On 11/06/09, President Obama signed into law an extension and expansion of the $8000 tax credit passed this year in the stimulus package.  The new version not only extends the first-time home buyer tax credit, but expands the offering to qualifying existing homeowners.  They are now eligible for a $6500 tax credit ($3259 married filing separate).  The government action now extends the deadline to buy a property until April 30, 2010,  provided that it closes by June 30, 2010. 

The expansion refers to “long-time residents of same principal residence” as someone who has owned a home and occupied it as the principal residence for any consecutive 5-year period during the last 8 years.  This includes current homeowners, so long as the home was both owned and occupied by the taxpayer for at least 5 consecutive years. You may be eligible if you meet the income guidelines established in the law.  Congress determined that providing incentives to additional segments of the housing market would further stimulate the economy.

Those eligible and qualified for the $6500 tax credit may choose to keep their existing home and purchase a new primary residence (replacement home).  Consult with your tax accountant to verify options available to you under the tax code.

Monetizing the tax credit to have funds available at closing is still an option.  Consult with your Realtor and lender for financing options in your state.

The chart below compares eligibility requirements for both first-time home buyers and those that currently own.

Comparison of Changes of Initial $8000 Tax Credit

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