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Congress has just extended and modified the Homebuyer Tax credit to include existing homeowners who sell their homes and purchase a replacement home.

As it now stands, the federal tax credit will be extended through April 30, 2010, with a 60-day extension if a binding contract is in place prior to the deadline. First-time home buyers will continue to be eligible for a tax credit of up to $8,000, while existing homeowners will be eligible for a reduced credit of up to $6,500. To qualify for the $6,500 credit, existing homeowners must have lived in their current residences for at least five years. The bill also increases the qualifying income limits from $75,000 for single tax filers and $150,000 for joint filers to $125,000 and $225,000, respectively. The purchase price of the home is capped at $800,000 in both instances.

Under additional provisions included in the bill, taxpayers can claim the credit on purchases completed in 2010 on their 2009 income tax returns. The legislation maintains the provision that home buyers do not have to repay the credit provided the home remains their primary residence for 36 months after purchase, and waives this requirement for active duty military personnel who move due to a military order.

Why this benefits you. It is normally less expensive to sell your current home and buy your next home when prices are down as compared to when prices are higher. Of course you will get less money for your existing house, but will make it up because the replacement home will be down in price as well. Also, because your property taxes are based on the purchase price of your next home, the lower the price, the lower the property taxes for the duration of the time you own your next home. Also, most of your other closing costs are based on the lower sale prices of your existing home and the home you purchase. Interest rates are currently at a very low level and will probably increase again as the economy gets stronger or inflation returns.

You must act quickly. We must get your current home sold and your next home in escrow by April 30, 2010. That is just over 5 months from now, and close by the new home by June 30 2010 to be elegible. We can do it but we need to get started now.

Call us today so we can discuss your goals and come up with a plan to make it happen.