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Did Congress Make the Homebuyer Tax Credit Retroactive?

Written by Nickel - 31 Comments

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.


Published on November 6th, 2009
Modified on December 18th, 2009 - 31 Comments
Filed under: Mortgages, Taxes

About the author: is the founder and editor-in-chief of this site. He's a thirty-something family man who has been writing about personal finance since 2005, and guess what? He's on Twitter!

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31 Responses to “Did Congress Make the Homebuyer Tax Credit Retroactive?”

  1. 1
    Craig Says:

    Agree, it does not seem to make much sense at that point although if I was buying a house I would love that and to take advantage of it.

  2. 2
    kev Says:

    I keep hearing different things about the effective date. Since it is primarily an extension, it leads one to think that it would take place December 1st since the prior credit expires Nov 30th. On the other hand, I’ve also read that it becomes effective the day Mr. Obama signs it.

    Does anyone know the answer to this? It actually matters to someone I know who is closing this month. His salary is above the current 75,000.00 limit, but below the new 125,000.00 limit. I told him he may want to push his closing back so that it falls after December 1st.

  3. 3
    John Says:

    My question about the $6500 credit is how easy will it be to fleece this program for free money? What is to stop neighbors bob and doug from selling their houses to one another for no reason other than to pocket the $6500 each from the gov?

  4. 4
    Chris I. Says:

    “While this might not seem fair,…”

    The original tax credit for first time home buyers as well as the new one for existing homeowners are inherently unfair. There is nothing fair about giving money to a small subset of the population that is paid for by all taxpayers. It’s a simple transfer of wealth. Unfairness (or the perception thereof) is a natural motivation for people to cheat on their taxes.

    Of course, I find it particularly unfair since I bought a house less than three months ago, and would qualify for the $6500 credit if I was buying now instead of then. Oh well….

  5. 5
    Financial Samurai Says:

    They gotta RAISE the married couple income limit to at least $500,000. Why is it that only people $225,000 and under can get the free monay?

  6. 6
    John DeFlumeri Jr Says:

    Thanks for explaining the tax credit. Too bad for those who purchase in the gap.

  7. 7
    Greta Says:

    My significant other and I bought a house in February 2009. My boyfriend is a first time homebuyer who makes over the $75,000 limit at around $90,000; and I have owned a house in the past three years. We don’t qualify for any credit at all. But under the new Obama rules, if we would have purchased after November 6th, he would have qualified for $8000, or I would have qualified for $6500. It’s not fair that the new rules aren’t retroactive for 2009! It’s disgusting that we get nothing for this and our neighbors down the street who make more than us get $8000 plus a better deal on their house. This is ASS!

  8. 8
    Mike Says:

    I’m just disgusted at the massive transfer of wealth between taxpayers who don’t want to buy a house to those who were in likely to buy one anyways.

  9. 9
    Tom Says:

    This is truly disgusting. I lost $30,000 on the house I sold 5 months ago as I had to move to stay employed. When I then buy a house, I didn’t get a tax credit because I wasn’t a first time homebuyer. Mean while, someone that never paid property taxes or took a loss on a property and who is buying when rates and prices are already low gets the $8,000. They are basically getting my tax money so they can compete with me for the best house and pay $8,000 more without it coming out of their pocket. Mr. Obama – Do you know what I would have done with my $8,000. I would’ve paid off the house I don’t own anymore but still owe $$$ on, you a$$. Now they extend the tax credit but not make it retroactive. I’ve lived in my house 6 weeks. All this is going to make people not want to buy anything until the gov’t gives them incentive to do so. I won’t buy a car, a house, a tv, anything until the next tax credit comes out.

    I bet 4 years from now there will be another waive of foreclosures from all the people that jumped at the chance for the money and bought a house when they weren’t ready to do so. I bet few spent the credit wisely. They don’t have to worry. I will bail them out again next time.

    I no longer support our gov’t or country as I am more American then they.

  10. 10
    Charles Says:

    I agree with Tom’s comment on Nov 10 2009. My wife and I lived in our prior home for 9 years. We never received any form of 1st time home buyers assistance/tax rebate when we bought that property. We were told “you make too much”. Hmmmm $70,000 household income is TOO much???? NOW my wife and I sold that house and moved into our new property on September 30, 2009. With this plan not being retroactive we are getting the shaft…again. I hope our government at least sends me a jar a Vasoline the next time they bend me over. Ridiculous!!!!

  11. 11
    Heather Says:

    I agree with Tom as well!!! I am outraged right now that this cannot be retroactive! I lived in a home for 6 years and recently moved to a new home. I did not qualify for the first time home buyer as it was my second home. Now I find out after I close on my new home I missed the $6500 tax credit be 1 WEEK!!! Yes 7 days…..not happy at all! My husband and I are in a higher tax bracket and never qualify for any government “handout” so to see I was so close I could spit nails!!!! Praying this tax credit will become retroactive for everyone who purchased a home prior to Nov 6th.

  12. 12
    Kris Says:

    Yes, I agree , all of us who bought in 2009, durign this entire act helped prop up the saggig economy. In our case we did Pay MORE as we had first tiem homebuyers biddig against us! They had the advantage in our economy-so the $6500 is not fair to withhold to all those who moved up in 2009 to as eocnd home-MAKE IT RETRO.We were responsible homeowners-working 12 + hours a day on salary-no overtime-no gravy train-just glad to be employed-but needed that extra bed or bath to give our family a little breathing room. We are the middle class-we don’t come near the income limit-we should all write our local rep’s. start petitions-maybe start an online petition! I think anyone who bought in 2009- and took a leap of faith should get a$6500 ;pat on the back for keeping things going in housing market -I was afraid we were doing the wrong thing despite low rates-jobs are disappearing in a scary economy and an unstable job market-C’mon-we all deserve a pat on the back-not just thise who buy from Nov-6 until April 2010. It really must hurt to close late October-C’mon!

  13. 13
    Rick Says:

    I agree with Tom also. My wifre and I are furious that this is not retroactive. We lived in our previous home for five years, closed on our new home in August 26th. Contrary to what we were told regarding the $8000, we found out recently that we did not qualify for the $8000 because our old home was bought by my wife prior to us getting married. I haven’t owned a home in over 20 years which qualified me as a first time home buyer but because of marriage I became disqualified. When we heard of the $6500 tax credit we were excited, only to find out that it is not retroactive…..the $6500 tax credit should be retroactive for purchases bought in 2009 as it is meant for us homeowners to invest this money back into our homes, as it is intended. That is true stimulas…We are very angry!!!!!!!!

  14. 14
    Jessica Says:

    We are in the same boat! Lived in our previous home for 6.5 years, just closed on our current home on NOVEMBER 2nd! I can’t believe how many hard working American families are being screwed by our government. Obviously, if you were able to sell your home and/or purchase a home, you must be part of the small few that are employed and responsible with the upkeep of your previous home and your bills/credit! This is how we get rewarded! This $6500 should be attached to the original First-time home buyer credit and be retroactive for all of us that have been trying to stimulate the economy over the past year!

  15. 15
    Jason Says:

    I am in the same boat as Jessica, Rick, Kris, Tom, etc… Just closed on a house a little to soon.

    All I can suggest is that everyone that purchased in 2009 and does not qualify by this date should write their congress person.

  16. 16
    Jessica Says:

    I did email my congressman. I, too, suggest everyone else should do the same. It was a piece of cake and only took a minute. We need to unit the masses to be heard! After all we are the ones contributing to stimulating this slow, dying economy!

  17. 17
    Greta Says:

    How do I e-mail my congressman? I live in Nevada. I have never done that before, but I will now!

  18. 18
    Jessica Says:

    Just do a google search and it should be pretty easy to find. The website I used just asked for your zip code and then it tells you who is your congressperson and a link for their page and then it was a form pretty much like this, email address and your email! It was really simple and only took a couple of minutes, hope others are joining the cause!

  19. 19
    Debbie Says:

    My son purchased a house back in September of 2008 as a first-time homebuyer and received the tax credit of $7500. Does anyone know if he can amend his taxes, take off the $7500 and put in the $8000? I know many of you feel this tax credit is unfair but seeing how the young couples nowadays are struggling, I’m glad this is there for them.

  20. 20
    Tom Says:

    How are young couples struggling this days? They have cell phones, flat screen tvs, two cars and a house. I have kids.

  21. 21
    Nick Says:

    This whole credit thing makes me sick.. We lived in out house for 5.56 years and purchased in April…. the price was jacked up form all the bail out recipients trying to outbid.. Despite that we still purchased.. I work hard to pay my bills and be a man and stick to my obligations… I even have family and friends who let there 1500 sq ft house go and turn around and buy a 2500 sq ft house and save hundreds of dollars a month. I was actually excited when I heard the Home Buyer credit being modified… Wasn’t till today when I tried to start my TurboTax and realized the restriction they put on it.. This makes me sick I voted for CHANGE… I haven’t seen anything change for the Working American.. Just the unemployed and credit scammers…. I cannot believe the didn’t make the credit retroactive? Anyone interested in starting an online petition please email me at camuti67@yahoo.com, Im serious I wll set one up tonight…..

  22. 22
    Nick Says:

    Just created a petition to let our voice be heard.. please pass it around, Anyone want to help me work up a letter that can be attached and sent to your congress man i would appreciat it

    http://www.thepetitionsite.com.....e-for-2009

  23. 23
    Pat Says:

    I’m in the same situation as most, purchased a new home in September after living in mine for 15 years. No tax credit for us.
    I am really getting a kick out of Nick’s comment on voting for change. Many tried to warn that the white house was going to be inhabited by a socialist. Well here it is. I’ve read many comments about taking from the hard working, responsible tax payers and giving to the others. That is what you call socialism. I only wish the rest of the country would catch on before it gets worse.

  24. 24
    Screwed Says:

    one word for the 6500 not being retroactive. HURT!!! It makes me sick to my stomach!!!! While the dope head next door gets 8 grand for buying a new house I get the shaft once again. Spare me the objectivity for it not being retroactive…i know why they did it…but it still really ticks me off!!!

  25. 25
    Jessica Says:

    HERE IS THE EMAIL I RECEIVED FROM MY CONGRESSMAN (IF HE EVEN WROTE IT, EITHER WAY I APPRECIATE THE RESPONSE, NOT THAT IT WILL DO ANY GOOD)

    December 2, 2009

    Dear Jessica,

    Thank you for contacting me with your views. I always appreciate hearing from my constituents about the issues that matter to them most.

    I appreciate you taking the time to share your thoughts regarding the recent extension of the homebuyer tax credit. I understand your frustration and dissatisfaction with this program. I am often disappointed that tax policy often does not perfectly acheive its objectives and leaves some individuals feeling shortchanged. You can be assured that I will keep this in mind as this policy is refined in future tax bills. I appreciate your advocacy on this issue . Your opinions are important, and you can be sure that I will keep them in mind as I continue my work in Congress.

    Again, thank you for taking the time to contact me with your concerns.

    Sincerely,
    Earl Blumenauer
    Member of Congress

  26. 26
    paul Says:

    The stipulation that disqualifies first-time home buyers from receiving the full tax credit if they purchased in 2008 is unfair. With the new legislation anyone other than those who first took part and trusted in this program is eligible.
    I am a law-abiding and taxpaying citizen and I have worked very hard to purchase my first home. I went through the full process of taking out a loan and signing a contract and it is not right that I do not qualify for this tax credit just like everyone else.
    I know there are many others who also fall into this category.

    I purchased in Sept of 2008. I am a single dad and get no support from ex. Kids and I have not found one program to help us. I make a single middle class income. We took the credit to pay for washer dryer etc. I see millions going to someone or some bank or some car company, but my family has not seen anything. Now my student loans have skyrocketed, my credit card companies are hitting me with more fees, my health insurance has gone up, and secretly groceries have tripled but no one says anything. This credit not being extended to those of us that first took part in the program is a disgrace and I regret having to have had to use it. The new credit is open to all home buyers. The only ones who cannot benefit from this program are those who were the first to trust it. And here is the only place I can vent… maybe 1 person will read this. Powerlinep on facebook.

  27. 27
    Mike Says:

    I don’t know about you guys but I am applying for the $6500 credit even though I purchased the home in May 2009. It’s not fair to those homeowners who purchased the home before Dec 1, 2009 to not get anything. The law should have been retroactive at least for 2009.

  28. 28
    Tim Miller Says:

    I’m in the same boat as all of the above. We bought our house in early August. I just found out about this extension yesterday. Makes me sad. We could have really used it.

  29. 29
    Chuck Says:

    I don’t support this hand-out any more than many of you. One thing I find interesting is that much of the concern expressed here is because someone missed the deadline because “your” purchase took place before this credit was enacted. I wish you would consider those who do not wish to move at all. Why should any taxpayer subsidize another who is in the financial condition to buy a house? My family and I don’t qualify for pretty much every reason in the book – even if we did, I think this is a bad program for many of the same reasons expressed by people in the above comments. Roughly half of Americans don’t pay any federal income tax. The top 5% of US earners pay roughly 65% of the current tax burden. This is just another wealth transfer effort and I, for one, am getting sick of it. Another thing, why can you max out this benefit at 65K? In my region, less expensive homes have been hit far less than the very expensive homes. Case in point: a home selling for 65K in 2006 would probably now sell for 55K, but a home selling for 1 million in 2006 would likely be around 700K now due to higher cost of Jumbo mortgages and the inability of banks to house additional real estate loans on their balance sheets.

  30. 30
    Alida Says:

    I agree with a lot of your comments here, but let me tell my story. A single mother, earning low-middle class wages, not married, never owned a home-bought my first house in Oct. 2006 (no help at all, even first-time buyer’s help). May 2007, got married. May 14th, 2008-tornado destroyed my house. Red Cross nor United Way (to which I donate through work about $1000 per year) would help us. Red Cross specifically told us, “Sorry, you should have called the day it happened” (no cell phones were working that day because of the weather!). Exactly nine months later, Feb. 14th, 2009-we moved back into our house. I refinanced the house June 2009 to try to get a better rate—–ALL THE WHILE WITH NO HELP! Living in a camper for nine months with 2 adults and a teenage son-with a camper that leaked profusely (we had no other place to go), I cannot help but be angry at the help that some of the others have received! Why doesn’t the stimulus cover refinancing as well? Especially since we couldn’t live in our house for 9 months!

  31. 31
    Kristie Says:

    Sign the petition & hope for tax credit retroactive 2009!

    http://www.thepetitionsite.com.....e-for-2009

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