FTHB-New Law-$6500?

[zeros]

Have client who is in the process of purchasing a HUD home. Been at it for awhile with much paperwork and so on. It looks, now, like it might be finalized after November 30th. Do this mean that she might be eligible only for the $6500 credit under the new law? She hasn't owned a house before.

[Bees Knees]

The $8,000 credit still applies through the end of June, 2010, provided there is a signed purchase agreement prior to May 1, 2010.

The new $6,500 credit applies to homeowners who have owned their home for at least 5 years. If they sell and purchase a new home, they too are considered first-time homebuyers, eligible for the lower credit.

[ChEAr$]

The $8,000 credit still applies through the end of June, 2010, provided there is a signed purchase agreement prior to May 1, 2010.

The new $6,500 credit applies to homeowners who have owned their home for at least 5 years. If they sell and purchase a new home, they too are considered first-time homebuyers, eligible for the lower credit.

My question on the 6500 credit is what date is it effective?

[AJsTax]

The date the bill was signed

is the date the new provisions on home buyer credit take effect. I believe that is true for all the new provisions for home buyers, including that the HUD statement is now required to be included with the return, but I am not quite 100% sure of that.
We will know a lot more in the next week.

One good question, a person qualifies for the credit as a previous owner of 5 out of the last 8 years, they have signed an agreement to purchase on Nov 1, 2009, but have not closed. Will they qualify?

None of the new provisions seem to have been made retroactive.

[Bees Knees]

My question on the 6500 credit is what date is it effective?

Effective the day after ennactment. Thus, anyone who closes on the house starting 11/7/2009 and before 7/1/2010 (signed purchase agreement before 5/1/2010).

[Bees Knees]

One good question, a person qualifies for the credit as a previous owner of 5 out of the last 8 years, they have signed an agreement to purchase on Nov 1, 2009, but have not closed. Will they qualify?

None of the new provisions seem to have been made retroactive.

The definition of purchase date is the day title changes hands (the closing date). The only reference to a signed purchase agreement is under the new law that requires the written binding agreement to be signed prior to 5/1/2010.

Thus in my opinion, those who had a signed purchase agreement prior to enactment of this new law qualify under the new rules provided the closing date is after 11/6/2009.

This is in effect a sort of retroactive provision.

A negative retroactive provision is the purchase price limit of $800,000, the age limit of age 18, and the not a dependent provision, all of which are effective for any house closing after 11/6/2009. Thus, it is possible a 4-year old movie star dependent who was about to close on the purchase of a $10 million dollar mansion on 11/9/2009 who was expecting to get the $8,000 credit will now all of a sudden find out he/she no longer qualifies for the credit.

Bummer.

[solomon]

From the JCT regarding the 6500 credit.

Long-time residents of the same principal residence

An individual (and, if married, the individual’s spouse) who has maintained the same
principal residence for any five-consecutive year period during the eight-year period ending on the date of the purchase of a subsequent principal residence is treated as a first-time homebuyer. The maximum allowable credit for such taxpayers is $6,500 ($3,250 for a married individual filing separately).

[Larmil]

The $8,000 credit still applies through the end of June, 2010, provided there is a signed purchase agreement prior to May 1, 2010.

The new $6,500 credit applies to homeowners who have owned their home for at least 5 years. If they sell and purchase a new home, they too are considered first-time homebuyers, eligible for the lower credit.

I haven't seen the new law. What is the min. purchase price to get the max $6,500 credit? Thanks

[solomon]

I haven't seen the new law. What is the min. purchase price to get the max $6,500 credit? Thanks

For easier reading, click on download at the JCT.

http://www.jct.gov/publications.html...rtdown&id=3621

[Larmil]

Here is a link to the enrolled version.

http://thomas.loc.gov/cgi-bin/query/D?c111:5:./temp/~c1111OutWc::

Scroll down to Section 11.

For easier reading, click on download at the JCT.

http://www.jct.gov/publications.html...rtdown&id=3621

Thanks for the cite. I Was also interested in Section 17.

[solomon]

Thanks for the cite. I Was also interested in Section 17.

Yeah, I did not see any penalty for non-conformance but I guess that could come later.

[newbie]

I see now the taxpayer must attach to the return a properly executed copy of the settlement statement used to complete such purchase. Will this apply to amendments also?

[newbie]

The new $6,500 credit applies to homeowners who have owned their home for at least 5 years. If they sell and purchase a new home, they too are considered first-time homebuyers, eligible for the lower credit.

I don't see a requirement that the old home must be sold, just want to make sure I'm not missing something. If a qualified home is purchased could the old home be kept for a rental?

[solomon]

I don't see a requirement that the old home must be sold, just want to make sure I'm not missing something. If a qualified home is purchased could the old home be kept for a rental?

The law does not preclude such treatment but does require the home is used as a principal residence for five consecutive years out of the eight years prior to the closing date of a new principal residence. Notice the consecutive years.

[dyne]

H R 3548

The new law may be viewed by entering H R 3548 in Google.
The new home credit for a taxpayer who has had a home for 5 consectutive years out
of the 8 prior years is an extension or part of the first time home buyers credit. See
11(b).
NO credit is allowed for a home which cost $800,000 or more.