I understand that even if I have previously owned a home, I may be eligible for the homebuyer credit. Can you explain the rules?

If you are a long-time resident who has owned and resided in a home for at least five consecutive years of the eight years prior to the purchase date the law may allow you to claim the homebuyer credit.  You must buy your new home after Nov. 6, 2009, and before May 1, 2010. Alternatively, if you sign a binding contract on or before April 30, 2010, you must purchase or close on the new home on or before June 30, 2010. Remember, if you claim the credit as a long-time resident of the same main home, you will have to provide documentation showing you lived in that home for a five-consecutive-year period during the eight years ending on the date you buy the new home.

I’m already a homeowner. If I buy another home after Nov. 6, 2009, to use as my principal residence, do I have to sell my home to qualify for the homebuyer tax credit?

No. If you meet all of the requirements for the credit, the law does not require you to sell or otherwise dispose of your current principal residence to qualify for a credit of up to $6,500 when you buy a replacement home to use as your principal residence. The requirements are that you must buy, or enter into a binding contract to buy, the replacement principal residence after Nov. 6, 2009, and on or before April 30, 2010, and close on the home by June 30, 2010. Additionally, you must have lived in the same principal residence for any five-consecutive-year period during the eight-year period that ended on the date the replacement home is purchased. For example, if you bought a home on Nov. 30, 2009, the eight-year period would run from Dec. 1, 2001, through Nov. 30, 2009.

Do I need to own a home at the time I buy my new home to get the credit as a long-time resident of the same main home?

No, you do not have to own a home at the time you make your new purchase. But you must satisfy the criteria for having owned and lived in a home as your primary residence for a five-consecutive year period that falls somewhere within the eight-year timeframe that ends on the date you buy the home on which you are claiming the credit.

Thus, if you make a qualifying home purchase on Nov. 30, 2009, the eight-year period would run from Dec. 1, 2001, to Nov. 30, 2009. If you bought your previous home on Nov. 1, 2003, and continued living in it as your main home until at least Oct. 31, 2008, you will meet the five-consecutive year requirement. In this situation, you will still qualify for the credit even if you didn’t own a home from Nov. 1, 2008, to Nov. 30, 2009, but you instead, for example, lived in a rental home during that period.

If you are interested in purchasing a home and qualify for the Move Up/Repeat Buyer Tax Credit, feel free to contact one of our Home Loan Specialist for more information or to get prequalified for your loan. Remember, to take advantage of the credit, a purchase agreement must be signed by April 30, 2010 and the closing documents signed by June 30, 2010.