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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Denise - This is good information. The question had been asked of me and I had also found the same answer as you. Great news for your prospective buyer.
Wow,I did not even know this until I just read your blog! Thanks for sharing!
I was wondering this myself. Thank you for the great info!
Hi Denise ~ I was surprised to learn of this since I would have assumed otherwise. But you know what they say about assumptions...
Liz
Hi Everyone, thanks for stopping by. It is interesting, isn't it? I was leaning towards this answer after reading the requirements for homebuyers who apply for the tax credit. OTOH, I agree with you Liz, it seemed kind of strange NOT to need to sell before buying a replacement home. Glad to have confirmation that it is indeed this way. And as you already pointed out Phillip, I'm not the only person in the world who's been asked this question, so it will open doors for more people once the word gets out.
Denise
This is good information, and it's something we all should be aware of. Thanks for pointing it out.
Denise...Thank you for confirming the question about existing home owners purchasing a new home and qualifying for the tax credit. My intuition, which was obviously wrong. I have been asked the same question a couple of times and unable to answer it until now. Thanks again,
john
Denise I always appreciate it when people take time to do the research before stating tax policy - there are too many misinformed opinions - thank you
Hi Karen ~ You know that is one of my pet peeves. People who give their opinion without research and backing it up with facts.
John ~ I know this is a pretty common question. Glad I could shed some light on it for you.
Margaret ~ Thanks for commenting, I agree this is something we all need to know.
Denise