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6500 Tax Credit For Move Up Buyers

Posted on November 17 By Justin McHood

With the success of the $8000 tax credit for first time home buyers in 2009 - Congress has recently decided to add an additional incentive for people who are not first time home buyers - but move up home buyers.

Move up home buyers are those people who currently own a home, but go out and buy a different home (usually a bigger or nicer one) to live in as their primary residence. For much of the 1990's and early 2000's, the move up home buyer was the backbone of the housing market.

According to UPI, the move up home buyer tax credit may not spur as many new sales as the first time home buyer credit:

"On a percentage basis, the effect of the tax credit would be much smaller for current homeowners," observed Thomas Popik, research director for Campbell Surveys. "We estimate that the first-time homebuyer tax credit will result in a 10 percent increase in home sales from March through November of 2009. We'd expect the effect of the proposed tax credit for current homeowners to be about half as large--from December until the tax credit expiration in the spring of next year, it might be five percent of three million transactions, or about 150,000 incremental home sales. Incremental sales to first-time homebuyers could be an additional 300,000, for a total of 450,000 incremental sales due to the tax credit extension."
Here are the highlights to the 6500 tax credit for move up buyers:

  • For "long time resident" homeowners who are purchasing a new home, the tax credit is 10% of the purchase price, with a maximum credit of $6,500.
  • The income limits are now $125,000 for individuals / $225,000 for couples.
  • The purchase price of the house must be below $800,000.
  • Only primary residences are eligible for the tax credit. No second home or investment properties are eligible for the tax credit.
  • For members of the Armed Forces deployed on duty outside the United States, the tax credits are extended to May 1, 2011 (must close before July 1. 2011) Must be deployed outside the U.S. for at least 90 days between Dec 31, 2008 – May 1, 2010.
  • Due to fraud in the 2009 new home buyers tax credit, more fraud prevention measures are now in place - so make sure you qualify before applying for the credit!
If you still have questions about the 6500 tax credit for move up buyers, be sure to ask your loan officer or your CPA - but make sure you hurry before the credit expires this spring!

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