I’ve received several comments/e-mails asking about whether Congress has decided to make the first time homebuyer tax credit retroactive. If you saw my previous article, you’ll know that Congress has extended the first time homebuyer credit and added a new $6500 credit for existing homeowners.
Is the homebuyer tax credit retroactive… or not?
From everything that I’ve heard, the answer is that it will not be made retroactive. While this might not seem fair, the undelrying logic makes sense… Since the goal is to stimulate sales going forward, it makes no sense to hand out credits to people who have already bought. The likely effective date of the new credit will be December 1, 2009.
The bigger question is whether not the $6500 tax credit will be enough to push existing homeowners into the market for homes and mortgages. Even if it does, I’m not convinced that it will have much of an impact for anyone other than realtors. After all, for every homeowner that goes looking for a house, there will be one more house on the market.
Can you use the $6500 credit to buy a second home?
The only exception to this one-for-one swap will be if people want to use the credit to buy a second home. The primary limitation here is that the new home has to serve as your primary residence. I’m not sure how they’ll enforce this, but it seems like you could buy and move into a new home while keeping your old one as a rental property.