Q: Your recent article regarding the new buyer tax credit was interesting, but I wondered if you could clarify the “five consecutive years” rule for trade-up buyers. We closed on our existing home in September, 2006, therefore in January, 2010 we will have occupied it over five calendar years (2006-2010) but not for 60 full months. Would we qualify? The IRS site doesn’t explain this point.

A: I don’t think five calendar years will cut it. You need to live in your home at least five full years.

Recently the IRS issued further clarification on the new rules for the home buyer tax credit: “The new law also provides a ‘long-time resident’ credit of up to $6,500 for others who do not qualify as ‘first-time homebuyers.’ To qualify this way, a buyer must have owned and used the same home as a principal or primary residence for at least five consecutive years of the eight-year period ending on the date of purchase of a new home as a primary residence.”

From the new guidance, it seems clear that the IRS means you have to have lived in your home for 60-months straight out of the past eight years.

My best guess is that Congress wanted to limit fraud and the number of homeowners that could qualify for the $6,500 homebuyer tax credit. In your case, you would have to wait until September 2011 to qualify for the tax break.

However, by that time the tax break will have long expired. While the IRS does not discuss the issue of calendar years, the site is pretty clear about the sixty months that you have to have lived in your home to qualify for the current tax credit.

More on the rules and restrictions on the 00 first time home buyer tax credit and the 00 home buyer tax credit in these articles:

00 First Time Home Buyer Tax Credit Extended and Expanded: Questions and Answers

8000 Tax Credit First Time Home Buyer Requirements: Buying From A Relative

8000 Tax Credit First Time Home Buyer Rules For Buying With A Partner

Home Buyer Tax Credit Cut-Off Dates: Do I Qualify?