Savings for Cupertino Seniors-the Tax Credit for Move-DOWN Cupertino Buyers

Savings for Cupertino Seniors-the Tax Credit for Move-DOWN Cupertino Buyers

By Michelle C. Carr-Crowe

Lost in the hoopla about extending and expanding the “up to” $8,000 credit for new homebuyers is the credit for existing homeowners. In my opinion, this can be “Senior Salvation” - a tax credit for move-DOWN Cupertino sellers and buyers.

I called my broker, my local real estate board, the California Association of REALTORS®, and even the IRS to ask my question: does this credit apply for move-down buyers?

So far the answer is, “As long as they qualify and have a tax to apply the credit to, it looks like YES.”

To summarize:
1. A first time homebuyer is one that has not owned a home for at least three years.
2. A repeat homebuyer must have owned their current home for at least five consecutive years out of the last eight years.
3. The maximum purchase price for the new home is $800,000.
4. If single, your earning maximum to qualify is $125,000; if married, it’s up to $250,000.
5. There's no gap between the prior deadline (November 30th) and the new credit period, which ends April 30th.
6. While you must be in a contract to purchase your new home on or before April 30th, you have until June 30th to close the transaction.
7. To prove you qualify, you'll need to attach proof of purchase to your tax return (most likely a HUD-1 or final closing statement).

Caveat: please, please check with your tax professional and attorney before making any real estate commitments.

However, this may finally be a tax credit that helps seniors who’ve lived in their homes for more than five consecutive years of the past eight.

For example, a senior couple selling a $2 million dollar single family home in Cupertino Monta Vista they’ve owned for the past 8 years, then buying a new single-level 2 bedroom condo in San Jose for $650,000 not only get to keep their $500,000 tax-free capital gains benefit and transfer their tax basis, they can also now use up to $6,500 as a tax credit.

And as the capital gains $500,000 tax-free credit is set to EXPIRE as of December 31, 2010, now is a huge window of opportunity for seniors seeking to maximize their benefits.