You don't need to sell your home to qualify for the $6500 Tax Credit. Since day one when the extended home buyer tax credit became law I've been waiting for an answer to that question. Well, here's the answer from the IRS site:
Q: I'm already a homeowner: If I buy a replacement home to use as my principal residence, do I have to sell my home to qualify for the homebuyer tax credit?
A: 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. You must buy, or enter into a binding contract to buy, a principal residence 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 period during the eight-year period that ended on the date the replacement home is purchased. (11/17/09).
When I'm out and about I often get asked questions about the tax credit. In this case I got asked the question by someone who is thinking of renting his current residence and upgrading into a bigger home. What I intend to do is pick up on these questions individually, rather than make a long confusing post with reams of information in it. That way you get to pick and choose the topics that apply to you.
For those of you interested in learning more right now, here's the most current link to the IRS site, where they have Homebuyer tax credit questions and answers for homes purchased after November 6, 2009 when the new tax credit became law.
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