About that new $6500 tax credit

Much press has been given to the first time home buyer's tax credit, but the newest incarnation of the tax credit includes another very interesting element - the $6500 tax credit available to current home owners.

Not every current homeowner will qualify for this tax credit. Here is a summary of who is eligible:

• You have lived in the home your currently own for at least five consecutive years of the last eight years. This is very important detail that can help those home owners who have had to relocate for work purposes and who have been unable to sell their former home yet.
  
• You are purchasing a home for your primary residence. It does not matter if you are purchasing a traditional single family home, a condo, a townhome or a half duplex as long as it will be your primary residence. Investment and vacation properties do no qualify.
• Your income must be less than $225,000 for a married couple or $125,000 for a single person to qualify for the full tax credit. If your income is between $225,000 and $245,000 for a married couple or $125,000 and $145,000 for a single person, you will receive only a partial credit.
• The home you are purchasing must be less than $800,000.
• You must have an accepted offer to purchase no later than April 30, 2010 and you must close on the property no later than June 30, 2010.

As with the first time home buyer's tax credit, the amount of the credit is based upon the purchase price of the home. The tax credit will be equal to 10% of the purchase price of the property up to a maximum of $6500. If you are purchasing a property that is less than $65,000, your tax credit will be 10% of your purchase price only.

You will need to live in the home for at least three years. If you live there for less than that, you will need to repay the full amount of the credit.

This tax credit is exciting because it helps not just young families move up in their homes as many of these programs normally do, but it also help empty-nesters and retirees who want to downsize.