First Time Home Buyer Tax Credit

There has been a lot of talk (and confusion) about the economic stimulus bill and what it means to home buyers. Who qualifies? What year can I claim the credit? How much of a refund would I get back? What are the criteria to receive the credit? So I'm going to attempt to answer the most common questions about the bill. Keep in mind, I am NOT a tax professional or accountant and always recommend when it comes to your taxes to seek the advice of an accredited tax professional.

That being said, the bill states that first time home buyers can claim a tax credit worth $8,000 OR 10% of the home's value, whichever amount is less. So, if you bought a condominium for $65,000, your tax credit under the bill would be $6,500, not $8,000.

Qualifying

In order to qualify for the credit, the home purchase must be made between January 1st and November 30th of 2009 (so if you buy a home on December 1, 2009 you are not eligible). In addition, there are income restrictions as well. To qualify, a single person must make less than $75,000 a year. Married couples must make under $150,000 a year. However, higher income buyers may receive a partial credit. You must also live in the house purchased for at least three years or you will be required to pay back the credit. The property being purchased can not be owned by a close relative like a parent, grandparent or one of your children. The definition in bill for a first time home buyer is anyone that has not owned a home in the last three years.

Tax Filing

The credit can be claimed on your 2008 or 2009 income taxes. Now as I said you can claim the credit on your 2008 tax filing. If you have already filed them, you can file an amended return to claim the credit if you wish to do so. Based on the feeback we've been getting, the process takes about 12 weeks. Another great thing about the credit it that it is fully refundable, so even if your total tax bill (refund) is less than $8,000 (and you qualify for that amount of a credit), you would still receive the full $8,000 back plus the amount you had overpaid.

For example, John's taxes showed that he had paid $5,000 in taxes over the year. He filed his return and he actually only owed $3,000 in taxes. Normally he would have received a refund of $2,000. But under this bill, he would receive the full $10,000 instead! To claim the credit on your taxes is just a matter of filling out the form, without any additional paperwork involved.

This is a simplified breakdown of the economic stimulus bill. I highly recommend consulting a professional tax service regarding your taxes. You can download the tax form here: http://www.irs.gov/pub/irs-pdf/f5405.pdf

Thank you for reading our real estate blog and feel free to contact us for all of your Las Vegas NV real estate needs.  

Source: CNNMoney.com

Comments

Getting Married and Moving Now What????

My question is. I claimed the tax credit on my 2009 taxs when I was single and closed on my house 01/01/2010. I am planning to get married in 2012 and purchase a move up property to fit out starting family in a different county were we both work. Are there exceptions to the pay back rule for life changing events?

Disallowed again!

I keep getting jerked around, first because I did not get a HUD-1 because I used a Home Equity line to buy this house, then because I failed to change my licence and auto registrations(there was no requirment that I saw for this) to the new address and now they tell me that their research shows this house in my name for several years(which is false). The tax advocate abandoned me, so I decided to take my paper work and just go to an IRS office. Anyone have any advice?

Repayment of 1st time home buyers credit for 2009

I am a real estate agent and do not want to give any bad advice. I have a client who purchased a home in August of 2009. They planned to live there for many years but the husband lost his job and was unemployed for 4 to 5 months. He has since found a new job in another town (hours away). Is there any way my clients would not have to pay the whole tax credit back. They are still trying to recover from his job loss and they will be luck to break even if they sell their home.
Thanks for any and all help you might have for me.

Coverage of this Tax credit was very misleading!!!

I was a first time home buyer in 09, but because my husband had a mortgage in his name, I was disqualified and we just missed the "upgrade tax credit". What really frustrated me was the agencies were looking at to purchase our home were assuring me that I did qualify.... 6000.00 -8000.00 sure would have been nice but it just didn't happen for me!!!

Renting questions

My husband and I bought our house in November of 2009. He is being relocated for work out of state for 3 years. We do not want to sell our house but we do want to rent it out while we are gone, we want to come back to live in it after his 3 years is up. Will we have to pay back the $8000 tax credit we recieved?

Housing Credit/Renting

Hi, I found your question while searching for the same answer. I have only been in my place for a year but need to rent it now. Not sure if I can and so far have not found the answer. Just wondered if you were able to?

It must be YOUR main

It must be YOUR main residence in order to keep the tax credit. But, now I have a question. My husband and I purchased a house together. He claimed the tax credit on his taxes, but now he needs to relocate for work but my daughter and I were going to stay here til the end of school. Would we have to pay it back?

Finally Recieved the Credit

Almost one year to the date we sent in all of our information. At first we filed for the first time home buyer, but discovered later that we did not qualify because we owned a mobile home. So we closed that tax case and opened up a new one under the long-time resident credit and resent everything previously sent along with mobile home information. Eventually, we had to contact a tax advocate. After speaking with the tax advocate and 5-6 weeks later, we received our check.

Will the IRS take my return.

I purchased the home in 2009 had an amended return done to get the FTHB credit, put the whole check towards the balance on my house. After a year and a half, I gave it back to the man who sold it. When I file my taxes for 2011, will the IRS take my whole refund towards the FTHB that I have to pay back?

I have my tax return for the

I have my tax return for the years of 2009/2010, And my husband doesn't. Because he didn't work for those years.
Will this be a problem when we purchase a house??

Question about selling my house less than 3 years later

We bought out house in May 2010 and got the 8000 home buyer credit. We have put about 15000 into the home (floors), but now want to sell to buy a house with a little more space down the street. Will we have to pay the 8000 back if we sell our house to buy another one? I seriously doubt that we can sell our current house for the original price plus what we put into it with the market the way it is. Thoughts?
Thanks!

Yes, you will have to pay

Yes, you will have to pay the $8,000 back. You have to stay in your first residence for 3 years or else you have to pay back. Doesn't matter if you lose money selling your first house.

I received the $8,000 credit

I received the $8,000 credit as well, purchased my house in May 2009, according to the regulations, I have to live in that home until May 2012 to keep the $8,000. I understand that, but my question is, if I decide to sell the house just shy of those 3 years, like 6 months to be exact, do I have to pay the entire $8,000 back or just a partial amount? It doesn't seem fair to have to send the entire amount back, after all, I lived in the house for 2 and a half years and I used that money to fix up the house. Can anyone help me?? I've asked several realtors and finacial advisors, they all do not seem to know the answer!

i bought the home in 2009

i bought the home in 2009 march. i was wondering if i can
sell it next year or do I have to wait until i have lived here three years? from purchase??

payback

Payback? let me clarify myself. Bellow are info available at IRS website:
" You purchased your home in 2009 or 2010.
For the three years after you receive the FTHBC, the IRS sends you a letter called a Notice CPO3b, Courtesy Message About your First Time Homebuyer Credit. This notice lets you know what to do if you sell the home or it is no longer your main home. Generally, you must repay the entire credit for the year you sell the home or it is no longer your main home. There are some exceptions to this rule, however, and you do not need to repay the FTHBC for a home you purchased in 2009 or 2010 if it remains your main home for the three years after the purchase. To repay the credit, you must attach a completed Form 5405 to your federal tax return for the year the home stops being your main home. Find more information here on Repaying the Credit if your home is no longer your main home. "
Also I already receive my tax credit. If you fax the paperwork they request to prove you are FTHB better not, send by regular mail. I have that problem before.

What is paperwork are requested?
1. A copy of your most recent monthly mortgage statement
2. A copy of the final closing contract (for example, the HUD-1 Settlement Statement), bearing all parties signatures, the property address, the seller(s) and buyer(s) names, and purchase price
And If the home you purchased was newly-constructed, a copy of the occupancy permit
Provide at least two of the following:
3. A copy of your current driver’s license or other state-issued identification showing your home address
4. A copy of a recent pay statement (within the last two months) showing your name and home address
5. A copy of a recent bank statement (within the last two months) showing your name and home address
6. A copy of a current automobile registration showing your name and home address

Per the IRS, you would have

Per the IRS, you would have to pay a pro-rated amount back, not the full $8000 if you sell the house before the 3 years are up. I'm not sure of the math, but it would be based on the final settlement date, not when you put it on the market or went under contract. The IRS would calculate the amount to be paid back based on the date that the ownership changed hands.

okay, bouncing off that

okay, bouncing off that initial question: we were wondering if we could rent out the home we got the tax credit for and buy another without having to pay the 8k back. We would still have ownership, but it wouldn't be our primary residence. Any input would be appreciated.

sad i have to pay back my $7500.00 first time buyers loan

I was told it was the thing to do by my realtor. BUY do not rent… Bush gave the incentive to buy buy buy… help the economy…. so I did! Less than six months later Obama gave a better tax incentive that dose not have to be paid back…. Since my property value dropped over 25,000.00 and I got laid off my job. Found a new job making less money… in the hole. Can't rent the place or I have to pay it all back at once…. This year I had to pay back my first installment of $500 towards my $7500.00 dollar loan… not sure how it was a tax incentive??? Yet... if I purchased 6month later with Obama I would not have to pay back $8000.00… what to do? I think it’s a joke and unfair. I am a single women just getting by and trying to make life better. The economy is weak and many are walking away from their houses and I still have to pay back this stinky loan… what a joke! The greed of many put America here!
HELP!!!! How can I fight this BS!
I do not want to pay back anymore money until my property goes up once again...

I purchased a town home in

I purchased a town home in June 2011, I had gone under contract in dec 2010 I fit criteria for TFTHBC. I went to a professional tax preparer to ensure everything was done correctly; unfortunately, I still got a letter stating I needed to send in my settlement statement, because I didn't sent it originally (not true). I did not receive that letter until the day in was supposed to receive my electronic deposit, 8 weeks after I had sent in my return.

I sent in the requested paperwork and continued waiting. The deposit did not show up in my bank account and Where's My Refund said to wait til the 25th to call about it's status if not rec'd. The woman I spoke to that day said the routing number my refund was sent to did not match the number I told her when we tried to verify; she said I would have to call back on Monday(which I questioned b/c it was going to be a federal holiday, and she giggled, said she forgot and corrected herself with Tuesday) she said they were waiting to see if they could PING my return to find out where it went. H and R Block told me the IRS finds out immediately if the returns go to somewhere it shouldn't. I believe this employee straight up lied to me because she was too lazy to do her job.

This week I called to find out the status and I have been told a papercheck will be cut next Friday and sent w/in 4 days of that. The routing number on my tax return was correct! I don't see why it would have been changed. It is not an internal bank routing number, it's the same one my military paycheck is sent to. Of course, the employee I spoke with this week said if the employee last week had clicked deeper one more screen to research my return she would have seen that my return was waiting to be approved to be sent by mail, and that if she had done that last week my check would have been cut and sent this Friday.

Now I am wondering what will possibly go wrong next!

Going on 2 1/2years now, and still waiting.

I bought my house in August of 2009, filed my taxes in Feb of 2010 and sent in the forms by mail to the IRS for the credit. My g-friend at the time gave me 1500.00 for closing costs. 6 months later after closing, I recieved a form where she had to sign saying she really did give me this money for closing costs. Since returning this form to them, I haven't heard anything back. After reading all the rules, it appears I should still get the credit, regardless of who helped me with closing costs. I've called them 4 times, all they say is that due to people acting like they bought a house and trying to scam them, they are overly swamped and backed up. 2 1/2years!! REALLY! If its really a damn LOAN, than I don't want it obviouslly, but if it's credit than I DO! Any suggestions? SO FRUSTRATED!

Got our refund, no problems so far.

I bought my first home with my husband last spring, and we decided to wait until the 2010 tax year to claim our refund instead of ammending our return for 2009. We mailed out our taxes the first week of April, and got our tax return with the homebuyer credit today.

I read through the tax preparation material carefully and made sure to include all information required the first time I mailed it out, so the IRS never called looking for more information or asking for more time. So, I guess as long as they don't end up asking for the money back in the future, it's all gone off without a hitch for me.

FTHB Credit disallowed

I purchased a piece of land in March 2009. In April 2010 I purchased a mobile home and contracted a local builder to grade the land, move and set the mobile home, and install the septic and well systems. I got my occupancy permit before the June 2010 deadline when the FTHB credit was due to expire (but was later extended by 3 months). I filed an amended 2009 form for the FTHB credit. Four months went by before I was informed that it had gone up for review and the IRS requested some additional information. I sent them the info and three months later they responded with a letter offering a third of what I had applied for. The attached letter stated that the cost of the land was disallowed because it had been purchased more than a year prior to the purchase of the mobile home. I've never heard of this requirement. I thought that since I'd completed everything within the given timeframe (January 2009 to June 2010) that I'd met the requirements. Has anybody else heard of this? Should I contest the decision?

Land is not a dwelling;

Land is not a dwelling; therefore, the IRS was correct in their decision.

divorce after rebate

My husband & I purchased a home in 2009 and just received the $8,000 rebate check. We are now starting a divorce..My husband said we would have to pay back the $8,000 if we divorce. I will still be living in the house and paying the mortgage myself. He will be moving on.
Is this true, will I have to pay back the rebate even though I do not intend on moving?

i got this answer from the

i got this answer from the the irs web page (http://www.irs.gov/newsroom/article/0,,id=206294,00.html) you can look into it your self. as long as you continue to occupy the home for 3 yrs you do not need to pay it back. but if you do sell it or stop using the home you will be responsible for the 8,000 IF there is a gain on the sale.

S14. During their marriage, Taxpayer A and B purchased a home together and claimed the credit. Later they divorced and Taxpayer A transferred the home to Taxpayer B under the divorce decree. Taxpayer A did not keep any interest in the home. Are repayments waived for Taxpayer A?

A. If the home was purchased in 2008, Taxpayer A is no longer required to repay any remaining amount of the credit. Taxpayer B now is responsible to repay the entire remaining amount of the credit in equal annual installments. If they purchased the home in 2009 or 2010, and Taxpayer B sells or stops using the home as her main home the home within 36 months after the purchase date, Taxpayer B must repay the entire amount of the credit if there is gain on the sale of the home

This is a bunch of BS

My husband and I sent off our amended tax returns at the end of Feb. I called today 4-27-2011, and was told that our check was sent out on April 15th, 2011. YEAH RIGHT...we are still waiting on that check....there is NO way it takes almost 2 weeks to receive it.

I filed for the FTHBC July

I filed for the FTHBC July 7, 2010. In November I received a letter stating they need additional information. Faxed the information to them the next day. I recieved a letter from them in November, December, and January saying they were reviewing my inforrmation. February they send me a letter stating that they need my college transcript to prove that I graduated from college. ??? I didn't understand why they needed that information, but I sent it anyway. I get yet another letter in March stating that they are REVIEWING my information. April comes along, and I get a letter stating "we cannot allow your claim because you have not provided more than half of your own support to live in the tax year. You are considered a CHILD." I am 24 years old, and have been suppoting myself since my son was born 3 1/2 years ago. IRS give me a break!!!!

bought a home in 2006

Hi,

I bought my first home in 2006 and did nothing but a 1040EZ ... can I ammend that to take the credit of has it just been too long?

You bought your first home

You bought your first home in 2006 and want to claim the FTHB credit? You may be able to amend the years that you did not claim your mortgage interest, but you're not going to be able to claim any credits for being a FTHB in 2006. A good source of information is IRS.gov...

Did you ever get an answer

Did you ever get an answer to your question? I have the same question....

Contacts

I wonder does anyone know who/what a person can do to appeal a denial from the IRS regarding this home buyers credit. The fact is, I did purchase the house and I am living in it. Just because I have not yet changed things like drivers licence or bank doesn't mean I don't qualify, so I want to fight this. I had an IRS advocate, but she has given up.. I was thinking either an attorney or a congressman..

How much do i need to pay for a house in LV annually

I would like to know, if I buy a house in Henderson, how much do I need to spend annually for taxes or others. Thank you! Maya

Denial of 1st time Homebuyers Credit

My husband and I have been trying for 2 years to get our credit. You don't have to formally appeal, but you do have to get your paperwork straight. Just because your advocate has given up doesn't mean its too late. Change your address on your bank account and driver's license and sent it in again--this will much cheaper than an attorney. (You can always change it back afterwards)

A letter from a lawyer might get a supervisor's attention, or try just calling the Accounts department and ask for one. Keep trying. I think we might be getting ours soon. Our delay was all because we had an owner financed transaction so our paperwork was in a different form. We basically had to go back and make new paperwork with the same info, different title. Good luck!

FTHBC

I also owner fianced my home and have been trying to get my paperwork straight for over three months, they keep sending me notices needing more info? Can you tell mewhat I'm doing wrong? Or what I else I need to file?

Disallowed 2008 First Time Homebuyer credit

I filed my 2008 taxes on 1/31/09 claiming the 2008 first time homebuyer credit. I owned a home from 2003 through April 2008 that was solely my home. I met my husband in 2006 and we married May 2007. He was never a part of my mortgage. By all definitions of the term my husband had never owned a home. I sold my home April 2008 and we built a home and closed on it June 2008. I called the IRS before claiming the credit to explain my situation and ask if my husband would be allowed to claim the credit for our new home purchased June 2008 since I wasn't married to him when I had bought my previous home. The IRS representative who was in the "first time homebuyer department" which had been created at the time told me the legislation they had received on the credit was very vague and my husband would be allowed to claim the credit. I also used H&R Block online tax to file my 2008 taxes which asked a series of questions to see if we qualified for the credit. We answered all of those questions honestly and it also said we qualified for the credit. So we claimed the credit. We got our refund and are still currently living in the same home. We received a letter from the IRS asking for supporting documentation for the credit late 2010. We provided that to them in the timeframe they requested it. 4 months later they sent us a letter saying our credit was disallowed and we owe the $7,500 credit back as well as $1,500 interest and an additional 4% interest on top of that (nearly 10k). We have already filed out 2010 taxes and included the first requirement payment for this credit of $500 on our 2010 taxes. My husband called to speak with the IRS agent who informed him that while we were qualified for the credit when we claimed it, congress added additional rules/requirements after that made it no longer qualified for us. I have spoke with a tax advocate who informed me to send the IRS a letter detailing my situation out and request that they provide me with any legistation that was available as of 1/31/09 that would have disallowed my credit. If they again deny this I will either have to pay the 10k or go to tax court and have to pay court fees. I just do not understand why this is happening. If I had known the 7500 credit would be required to be paif back two years later plus over 2k in interest we never would have accepted the loan. I can't afford to pay them 10k and I can't afford to pay on a loan this size on a payment plan. This will cause a huge financial hardship on my family which could result in us losing the home in question.

Same thing just happened to me

This just happened to me also. I answered all the same questions. I was not on the deed to our home or the mortgage and my husband purchased this home before we married. I called and they pretty much told me to bad you are disallowed. This is crap. People need to stand up against this. I am wondering how many other people are going through this. Maybe we need a class action lawsuit against the IRS.

The same thing happened to

The same thing happened to me so I got a tax advocate working on my case. The sad thing is that they took all of our refund this year. Had I known all of this was going to happen I wouldn't have accepted any sort of home buyer credit from the government. I feel they should have been straight forward about the whole thing and not taken advantage of people.

Credit rejected due to incorrect date of home purchase?

Just received a letter in the mail that mine was rejected as well, only they cited the reasoning as being my house was purchased prior to the "April 9, 2008" start of the credit, which is a FLAT OUT LIE because I closed and took ownership on April 18, 2008. I'm so mad I had to come online to see what anyone else was doing about this, since I've been trying to reach them by their toll-free number for the last 3 hours and keep getting the automated "Due to circumstances beyond our control, we are unable to take your call at this time" message. I've only rented before this home purchase, I'm not married, and I closed on the house with no one else, so I'm not really sure what is going on other than they just have their dates wrong. Does anyone have any suggestions that aren't going to cost me an arm and a leg just to fix their mistake????!?

date of purchase not before april 9th,2008

i have contacted my attorney for this very issue. i should know something tomorrow 8/10/11.I the mean time, find your hud 101(it is a settlement statement that shows who got paid what, etc.) while i wait to speak with my lawyer. the date should be clearly noted as to when you closed on your home. if i am right the closing date is the actual purchase date; in other words you should be ok.

Qualifying for the credit

If the property that was sold qualifies as taxpayer's (husband and wife) primary residence for the five out of eight years prior to the sale and the sellers repurchase another home within the time period to receive the $6500 credit for 2010, and if the the home purchased includes the daughter and son-in-law on the deed with the taxpayers, do they still qualify for the credit? Thank you for your help.

Screwed

So got my return and apparently the IRS took out 3000 dollars to repay my home buyers credit. Even though my paperwork states 200 per year over the next 15 or 16 years. Gov. screws me again. Voting conservative from now on.

Finally after a year of waiting.....

April 1st we will have been in our new home 1 year and just got word that our tax credit had been approved and we will receive it in 5 to 7 days. It was a long uphill battle and we had to file twice and send it a bunch of documentation more than once. We had decided that the whole thing was a myth. We also had to get a taxpayer advocate involved. So folks, don't give up even though it is hard not to.

Question about your refund that you posted

hey..we have been in our house since July and we too had to send all the documents twice. Last call we made said the papers were sitting on someone's desk for review. My question: did you get interest on the money? we were told we would, but the interest would be taxed next year!!!! We aren't giving up!

We bought our house in April

We bought our house in April 2009 and filed for the credit in August of 2009. We received a letter in Feb. 2011 (18 months later) stating that we would get our check in 6-8 weeks. This week will be 8 weeks and we have not received anything yet. I was just wondering if there was anyone else who had received a letter stating you would have the check in 6-8 weeks actually did NOT receive the credit (as I fear may happen.)

The so-called home buyer’s

The so-called home buyer’s credit was a Govt. scam to get people to buy homes, many did not get it because the IRS personnel are too stupid to figure out exactly what constitutes a purchase!

After 13 months, they want to decline me because I have not yet got a drivers license in the state I moved to and/or have a receipt for moving expenses or a bank account in that state, excuse me! I didn't see where I was obligated to do these things right away! Is it not ok to do the moving myself?

The agents at the IRS are stupid! And the so-called advocates are useless as well.

I bought a house and I'm living in it, I don't know what else I can say, it’s really stupid, Maybe I should consult an attorney...??

Home Buyer Incentive Check

Purchased a home, waited for incentive check which never arrived. This year, 2011, our tax specialist informed us the check HAD been sent. In other words, the Government had cut us a check, we just never received it!

Now what do we do?

5405 Refund Problems 2011

If you filed a 5405 on a 2008 tax credit and haven't gotten your refund, you're far from alone. You can join the conversation or get information from over 1000 other people experiencing the same problems at http://www.lvrealty.net/news

update

Everyone who is still waiting for the FTBTC keep fighting and don't give up conact your tax advocate if you have to to get help. We have been waiting for this approval letter that we received today we were turned down three times for three different reasons and we sent to appeals after the tax advocate helped us and we won we are getting our credit with in the next four weeks after waiting since sept 2009. So keep fighting don't let the government win. because if you quit u won't know if you couldve changed the answer to a better one.

8000.00 no where to be found.

I had no idea so many people were having the problem with this tax credit.
Seems the stimulus to get people to buy was just a ploy to get people to pour money into the housing market. I've been waiting a year and a half and still no resolution in site. Endless letters saying they need this documentation, this HUD statement etc...case closed, case opened...and in the meantime the interest just gets higher and higher.
My situation is that I cashed in stocks to be able to put a large down payment down for the home, That stock/savings check along with my yearly salary took me over the 75,000 total income limit. My argument is that my savings should not be included in the total yearly income and the credit should be based on my salary, wages and tips which is clearly under 75,000 which they can see from my tax return. Is this a useless battle I am fighting? Should I continue to fight and send more letters or just give up? Any advice would be appreciated.

Do not give up. If you feel

Do not give up. If you feel you have the credit due you, do not give up. Your stock and savings is money you already had and I agree it should not be included in your annual salary... Find a tax advisor that can help you. they will know the tax laws.

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