Dennis Norman
UPDATE 11/05 2:00 pm – The House has passed the bill by a vote of 403 – 12 – It now goes to the President who is expected to sign today or tomorrow.
UPDATE 11/05, 12:35 pm- To read the section of H.R. 3548 that contains the details concerning the first-time home-buyer tax credit click here.
If you care to read the entire bill click here.
UPDATE: At 5:28 p.m. by a vote of 98 to 0 the Senate Passed H.R. 3548 – It now will go to the House where it is expected to pass and then go to the President for him to sign into law.
The Senate voted 97-1 at 12:16 pm today (eastern time) to end debate on H.R. 3548 (The Unemployment Compensation Extension Act of 2009) which includes the amendment extending and expanding the home-buyer tax credit program.
So where does it go from here?
- The Senate will need to vote on passage of the bill with the amendment.
- If the Senate passes the bill, then the House could take up the bill in the next day or so. The thought is they will accept the Seante bill and vote on it. However, if this is not the case and they make changes, then that will slow down the process.
- Assuming the House passes the bill without change then the bill will then go to the President for his signature. The National Association of REALTORS has stated the white house has indicated the President is planning to sign the bill if passed.
I’ll keep you posted as I learn more…
Below is a recap of provisions in the amendment from the National Association of REALTORS(R):
- Credit available for purchases before May 1, 2010. Prospective purchasers with binding contracts in place as of April 30, 2010 will be allowed an additional 60 days to complete the transaction.
- Credit remains at $8000 for first-time purchasers. No change to definition of first-time purchaser.
- New $6500 tax credit for repeat buyers who purchase between December 1, 2009 and May 1, 2010. Repeat buyers must have lived in their homes consecutively for 5 of the previous 8 years.
- Income limits are expanded to $125,000 on a single return and $225,000 on a joint return. Current law $20,000 phase-out retained.
- New anti-fraud limitations are imposed.
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I had been in my current property for over 5 years and I have a signed sales contract with closing for November 12th. Also I have a signed contract for the purchase of another property – same closing date – November 12th. I am trying to understand if the new provision in the tax credit for $6500 will qualify me. If the new law is signed would it be effective December 1st, 2009? Or will it retroback and take into consideration sales/purchases prior to December 1st? Originally I was thinkig pushing back my purchase to December 1st (with seller’s agreement), but now I am thinking that I will have to do the same with the sale of my current property. Any advise? $6500 is a lot of money to pass by.
Denis,
Thanks for you comment..For starters, I am not an attorney and this is not legal advice. Having said that, I have been very closely following the home-buyer tax credits though. Remember, this is not fully passed yet, still needs to go through the House and President, but assuming it passes in it’s current form, it states for existing home owners they have to purchase after Dec 1st…I’m not sure if this means not enter into a contract to purchase until after Dec 1st or just close the transaction after Dec 1st. My guess is, it is based upon the closing of the sale. Therefore if that is the case and I was you I would talk with the seller, explain the situation and see if you can negotiate to change the closing until after Dec 1st. For whatever inconvenience this may cause you it may be well worth it to get the $6,500 credit.
Good luck!
Actually, December 1st is NEVER stated in the bill….effective date would be date of enactment…probably this week.
Where can we clarify is it is December 1st or the date of the enactment? The date of the enactment – is this the same date the President signs it? It is very important to me as my closing for the purchase is scheduled for November 12th and I had been in my current house (which is also scheduled to close on November 12th) for over 5 years. I do not want to move the closing to ater Decemebr 1st, 2009 if at all possible. Any advise would be appreciated…
Denis,
The addition of long-term homeowners (which is what you appear to be) is in subsection (b) of the bill…According to the effective dates below which I copied from the bill it appears you must purchase after enactment of the bill…so assuming the President signs it today or tomorrow after that. I don’t know that it is clear what defines “purchase” though..the date of agreement to purchase or the closing…My guess is the closing date, but that is only a guess…
(j) Effective Dates-
(1) IN GENERAL- The amendments made by subsections (b), (c), (d), and (g) shall apply to residences purchased after the date of the enactment of this Act.
(2) EXTENSIONS- The amendments made by subsections (a), (f), and (i) shall apply to residences purchased after November 30, 2009.
(3) WAIVER OF RECAPTURE- The amendment made by subsection (e) shall apply to dispositions and cessations after December 31, 2008.
(4) MATHEMATICAL ERROR AUTHORITY- The amendments made by subsection (h) shall apply to returns for taxable years ending on or after April 9, 2008.
Phil, The addition of long-term homeowners (which is what you appear to be) is in subsection (b) of the bill…According to the effective dates below which I copied from the bill it appears you must purchase after enactment of the bill…so assuming the President signs it today or tomorrow after that. I don’t know that it is clear what defines “purchase” though..the date of agreement to purchase or the closing…My guess is the closing date, but that is only a guess…
(j) Effective Dates-
(1) IN GENERAL- The amendments made by subsections (b), (c), (d), and (g) shall apply to residences purchased after the date of the enactment of this Act.
(2) EXTENSIONS- The amendments made by subsections (a), (f), and (i) shall apply to residences purchased after November 30, 2009.
(3) WAIVER OF RECAPTURE- The amendment made by subsection (e) shall apply to dispositions and cessations after December 31, 2008.
(4) MATHEMATICAL ERROR AUTHORITY- The amendments made by subsection (h) shall apply to returns for taxable years ending on or after April 9, 2008.
dennis@informationstlouis.com
Dennis Norman
1
Dennis, thanks for the information. I do agree with you that sale is probably defined as the date of closing since many sales contracts do fall thru and the closing does not take place. I read somewhere that due to a number of fraudulent claims IRS will be requesting Settlement Statements to verify the validity of the sale.
so, I sold my home this summer, to buy non contingent. I haven’t bought yet as the short sale market and non short sale market is ridiculous. i.e. still looking to buy. is there a window of time in which I must buy from the sale? would it have been better to be a contingent buyer? how do the semantics of this work?
Hi Anna
For starters, I am not an attorney nor CPA so this is not legal or tax advice..however, I have been following the tax credit issue closely…Based upon what you have said, assuming you owned the home you sold for at least 5 years (and occupied it) it appears you would meet the requirement of having owned and lived in your residence for 5 of the prior 8 years…next you need to buy a house..the new bill allows until April 30, 2010 to do this (or until July 1 if you have a binding contract by April 30th) so I think as long as you can buy a new home by April 30th, and meet the other qualification (income, etc) you probably can get the credit..
I would talk with your cPA or tax professional first to be sure…
Oh yeah, and make sure the President signs the bill
I also have posted updates to another blog, http://www.RealEstateConsumerNews.com it’s a blog more geared toward homeowners…you may want to check out the update there because there are about 50 comments/questions/answers from people and you can get a lot of info reading the comments and answers…the link that that post is:
http://realestateconsumernews.com/financing/home-buyer-tax-credit-extension-update-house-passes-bill-on-to-president-for-approval/
Do we know if the President signed the Bill into law yet? According to this link: http://www.upi.com/Real-Estate/2009/11/06/How-the-New-Homebuyers-Tax-Credit-Works/4991257514845/ the efrfective date is December 1st, 2009 for those who are purchasing subsequent property after living in theirs for 5 years. It is confusing information because I cannot anywhere find in the Bill that the date is December 1st, only found that it is effective on the date of enactment. My closing is next week
Denis,
As far as I know the President has not signed the bill yet..I receive news releases from the White House and have not seen anything on it…
As for your other question, I disagree with what UPI has out there, but I may very could be wrong…On another blog we had many discussions about the effective date for existing home owners – here’s a reply I posted earlier this morning to a comment..it looks like the National Association of Realtors has the same take on it as me…
Comment from: http://realestateconsumernews.com/financing/home-buyer-tax-credit-extension-update-house-passes-bill-on-to-president-for-approval/
OK, for what it’s worth, it looks like the National Association of Realtors agrees with my take on when existing homeowners become eligible (as soon as bill is signed) and what defines purchase date (the closing date)…I just updated my post with this info and link to some FAQ’s NAR just published…here is one from NAR on this issue:
Question: I am an existing homeowner. On October 25, 2009, I signed a contract to purchase a new home. I have lived in my current home for more than 5 consecutive years and am within the new income limits. I will go to settlement on November 20. If President Obama has signed the bill by the time I go to settlement, will I qualify for the new $6500 tax credit?
Answer: Yes. The existing homeowner credit goes into effect for purchases after the date of enactment (when the bill is signed). There is no reference to the date of contract for the new credit. The provision looks solely to the date of purchase, which is generally the date of settlement.
Bill signed: http://money.cnn.com/2009/11/05/news/economy/Extending_unemployment_benefits/?postversion=2009110612
From IRS web-site: http://www.irs.gov/newsroom/article/0,,id=204671,00.html
Denis, thanks for posting the IRS link…I checked it out and it looks consistent with everything we have discussed here which is good…unfortunately no clarification on the timing of the purchase for existing home owners but I think we have already beat that one to death..
i bought a home as a moveup. on a lake. i’v been in my home for 30 years and it has’nt sold yet. we have closed on the moveup property.am i out of luck for the 6500?
what about the poor sucker that bought and closer on july 11 2009 but has not sold own place yet? does he lose out on the 6500
Paul,
You don’t say whether you have closed on the new moveup home you bought yet…but, assuming you have either not closed on it yet (but will by April 30, 2010….well, technically I guess June 30, 2010 assuming you have a binding contract) or you closed on it AFTER November 6, 2009, then, provided you meet the rest of the criteria (income limits, etc) then I think you would qualify for the credit….there is nothing I have found in the legislation or on the IRS site that says you have to have actually SOLD your prior home, just that you lived in it for 5 consecutive years….If you closed on the move-up house on or before November 6, 2009 then I think you are out of luck….of course, you should check with your tax professional or CPA though to be sure…
Paul, for this scenario, if an existing homeowner bought a home on or before November 6, 2009 they are not going to be eligible for the credit….As bad as this may sound, it actually makes sense…the credit is meant to stimulate “new” sales and help reduce inventory, not reward people that already bought…..
Home buyer tax credit extension update; Senate Passes Bill
Thanks for sharing
Lived in house for 7 consecutive years.
Sold and closed May 18, 2009.
Purchasing home in December (close prior to April)
Anyone have any idea if I will be eligible (having met income
guidlines, etc…).
I have read quite a bit. . . understand when the purchase window opens and closes but unclear as to when the sale of existing home may occur. . . must it be in that same window of time?
Hi Katherine,
It sounds like, provided you meet the other requirements (income, etc) that you will be eligible for the credit of up to $6,500…
Of course, check with your CPA or tax professional to be sure…
Also, I did a post on the tax credits last week with several updates following the legislation through passage…there were a couple of hundred comments with some good questions and answers on the credits…
it’s worth reading through the comments if you have questions on the homebuyer tax credit…the post and comments are at:
http://realestateconsumernews.com/financing/home-buyer-tax-credit-extension-update-house-passes-bill-on-to-president-for-approval/
I couldnt agree more good post.