NAR Frequently Asked Questions – Homebuyer Tax Credit Changes

Homebuyer Tax Credit Changes National Association of REALTORS® Government Affairs Division 500 New Jersey Avenue, NW, Washington DC, 20001

Here are some of the most frequently asked questions on the changes to the Homebuyer Tax Credit Question:

Existing homeowner credit: Must the new house cost more than the old house?

Answer: No. Thus, for example, individuals who move from a high cost area to a lower cost area whomeet all eligibility requirements will qualify for the $6500 credit.

Question: I am an existing homeowner. On October 25, 2009, I signed a contract to purchase anew 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. IfPresident Obama has signed the bill by the time I go to settlement, will I qualify forthe 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.

Question: I am a first time homebuyer but was not within the prior income limits at the time Ientered into my contract to purchase on October 30, 2009. I will be covered,however, by the new income limits. If the new rules have been signed into law by the time I go to settlement, will I be eligible for a credit?

Answer: Yes. The new income limitations go into effect as soon as the President has signed the bill. The income limit and other eligibility rules will look to your status as of the date of purchase,which is the settlement date. So if the new rules have been signed when you go to settlement,you should be eligible for the credit (or a portion of the credit if you’re within the phaseoutrange).

Question: I am an eligible existing homeowner. I have a fair amount of equity in my home. Ihave found a home with a nonnegotiable price of $825,000. Will I be able to use any of the $6500 tax credit?

Answer: No. The $800,000 cap on the cost of the purchased home is firm at $800,000. Any amountabove $800,000 makes the home ineligible for any portion of the credit. The $800,000 is an absolute ceiling.

Question: I owned my home for 10 years, but sold it two years ago year and have been rentingsince. If I purchase a home, will I be eligible for the $6500 tax credit if I meet all theother eligibility tests?

Answer: Yes. Because you lived in the home for more than 5 consecutive years of the previous 8, you will qualify for the $6500 credit. For example, Say John and his wife bought a home in 2000and lived there until 2008 when he got a divorce. Whether John has been renting or bought in the interim, he WOULD INDEED be eligible for the credit because he owned a home and occupied it as his principal residence for 5 consecutive years out of the last 8 years. The keyword here is “consecutive.” As long as he lived in that house for 5 years straight what he did since 3 years doesn’t impact eligibility.

Question: I am an eligible first time home buyer. I entered into a contract to purchase on November 1, 2009. Do I have to go to closing before December 1? How does the extension date affect me?

Answer: You do not have to close before December 1. Once the legislation has been signed, it will be as oif the Nov 30 date had never existed. Therefore, so long as the contract settles before April 30 (or July 1, worst case), the purchaser will be eligible for the credit.

Whether it was magic in fairy tales, childhood toys, or the miracle of elementary science experiments…many of us are still inspired by the idea of magical transformation.

2009 hasn’t been the best year in Real Estate, so as we roll around to the holiday season, many of my realtor and affiliated friends (who are some of the most “giving” charitable people I know) are looking to balance what they’ve done in years past with their significantly reduced bank accounts.  Enter me, wanting to be as much of a ‘fairy godmother’ as I can be to these wonderful and deserving people.

Like Rumplestilskin, I found a way to spin something that’s does little more than take up space into CASH.  Ok, not enough to line the streets with gold…but depending on the person…enough to help re-invigorate and support the ‘giving spirit’ that the holidays especially bring out in us.

The price of gold per ounce is over $1000 and climbing.  Well yea for the traders and jewelers, but “what does that have to do with me” you ask.   My answer is, “plenty”.  The new well-spring of licensed, bonded precious  metal buyers are moving away from bricks and mortar and into the intimate private party world (ala Tupperware).  Party participants are encouraged to bring their old, out-of-date, broken and otherwise useless precious metal pieces in exchange for a cash offer based on current market rates for the metals.

How many broken, twisted or permanently knotted gold and silver chains; earring backs; tie tacks (who wears those any more?); singles of cuff links and earrings; etc. live in our jewelry and memory boxes serving no use whatsoever?  Or how ’bout dental gold or the single serving spoon from grandma’s sterling silver service that we inherited?  Most of us have that kind of stuff hanging around the house…we hold on to it because we know it has value, we just haven’t known how to accomplish the modern day version of the Rumplestilskin spin of that ‘stuff’ into cash.  Until now.

Ok, you’re NOT going to get $1000 +/ounce for your stuff.  There are costs that these “party” have to cover…but their costs are significantly less (so the rates they offer are traditionally higher) than a jeweler or pawn shop.  Of course if you’re lucky enough to own antique jewelry or special pieces (that might just not be right for you) a jeweler or antique dealer might still be your best resource for those types of pieces.  But for most of us, unless we have direct access to a precious metal refiner, we’re likely to make the most of our cast-offs through these parties.

One note of caution before hosting one at your home or business…make sure your buyer is licensed in your state for purchasing precious metals,   check their BBA reputation, and check their references to ensure you are able to bring someone credible into your circle…and then have fun being the Rumplestilskin for your friends and business acquaintances in time for the holidays!

If you want to join in my party this Thursday, or want more info about this, you can contact me through www.StephonieKirbyChicagoTitle.com; or leave a comment/post for me here; and I’ll do my best.

Over the course of time you’ll learn all kinds of things to help you with your business.  Some might be stuff you already knew but hadn’t thought about, while other subjects might be new to you.  Along the way,  I hope we’ll all learn to take the best of what’s offered and apply it while we have a few laughs along the way.  After all, life’s too short not to have fun while you’re living it!!

For realtors in the Houston area, I’m hosting a “Beginning Blogger” session on Thursday at Chicago Title Cypresswood…you can get the details on where we are and how to get there at my website, www.StephonieKirbyChicagoTitle.com.

After the session on Thursday afternoon, I’ll upload the presentation for ya’ll on “Slideshare.com”.

I’m looking forward to building something really special here together with you.

Until next time, I’m here for you,

Stephonie