sent a batch of tax questions out, so check back on the blog next week. - ema
Posted by: antonio rodriguez | December 10, 2009 7:35 PM
Do units (rental property) qualify as a house if we lived in one of them? Also, if both spouses lived in the house for 5 years, but only one of them owned it for the first 3 years, and the 2nd spouse was added to the deed 2 years ago, do they still qualify for the $6500 credit?
I believe you have to have owned the house for five years, not three. - ema
Posted by: Nancy | December 14, 2009 10:54 PM
I bought land on Dec 5, 2009, and a mobile home on Dec 13, 2009. The mobile will go on the land in Jan 2010, then a well and septic will be installed in Feb, electric lines will be run to the land in March and it will be remodeled in March as well. My wife and I have both lived in a rental since Aug 1 2007. If we keep the rental as principal residence until Aug 1of 2010 (moving day) can we take the first time homebuyer credit of $8,000?
Not sure. But I'll run this question by a tax pro. It will take some time to get the answer given the holidays, so keep checking the blog. - ema
Posted by: Tom in Colorado Springs | December 17, 2009 10:53 PM
My wife and I sold our home in Connecticut on October, 6th. We lived in the home for 22 yrs and sold for $240K. We are hoping to close on a $130K home in Florida middle to end of January. Do we qualify for the $6,500K homebuyer's credit?
I don't see why not, unless there's something you are not telling me.
By the way, I hope to host an online chat on this blog at noon, Jan. 5th, with a tax professional who will answer readers' questions. Tune in if you have more. - ema
Posted by: Caesar Meredith | December 18, 2009 2:51 PM
We closed on November 4, 2009 and owned our first home for six years. Is there any leniency? How could we close on November 7th (the earliest and a Saturday)?
I don't believe there is any leniency. There has to be a cut off date at some point. But we are holding an online chat Tuesday, Jan. 5, on this blog at noon with a tax professional, and I will forward your question. Check the blog then or replay the chat later - ema
Posted by: Sarah Tillo | January 3, 2010 12:02 AM
We rented a primary residence in Ocotber 2003, but did not purchase this property until 2006. We lived there until selling the house Dec 1, 2009. Do you have to have owned the whole 5 years or just resided in the house the 5 years to qualify for the move up $6500? We have now purchased another residence in another state on Dec 16, 2009.
Join our live chat on this blog tomorrow, Jan. 5, at noon where we will have a tax professional answer questions. I'll pose yours to him. - ema
Posted by: Jeff Jordan | January 4, 2010 12:18 PM
My wife and I have owned and lived in the same house for more than 5 years, but we separated last month. If we purchase a new home, would we qualify for the repeat buyer tax credit if only I use it as my primary residence?
We're having a live chat on the homebuyer credit at noon, Jan. 5, on this blog. You can check the blog for the live chat then to ask your question or I will try to ask the tax professional for you. - ema.
Posted by: Dan | January 4, 2010 5:52 PM
Can I e-file if I get the 6500.00 credit because I know you can't e-file if you are a first time buyer after Nov.6th
Sorry, don't know the answer. I suggest you try the IRS site at www.irs.gov - ema
Posted by: kay | January 5, 2010 1:15 PM
My husband and I sold our house we have lived in for 13 years. We closed on this sale on November 16th. We are in the process of building a new house. We did a one-time close with the bank on December 11th, so we won't have to close on the loan again after the house is completed in May. Do we qualify for the repeat homebuyer's credit for our 2009 return since the closing was done in 2009 or do we have to wait until we move in the house in 2010 and claim it on our 2010 taxes?
Sorry, not sure. We periodically send questions to a tax professional but it may be some time before we do that again. Check the blog under the tax category, because a similar question may have been asked before. Or, for a faster answer, please check out the IRS Web site at www.irs.gov - ema
Posted by: Karen | January 6, 2010 11:23 PM
My girlfriend (at the time) bought a condo in July 2003 as a single person. We got married a few months later, in November 2003. The condo was our primary residence since 2003, thus we both meet the five consecutive years critiera. In addition, we have been filing jointly since 2003. We sold the condo in November 2009 and purchased a new home together last month. My questions is eventhough my name was never on the deed/mortgage on the condo would we qualify for the $6,500 credit?
Please check the live chat on this blog from Jan. 5, and check the tax category on the blog. We've had similar questions asked and answered by tax professionals. - ema
Posted by: Eric | January 8, 2010 9:13 AM
I guess this is harder than i thougt. We lived in a single wide mobile home for 4 years that we bought in 1998. In 2002 we bought a triple wide mobile home and have lived in it for almost 8 years. Do we get any kind of a credit for this. We don't plan on buying or selling but we just wonder do we get anyting...
Thanks,,,
Sorry, no. Just because you bought a home 8 years ago, doesn't entitle you to the extended homebuyer credit. - ema
Posted by: Lori | January 9, 2010 11:40 PM
I closed on my new home on November 6, 2009 and owned my previous home for 10 years. Do I qualify for the repeat buyers tax credit?
Oh no. The credit is for deals done after Nov. 6, so Nov. 7th on. I don't think you will. - ema
Posted by: T | January 12, 2010 2:02 PM
When did the "Repeat Home Buyer" credit come into effect? I divorced and bought my home January 2008 and would love to go back and take the credit.
Sorry, takes effect on house purchases starting Nov. 7, 2009. - ema
Posted by: Sissy | January 12, 2010 6:19 PM
i bought my home (my 1st an donly home) in January 2003 while i was married. I got divorce in 2006 and still live in the same home. Am i qualified for any on these tax credit?
Thank you
Are you buying another house? If you are buying another principal residence, you might qualify for the repeat buyer credit. - ema
Posted by: Kissimmee Homeowner | January 13, 2010 5:06 AM
I recieved a homebuyer credit last year or 7500 dollars. a few months later this credit was increased to 8000 dollars and the 15 year repayment was discontinued. Can I change my 7500 dollar credit to the new non-repayable version?
The $7,500 credit applies for purchases made from early April 2008 through the end of 2008. If you purchased your house then, you won't get the $8,000 credit which applies to purchases made in 2009 through spring of this year. - ema
Posted by: Chester A Powell III | January 13, 2010 8:16 AM
I bought my house in April 2004, got married in July 2004 but we didn't put her on the mortgage. We sold it and bought a new one Nov 20, 2009. Do we qualify? My concern is that she wasn't on the mortgage. Any thoughts on whether the federal government considers both of us to have owned the house? We meet the reqs in the income arena.
It doesn't matter that she wasn't on the mortgage, but I'm not sure about the rules if her name wasn't on the deed. I'm forwarding questions next week to the IRS for answers. I'll include yours, so check back on the blog later. - ema
Posted by: Nathan G | January 15, 2010 10:54 PM
I bought my home 12 years ago. I got married 7 years ago. My wife never made it onto the grant deed, though I clearly considered her an owner of the property. She lived there at least 5 years before we sold the house last year. We're renting now.
Will we qualify if we buy something next month? Or, do we have to prove my wife was on the grant deed?
I'm sending questions to the IRS today and will forward yours. Check back onthe blog later for the answer- ema
Posted by: Thomas | January 19, 2010 2:30 AM
My fiance bought this house in 1998 refinanced in 2007.. Would he qualify for either of the tax credit?
No. Refinancing a loan is not the same as buying a new house. Sorry. - ema
Posted by: Tracy A | January 28, 2010 12:32 AM
Part A. Our co-op converted to a condominium structure this fall. We received new deeds, as we previously owned shares. I owned and occupied the home for over five years prior. Would this be a "new home" purchase?
Part B. If so, the closings for the 400+ units occurred over several weeks. I signed my paperwork on 10/28, but items were not filed by the conversion company until 11/7. The co-op share loan was not paid until 11/15. What day was the home "purchased"?
I am doubtful that you would be eligible. It doesn't sound like a new purchase but just a change in financing. But I suggest you call the IRS on this one at 800-829-1040- ema
Posted by: Sheri | January 30, 2010 4:50 PM
I have been in my home for 23 years, divorced 3 years ago but still in home and sole owner. Got remarried in december 2009 and added him to deed. he previously owned his own home solely for 15 yrs. do we qualify for the 6500 credit or no because we got married?
Sorry, no. You must buy a new principal residence. The goal is to boost housing sales. If everyone could get a $6,500 check for just putting someone else's name on the deed, we'd all do it! - ema
Posted by: sharon p | February 2, 2010 4:31 PM
I bought my home on Dec 15, 2005. The purchase price was $620,000.00 I still live there. Do I qualify for any of the tax credits?
Sorry, no - ema
Posted by: Stefanie | February 3, 2010 10:37 AM
I will have owned my house for 5 years as of 5/31/10 (purchased 5/31/05). If I am in a contract by 4/30/10 and close by 6/30/10, would I qualify?? Is it in 5 years consecutive years from original closing date?
Check back on the blog later, running questions by a tax pro. - ema
Posted by: Sarah | February 4, 2010 1:35 PM
My divorce was final 10/2009. On 12/31/2009 as specified in the divorce decree I was awarded the primary residence under the condition that I qualify for a new loan under just my name and the title would be under just my name as well. This transaction was for the purchase of the home and the old loan and line of credit were closed. I have lived in the home since 2000. Would I qualify for the repeat home buyer credit?
Only if you are buying an entirely new principal residence. Refinancing an old house doesn't count. - ema
Posted by: Theresa | February 6, 2010 2:46 PM
My husband is disabled and does not have to file income tax on his income. He signed the papers on December 31, 2009 for our new home with a VA loan. He purchased his last home with his wife (now deceased) in 1992. He still owns that home and has been renting it since we married in June 2009. Does he qualify for the $6,500 credit? And would this benefit him enough to file income tax? We are currently living in my home, purchased in 1976, until the "new" house can be remodeled.
Both spouses must qualify for the credit to receive it. It's not clear to me with the information provided whether you both do. Check our blog under the category of taxes, for Q&As about the $6,500 credit. Or, try the IRS site at www.irs.gov. - ema
Posted by: Teresa | February 8, 2010 8:27 PM