$6500 home-buyer tax credit for current homeowners

$6500 tax credit for home buyers

Apparently all the talk about the $8000 first-time homebuyer tax credit being extended and expanded is coming to pass. According to a USA Today article

“Senators agreed to extend the existing tax credit for first-time home buyers while offering a reduced credit of up to $6,500 to repeat buyers who have owned their current homes for at least five years”

Obama seems to be fully behind the extension of the tax credit, so it is will likely be finalized very soon. The proposed bill would extend the current $8000 tax credit for new homebuyers from it’s current end date of November 30th, 2009 to April 30th 2010.

$6500 tax credit for home buyersA different type of deadline

Just to clarify, they are discussing changing how the credit deadline works. Currently, you have to close on your home purchase by November 30th to be eligible. But under the new plan…

“The Senate agreement stipulates that buyers must have a sales contract on a house by April 30 to be eligible, but it gives them an additional 60 days to close the purchase. Looked at one way, the effective deadline of the credit under this agreement is actually the end of June.” (USNews)

Rules for current homeowners

As mentioned above, it would also allow current homeowners to get in the game by offering them $6500 if they have been in their current house for at least 5 years.

“The current credit prevents home buyers who have owned a primary residence within the past three years from claiming the credit. The agreement, however, would allow current homeowners to claim up to $6,500 as long as the property they are vacating has been their primary residence for at least five years.”

If you are a current homeowner looking to get in on the $6500, it would likely have an effective date of December 1st, 2009.

Income restrictions

As with the first round of the credit, it is not open to higher-income earners. It is open to higher earners than the first round (originally it was $75,000/single and $150,000/joint). Single filers making more than $125,000 and married couples making $225,000 or more aren’t eligible either. And if you have been eye-balling a million dollar house, that isn’t eligible either.  “Homes that cost more than $800,000 aren’t eligible for the credit.”

A few other points about the credit worth mentioning…

  • You can’t use the cash to buy a vacation home. Only primary residences are eligible.
  • Also you must be at least 18 years old to be eligible. Doing the research for this article I found a story of a 4 year old that claimed the credit.
  • The current tax credit has cost taxpayers about $8 Billion. And BusinessWeek estimates that the new one will cost us $10.8 billion.

So if you are are a current homeowner – is $6500 enough to get you thinking about buying another house?

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  1. Kacie

    Oh my gosh. I hope this doesn’t pass.

    I don’t think this is actually helping the economy. If people couldn’t buy a house unless the government gave them $8k or $6500, maybe they shouldn’t be buying a house to begin with.

    This is just going to cost taxpayers too much in the long haul.

    I’m a renter, and the extension of this wouldn’t get me into a house faster.

    • Bob

      While I agree, we (the taxpayers) are going to be paying for this for a while, it sounds like this one is fully-endorsed by Obama, so there is a very good chance this will become a reality very soon…

  2. Jason @ Redeeming Riches

    Great – we sold our house and moved out just before the 5 year mark and are now living w/ in-laws as we build a new one – I’m guessing I’ll somehow get hosed out of this credit! =) Hopefully not. Thanks for the update!

  3. Mike Piper

    All I can do is shake my head about this.

    This Washington Post article pretty much sums up my thoughts on the homebuyer credit.

    • Bob

      Yea, it seems that the US Government has been becoming better at throwing good money after bad…

  4. Gary

    Not only has the government thrown good money out for bad for a very long time, but $6500 won’t even come close to what this government created bad economy has done to our home values. I wish Obama could write me a check for all I have lost due to bad government decisions!

  5. anony

    You states that the new income limit for the couple is $225,000. But I read somewhere that it is $250,000. So which one is it? Thanks for confirming this.

  6. Bible Money Matters

    I’m not so sure this is a good idea. To some degree I feel like we’re re-inflating that real estate bubble – and any increases in the real estate market that we see now – we’ll have to pay for it later.

  7. Smitty

    when will long standing homeowner get a tax credit for being a homeowner

  8. Norbert

    Ridiculous idea. Where in the Constitution does it state that the US government is responsible for co-funding the purchase of a homes for its citizens (or cars, for that matter)? And then why not also clothes, computers, furniture, leisure travel, etc.? The logical end result is “to each according to his needs, from each according to his ability” and that’s a very dangerous place to be heading.

  9. cassandra legrand

    would this tax credit apply to those that own a mobile home as well

  10. Francis

    The article is not clear…can a current homeowner elect to turn their primary residence into a rental property and buy a new residence taking advantage of this new credit? Anyone know a good link to all the rules? I do not want a second property as investment…a personal family crisis has prompted the need for another residence…this would be timely.

    I will use the stimulous simply because it would be getting back a little of my own tax $$$…but incresing debt personally or governmentally will not serve to FIX the economy…that actually caused the problem…it caused a false bubble that burst.

  11. susan davis

    i have a home that i own but it is leased out for over 6yrs now, so i dont qualify for the first time home buyer of 8000 because i still own the home and its still in my name, so will i qualify for the 6500 tax credit since i am still the owner of the home?

  12. Shanna

    So just to clarify – we had been in our previous home for 7 years and bought new in July of 2009. We won’t qualify for th e 6,500 tax credit because it is not coming into effect until after Dec 2009.

  13. Tonya

    Like the post above (Shanna) we lived in our home for 9 years, and bought in April 2009. As long as the purchase occured in 2009 do we qualify for the $6500? Does the bill retro all 2009 transactions within the other parameters?

  14. Patty

    From what I understand to qualify for this credit the home you own has to be your primary residence. If you have it rented or leased it wouldn’t qualify for the credit.
    What I need to know if someone could answer for me is this:
    My husband has owned a home for the past 16 years, so he would qualify for the $6500 credit, but I have not owned a home for the past 10 years, so would I qualify for the $8000 credit since both of our names will be on our new house?

  15. don

    @ patty,
    if you get the loan in your name you will get the $8000
    if he gets the loan in his name he will get the $6500
    so just get the loan in your own name and you can both be on the deed to the house itself.

  16. jim

    Any idea of when the 6500.00 tax credit will be passed? We close on a “used “house December 1,2009.

  17. Randy

    Our house is currently on the market, but will probably come off in a couple weeks. We’ve been looking to move, but will wait until spring.

    If the tax credit is there, we will qualify and we’ll take advantage of it. But I’m not sure it’s good for the country.

  18. Francis

    You can lease your current home and purchase a second one and qualify for the $6500.00..The home you live in must be the new purchase…

    The $8000.00 credit was different…you could not have owned a home at all within the previous three years…

    This second credit makes room for people who want to own more than one property…but again, one must be careful…the IRS will be watching to make sure you lease the current and live in the NEW one…

  19. Francis

    Christina….if you buy a new one and live in it, the $6500.00 is yours and you can keep the current one as a rental…the rules don’t say you had to live in the first home I don’t believe…this second tax credit is to motivate people who own a home to buy a second one…

  20. Dave

    Is this retroactive? We lived in our old house for 17 years and just bought a (brand) new house in Oct 2009. Do we qualify for the $6500?

  21. Yang

    I owned a home during the past eight years, but I sold it in the summer of 2008. Then I bought a new home in March this year, am I qualified for the $6500 credit?

  22. kwon

    Don’t feel so bad.
    I have lived my current house for 8 years and I will close on my new one next week. I losing $6500 because of 2 weeks short of Dec 1, 2009.

  23. Greg

    So this is only good for home buyers that buy a house from 12/1/09 – 4/30/10?? I purchased a 2nd primary residence this year too and kept my first as a rental. I don’t qualify for this credit at all?????

    If not, people that took a stance to buy in this market get screwed????????

  24. Jorge

    Why isn’t the government helping people that need the help, the people that bought overpriced homes in the last five years are being entirely ignored for some reason. They are instead helping people who don’t need assistance. I bought my home a month before the tax credit came out and I haven’t owned for five years, why do they keep missing me?

  25. Francis

    Greg…the markets are shifting and changing rapidly…those who bought 8 years ago and now find their property is at least 1/3 less in value can feel that way as well….those who bought this year and got, say my house, and I lost all my equity might make me feel like I got skrewed and make you feel like you got a deal!

    The point is…we all make our best decisions at the time…sometimes it turns out we should have waited, and sometimes it turns out we moved at the perfect time…personally I feel like I am getting screwed because my tax doallars are going to investers and first time home buyers when I did the right thing building good credit, saving my money and buying my home the old fashioned way and I get NOTHING…

  26. dav e

    confused about this program.

    We just sold out house on September 11th after living there 12 years.

    We are having another house being built that we should occupy in mid-december. My question is does this program apply to us?

    If so, how do you claim it?


  27. Francis

    I am amazed at how we have become a society that believes the government is obligated to take hard working people’s tax dollars and try to make everything ‘right’ for everbody. This sense of entitlement is amazing…

    If your son plays football. They practice hard, they sacrafice to get ready for a game…they win…does his team need to make it right by spliting the score down the middle with the other team?

    That is the concept…people made bad deals…the best learning tool in life is experience and working our way out of a mess WE made…

    The markets did not fail for no reason…buyers and lenders both broke simple financial rules…now both want those who did not, to make that mess right for them…to make their bad decisions NOT cost them anything…

    this is wrong

  28. Greg


    I purcahsed my 2nd home because my family grew and we could not reside in our old home. I then went to sell my 1st home and I saw it was worth 100k less then it was valued at one time. At that time, I made a choice to rent out the property till I could gain some of the equity back in hopes to pay for my kids college one day.

    I agree that timing is everything but I did buy my 2nd home during the “first time homebuyers credit” and now it has been modified I would enjoyed the $6500 to upgrade my current home. Since I won’t be receiving the $6500 I guess I will just need to wait to fix some stuff around the house. Somethings in life are not fair and I enjoy to vent about them every now and then. This will not destroy me though or get my upset with our government anymore then I already am 🙂

    Have a great week!!!:)

  29. Charles

    As with others here, I’m trying to determine whether or not my wife and I would qualify.

    We lived in our old house for 9 years, sold it in August, and bought a foreclosure in September.

    If we don’t qualify, I guess that’s reasonable, just like Best Buy isn’t going to make a new rebate retroactive to something you bought 3 months ago, but it’d be fantastic if we did…

  30. rusty carnes

    we have owned our house for four years.And we have never been late on our payments.So why is the government not giving us some form of stimulas pay ment.We as well as a lot of americans could is a little help.Why are they giving money to first time home buyers and forgetting us.The government needs to help other people.But will the goverment help or not.I hope so but i doubt it.Will the goverment ever even read this.I dought it yet again.Signed a pissed off american,

  31. Chris

    How about a tax credit for people who purchase vacant/foreclosed homes as their primary residence? That sounds like a proactive approach that would benefit the real estate industry, the banks and economy.

  32. chase

    How about a little help for the ppl who bought houses just before the whole housing market collapse.

    Wouldnt it be better if the banks lowered everyones interest rates on homes that have been occupied from 2-3+ years vs giving away all this money?

  33. Francis

    Folks…the government has no money…all the money they USE is OURS…and what they borrowed from other countries that OUR money has to repay…

  34. Joe Example

    This sucks. We’ve owned our condo since September 2003; we just bought a house in June 2009. It looks like we won’t get the $6,500.

  35. nanc

    Works for me, my husband was laid off in may,got new job in oct. We close on our current home nov 11 and can put off close of new home till dec 18. I’ll spend thanksgiving on a motel for $6500.

  36. Sweetpeascc

    We just sold our home and closed on it Nov. 2nd (just a few days ago) we lived in the house for almost 8 years before selling it. We are temporarily living in an apartment for 5-6 months till our new home is done being built. We should close on our new home around March-April. Does anyone know if the $6,500 tax credit would aply to us or are we out of luck since we closed on our old house before the bill has even been passed.

  37. Krista

    I think this bill should be retro for all of 2009. We bought in May 2009. My boyfriend was a 2nd tinme homebuyer-but this was my 1st time applying as a home buyer-reason I missed out on the $8000 credit -we put my name on the deed of the house we shared together fo 7 years in 2005. Or I would have been a first time homebuyer! Now we both lose out on $6500 because we closed and bought a hosue too soon in 2009-May-it should be retro all of 2009. We are not high wage earners-and we helped drive the economy and bought a house inflated in price because we were competing with 1st time homebuyers at that time. All around we got the short end here—

  38. chad

    have a question sold my house in october (which we lived in for about 10 years) close on the new one in Dec. do i quailfy for the 6500.00 tax credit?

  39. Amy P

    We are homeowners that have lived in our home for >5yrs & are selling/buying a new home & are settling on Nov 20th so our buyers (1st time buyers) could get there tax credit (before we knew it would be extended), does anyone think we would qualify for the $6500 credit since our settlement date is in Nov? or does it not go into effect until Dec?

  40. lllttt

    how to calculate the 5 years?
    IRS can track to this? Only one day short is not OK?
    Because some months have 31 days, some have 30 days.

  41. Bob

    for those of you who are wondering if this legislation will allow you to claim a credit for a house you already bought (assuming you already an existing homeowner), here is a link to the house bill: http://thomas.loc.gov/cgi-bin/query/F?c111:4:./temp/~c111KgZGqb:e16075:

    Notice the sec. 11 (j)(1):
    (1) IN GENERAL- The amendments made by subsections (b), (c), (d), and (g) shall apply to residences purchased after the date of the enactment of this Act.

    subsection (b) pertains to existing homeowners:
    (b) Special Rule for Long-time Residents of Same Principal Residence- Subsection (c) of section 36 of the Internal Revenue Code of 1986 is amended by adding at the end the following new paragraph: `(6) EXCEPTION FOR LONG-TIME RESIDENTS OF SAME PRINCIPAL RESIDENCE- In the case of an individual (and, if married, such individual’s spouse) who has owned and used the same residence as such individual’s principal residence for any 5-consecutive-year period during the 8-year period ending on the date of the purchase of a subsequent principal residence, such individual shall be treated as a first-time homebuyer for purposes of this section with respect to the purchase of such subsequent residence.’.

    From reading this, it seems as though you would have to purchase a new principal residence after this act is passed into law.

  42. Sandy

    We close on the sale of our old home which we have owned 10 years on December 4, 2009. We put money down to buy a new home to be built last Septemeber but it does not close unitl end of February 2010. We meet the income requirement. Do we qualify for the $6500. tax credit?

  43. Paul

    This new tax credit for current homeowners would’ve been great if it was effective 2 months ago cause my wife and closed early October. Bad timing I guess. However, we would have bought regardless as we we’re ready to buy as we saved enough for the 20% down (no thanks to goverment handouts) and have jobs that is able to pay for the monthly expenses including a mortgage. Anyone needing the $6.5K or $8K to buy a house may need to think long and hard as $6500 will only take you so far. I just hope the Obama and company know what they’re doing. Good luck and God bless.

  44. RICHIE


  45. lllttt

    the fair rule should be anybody to purchase a house and live in it as a primary residence will get $8000, investment property(second home, vacation home) will get $6500, return the credit if it is sold within 3 years

  46. Jan

    We currently have a contract on a new principal residence and meet the other requirements regarding the 5 years and income. So do I understand that getting the $6500 credit is dependent on CLOSING the loan and having the title assigned to your name on or after Dec. 1? If so, we’ll absolutely reschedule our late Nov. closing date! I hope it doesn’t mean that the sales contract has to be signed Dec. 1 or later.

    (However, I certainly do not support the way Congress is just giving away money. But with the taxes we pay, I am happy to get a little back for a change.)

  47. lllttt

    The Congress operate at will.
    People bought in 2006 cannot get refinance, cannot get credit, cannot modify loan …….
    People sold in 2006 take sweet profit, get credit to buy 1/2 priced house.

  48. Dustin

    Guys..if you read the bill..


    It says you qualify if you owned a home for 5 years in the past 8 years and are moving into a new residence after Dec 1. So, how I read it…if you sold your house as we did in August (lived in it for 5 years and 2 weeks!!! Seriously) and am living in apartment until we close on new house in mid december….

    how I read it…I qualify….dones’t say anything about ahve to sell your 5 year residense home after dec 1….

  49. Dustin

    Also..this article is a bit misleading…it reads:

    “As mentioned above, it would also allow current homeowners to get in the game by offering them $6500 if they have been in their current house for at least 5 years.”

    the bill does not say you ahve to be a current home onwer…

    “who has owned and used the same residence as such individual’s principal residence for any 5-consecutive-year period during the 8-year period ending on the date of the purchase of a subsequent principal residence, such individual shall be treated as a first-time homebuyer for purposes of this section with respect to the purchase of such subsequent residence.’.

    See the difference?

  50. Paul

    There is no wording on when a contract is “signed” as that mattering. It’s when you CLOSE that matters. I have a closing Dec 15th so I’m EXSTATIC!

    One piece does confuse me a bit on the wording

    “apply to residences purchased after the date of the enactment of this Act.”

    When is the “enactment”? Is it 12/1/09 as people are saying or does “enactment” start when the President signs the Bill into law?

  51. Paul

    Hmmm…..I also read

    “In the United States of America a Bill is an enactment by Congress. It remains that until the President signs it. Then it becomes a Law”

    Wonder if this means the new home must be bought after TODAY?

  52. Keith

    I’m getting conflicting reports as to when the $6,500 credit will kick in. The website realtor.org is reporting that it will go into effect as soon as the President signs the bill. Other sources such as the Washington Post are reporting that it will go into effect December 1st. Anybody know for sure? I’m a repeat buyer who is scheduled to close on a new house November 24th.

  53. Jan

    Keith, we are in the same boat. If it is correct that “purchase” equals “closing date”, then I think we need to postpone closings until Dec. 1st.

    Here’s a link with a little info, although not the definition of “purchase”:


  54. Keith

    Thanks Jan. The chart is a little ambiguous and can be read two ways. Under “Effective Date – Current Owner” it reads “Date of Enactment”. To me that might mean it goes into effect as soon as the President signs the bill. This is what is posted on realtor.org.

  55. Jan

    Oh, boy, the government likes to make things complicated. I am afraid to trust the pre-Dec. 1 date, but we’ll be paying some penalties to postpone until after Dec. 1. My realtor is still not sure we’ll qualify because our contract was signed prior to the bill. However, I have to believe that purchase means closing, don’t you?

  56. Paul

    I would be quite surprised to see the definition of “purchase” be anything OTHER than closing. They even make a distinction on the April/June issue (signed by april, closed by june)

  57. Jan

    Thanks, Paul. Logic would definitely be purchase=closing. It says you have to provide proof of “purchase” with your tax forms, and that would have to be a closing document, not a contract since not all contracts end up being completed.

    I guess the big question is whether we need to move closings to Dec. 1.

  58. Keith

    Purchase means closing to me. To get the credit, you’ll need to attach your HUD-1 settlement statement. If I understand correctly, the only date referenced on this form is the closing date. The IRS would have no idea as to when you signed your purchase agreement (unless they ask for this form also).

  59. Jan

    Okay, here is another statement that says the $6500 goes into effect when signed by the President:


    Question: I am an existing homeowner. On October 25, 2009, I signed a contract to purchase a
    new home. I have lived in my current home for more than 5 consecutive years and
    am within the new income limits. I will go to settlement on November 20. If
    President Obama has signed the bill by the time I go to settlement, will I qualify for
    the new $6500 tax credit?
    Answer: Yes. The existing homeowner credit goes into effect for purchases after the date of enactment
    (when the bill is signed). There is no reference to the date of contract for the new credit. The
    provision looks solely to the date of purchase, which is generally the date of settlement.

  60. Keith

    I tend to trust the information coming out of the NAR. After all, they are the ones who have been pushing hard to get this bill passed.

  61. Jan

    That’s what I hope. The bill itself is confusing, though.

    j) Effective Dates-

    (1) IN GENERAL- The amendments made by subsections (b), (c), (d), and (g) shall apply to residences purchased after the date of the enactment of this Act.

    (2) EXTENSIONS- The amendments made by subsections (a), (f), and (i) shall apply to residences purchased after November 30, 2009.

  62. Jan

    The conditions for the existing homeowners and new income rules are listed under (b) and (c). So I am very hopeful that the NAR is reading this correctly!

  63. Dan Hammel

    I wrote to congressman Frank yesterday to demand that the 6500 credit be applied to any purchase in 2009! I colsed on a home on 8-31-09 and want to be included in the credit. I urge anyone in the same situation to contact their representatives and make the same demand.

  64. Keith
  65. Jan

    Dan, I really sympathize with your situation. But I think the House and Senate have already signed the bill and it is supposed to go to the President today.

  66. LMB

    lllttt November 5, 2009 at 2:43 pm
    how to calculate the 5 years?
    IRS can track to this? Only one day short is not OK?
    Because some months have 31 days, some have 30 days.

    I would say if you claimed the house on your taxes for 5 years, you are fine. I don’t think they are going to count days.

  67. Charles

    To Dan Hammel–

    That’s nonsense.

    Look, as I noted above, I’m in the same situation as you–My wife and I meet the other requirements, and also closed on our new home in late August, so naturally I was hoping that we’d qualify and am bummed that we don’t.

    HOWEVER, “demanding” the credit is absurd. If you buy a new computer from Best Buy, and two months later they start offering a rebate on that same computer model, are you going to “demand” that they give you the rebate as well??

    The whole point of an economic stimulus is specifically to encourage people to get off the fence and buy a house to cut down on the foreclosure mess. You and I *already* bought a house (and in my case, it was indeed a foreclosure), so obviously we didn’t need the extra incentive. The point of the credit is to encourage those who *need* something to make the decision easier.

    It kind of sucks, but it’s hardly unreasonable. Some laws can be made retroactive, most aren’t. This one apparently falls into the latter category.

  68. Jan

    Wow, Keith, I guess I am having trouble believing that we would be this fortunate to fall into this tax credit! But I’ll just consider it a real blessing and hope the economy doesn’t end up worse in the long run! Thanks for posting that! I’d be so happy not to have to postpone our Nov. 20th closing!

  69. Bryan

    Guys keep the dialogue going about the start date and anything you can find on the web. I close Nov. 10th, so needless to say, this is huge if it goes in effect today. I am still seeing articles stating Dec. 1st.

  70. Bryan

    Article from the UPI stating Dec. 1st is the start date, uggghhhhh….


  71. Jan

    I’ll say UGH!! to that, too! But I think they are wrong. I’ve seen several wrong things posted on various sites regarding this bill, so you really have to do research to find out what is true!

    I am not sure some of these people are reading the bill. Some of it goes into effect when the bill is signed, and it appears to me that the sections regarding the $6500 fall into that category.

    There had better be something very definitive posted about this quickly, though, so some of us will have the chance to reschedule closings if needed.

  72. Angela

    To LMB –

    You wrote,
    “how to calculate the 5 years?
    IRS can track to this? Only one day short is not OK?
    Because some months have 31 days, some have 30 days.

    I would say if you claimed the house on your taxes for 5 years, you are fine. I don’t think they are going to count days.”

    Here’s my situation with my current house. I bought my current house in August 2005 and looking for a new house right now. My question is, If I purchase a new house in March 2010, will I qualify for the $6500 credit? If you count the days, I am only several months short of the 5 full years. Exactly how to calculate the 5 years? By March next year we would have claimed the current house on our taxes for 5 years… Thanks anyone can answer my question.

  73. Katricia

    Is there a starting date on when the 5 yr credit starts I mean would you have had to bought it 5 yrs from todays date (November 6, 2004)or 5 yrs from when the credit ends?(April 30, 2005) I am curious because we closed on our house May 24th 2005 ?