Seniors who are considering downsizing into easy-maintenance homes may have one more reason to make the move in 2010: the newly expanded homebuyer tax credit now applies to repeat homebuyers.

Tax Credit Rules for Repeat Buyers

• 10% of the purchase price (up to $6,500) is now available for residents who have lived in the home they are selling for five out of the eight previous years
• Purchase contracts must be signed by April 30, 2010 and close on the home by June 30, 2010
• A single person with an income of up to $125,000 can qualify for the full credit; married couples qualify with an income of up to $225,000. The credit phases out for the next $20,000 in income for both singles and married couples
• The purchased home must be the principal residence
• The tax credit is fully refundable, which means that even if you don't owe much in taxes, you can get a refund check from the IRS
• The residence must be valued at $800,000 or less
• You must pay back the credit if you sell the home within 36 months, but your heirs won't have to

Ways to Use the Credit

A recent article in Forbes magazine suggests that the newly expanded tax credit can be valuable for seniors. The expanded homebuyers tax credit rules may allow seniors to receive tax credit for their home purchases, and provides an incentive to buyers to make offers on homes that seniors are selling.

Another idea for cash-strapped seniors is to take out a reverse mortgage on newly purchased home. New rules for 2009 say that seniors can use the equity in their old homes for the purchase, and then immediately apply for reverse mortgages. Reverse mortgages may provide seniors with easier cash flow and an emergency fund. Compare reverse mortgage programs from several lenders to get the best deal.