After a successful trial run that boosted home sales and brought buyers back to the table, the government has extended the $8,000 first-time home buyers tax credit through June 2010.
Now it’s not just first-timers who are benefiting — the president also signed off on a new $6,500 tax credit for existing homeowners who purchase a new primary residence.
Combined, the dueling tax credits may help spur even greater growth in the housing market, real estate experts say.
The new version of the tax credit has the potential to stimulate the housing market even more than the old version due to the fact that more people will qualify under the new rules,” Gibran Nicholas, chairman of the CMPS Institute, an organization that certifies mortgage bankers and brokers, told CNN after the bill’s passage.
In particular, the new “move-up” tax credit may reach a wider audience of willing buyers. Those who have owned their current home for at least five straight years in the previous eight years and meet a few other key criteria are eligible for the new “move-up” tax credit.
While it’s a catchy nickname, the “move-up” designation might be a bit misleading for consumers — home buyers don’t actually need to purchase a bigger or more expensive property.
Buyers must also have an adjusted household income of $125,000 or less if filing singly and of $225,000 or less if filing jointly. The “move-up” credit is already in effect, and thousands of homeowners are expected to take advantage in the coming months.
Here are a few other key parts of the new “move-up” credit:
- The home purchase price cannot exceed $800,000.
- You must live primarily in the new purchase. Buyers aren’t required to sell their existing home, so many should consider renting the space. Investments and second homes do not qualify.
- Buyers aren’t locked into purchasing single-family dwellings. Acceptable types include condos, manufactured homes and even house boats.
- Those who purchase a “move-up” home in 2009 can claim the credit on their 2009 tax returns or file an amended 2008 return. The purchase must be before Jan. 1.
- There are more fraud-prevention measures in place than for the previous program, so be prepared to have your finances scrutinized.
- Military members deployed on duty outside the United States have until July 1, 2011, to close on a property, provided they were deployed outside the U.S. for at least 90 days between Dec 31, 2008 – May 1, 2010.
Editor’s Note: Stay tuned, because more on this topic is coming tomorrow.
This guest post was written by Brandon Laughridge of Mortgage Loan Place. MLP specializes in educating consumers about the requirements for FHA loans and on home mortgage loans in general.
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