The IRS has released new information for existing homeowners who bought a new home and wish to claim the $6,500 tax credit. Read the accompanying press release. The relevant form you'll need to file is Form 5405. (Editor's note: This is a pdf file.)
Be aware that you must show proof you owned and occupied your prior home for five consecutive years. In addition, if you claim the credit and flip the new house, the IRS will retroactively come after you for the $6,500. You must stay in the new home a minimum of three years, during which it must be owner-occupied as your primary residence.
The clarification of the rules surrounding this credit may provide a temporary booster shot by creating another incentive for people to buy -- just as the $8,000 first-time homebuyer credit did.
All of this begs the question of when the housing market is going to recover. The new Case-Shiller Index shows the bottom is upon us in most markets across the country. But when do we get back to where we were when home values were at their peak two or three years ago? The latest guess is 2022, according to a Los Angeles Times analysis.
That's 12 years from now. Of course, no one knows what the future holds. But Clark has said that he expects our nation could spend seven to 12 years working our way out of the funk, so that dovetails very nicely with this new info.
This does not mean seven to 12 years of daily doom and gloom. Rather, we'll have a continuing drag effect on our economy with bumps in the road -- such as unemployment and budget deficits -- for up to a dozen years.
---From Clark Howard's Blog
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