UPDATE: On Nov. 5, the House passed
the Senate's first-time home buyer credit provisions discussed in this post. Obama is expected to sign the bill, possibly as soon as Friday, Nov. 6.
Read more on the final tax credit in
Home buyer credit new definitions, limits
The Senate finally extended unemployment benefits, with continuation of the first-time home buyer credit part of the deal late this afternoon.
As expected, and blogged about in Reconfigured home buyer tax credit, the $8,000 credit would stay in place through April 30, 2010, with a two-month grace period for folks with signed contracts by that date.
A second credit of $6,500 would be available for current homeowners who have lived in their residence for at least five years.
Now we'll see if the House will accept the Senate's home buyer credit tweaks. We shouldn't have to wait too long.
House Majority Leader Steny Hoyer, D-Md., has said that Representatives would act quickly once the Senate completed its job. Indications are that the House will agree to the Senate's home buyer tax credit modifications.
I do hope, however, that the final version does include some safeguards to stem the fraud associated with the tax credit.
Roth & Company, P.C.
The madness of crowds: Senate votes 98-0 to extend homebuyer credit
So the $8,000 first-time homebuyer credit is riddled with fraud and costs taxpayers $43,000 to $80,000 for each home bought…
Janet Sieham
What does “lived in home for 5 Consecutive Years” mean? I purchased home march 2006. If I sell in march 2010, am I eligible? Do you count 2006, 2007, 2008, 2009, 2010 if Lived in house during those calendar years? That would be 5 years. Or is it being counted living march 2006 – march 2007, march 2007 – march 2008, march 2008 – march 2009, march 2009 – march 2010, which it would be counted as 4 years? Is it that vague to be interpreted in any of these ways? Can anyone tell me 100% which one it is?
Kay @ Don't Mess With Taxes
Janet,
I’ve looked at the legislation and it’s not specific. The IRS is going to have to issue some guidance here. I suspect, however, that it’s going to be a date-to-date counting, not lived in a house during part of five consecutive tax years. If it isn’t precise, someone could have lived in a home from Dec. 1, 2006 to Jan. 30, 2010 and argue they were in the house for five tax years. I’ll keep searching and checking and get back to you (and/or blog it) as soon as I find an exact answer.
Kay
Jeff Jacobs
You count backwards 8 years from the date of the purchase of the new home. In 5 consecutive years during that span, you had to own a “principal residence” in which you spent the majority of your time.
So if I buy a new home on February 1, 2010, to be eligible for the credit, I must have had a “principal residence” on any 5 consecutive of these years:
– February 1, 2002 through January 31, 2003;
– February 1, 2003 through January 31, 2004;
– February 1, 2004 through January 31, 2005;
– and so on through Feb. 1, 2008 thru Jan. 31, 2010.
Kay @ Don't Mess With Taxes
Thanks, Jeff, for your very good response to Janet! Always appreciate the help!