First Time Home Buyer Tax Credit Extended

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There has been a lot of debate of the First Time Home Buyer Tax credit in the last several months, intensifying as the original November 30 deadline approached. Today, President Barack Obama signed into law bill H. R. 3548, granting an extension of the credit until April 30, 2010. The measure passed with an unprecedented show of bi-partisanship with a vote of 403-12 in the house and the Senate approving it unanimously.

First Time Home Buyer Tax Credit Changes

The bill made some changes to the original tax credit, aside from extending the deadline to April 30, 2010 to claim it. However, you have until June 30, 2010 to close on a property and still be able to claim the credit. So, say you put in an offer on a home towards the end of April next year. The offer is accepted and you open escrow on the 28th. As long as you close escrow before June 30, you can still claim the credit (of course, you have to meet the other requirements as well).

Credit Extended to Current Home Owners

Another significant change to the original credit is the addition of a smaller credit of $6,500 for current home owners if they purchase a new primary residence. There are of course, some requirements. In order to qualify for the credit, existing home owners must have lived in their primary residence for the last consecutive five years of out eight. The new home purchased can't exceed more than $800,000. You must also meet the new income requirements (see below) and just like first time home buyers, you must live in the new home for at least three years. Otherwise, you will be forced to repay the credit.

Income Limits

The other major change to the tax credit is the raising of the income limits. Under the original tax credit, a single person could earn no more than $75,000 a year and married couples $150,000. Now the income eligibility limits for both groups of home buyers have been raised to $125,000 a year for singles and $225,000 for married couples.

Military Personnel

Members of the Armed Forces and certain federal employees serving outside the U.S. have an extra year to buy a principal residence in the U.S. and still qualify for the credit. An eligible taxpayer must buy or enter into a binding contract to buy a home by April 30, 2011, and settle on the purchase by June 30, 2011.

The bill H. R. 3548 also extended unemployment benefits for another 14 weeks for those out of work people who have exhausted their benefits. It also provides additional tax relief for small businesses.

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Source: Associated Press

Comments

track home rates

CoreLogic, which tracks home rates and other housing information, just reported that Bradenton-Sarasota-North Port home prices, including short sales and foreclosures, fell by 9/75 percent in March 2011 from March 2010. Excluding distressed sales, priced fell by 4.76 in March from the same month in 2010, and by 3.97 percent in February from February 2010. Nationally, prices fell for the eighth month in a row after the rush of the home-buyer tax credit faded last summer. Including distressed sales, Florida prices were down 9 percent in the recent survey.

This loan will become due

This loan will become due and payable on your tax return one year after the 'credit' is taken. If you purchased a home, you will not receive a letter from the IRS.

$8,000.00

Don't forget your military clients, the $8,000.00 extension for them is about to run out. They deserve it.

First Time Homebuyers Credit

What most people fail to realize about this credit is that it is not a credit at all! It is a no interest loan! This loan will become due and payable in $500 increments on your tax return one year after the 'credit' is taken. Therefore, if you purchased a home in 2008 (as I did) you will not receive a letter from the IRS until December of 2010 stating your repayment requirements for April 15th of 2011.

Needless to say, I was shocked to receive this letter in that I did not sell or rent out my primary residence and never signed a promissory note for such a loan. Had I been aware of this fact, I would not have allowed my CPA to take the credit on my behalf. Actually, I never heard a word from my CPA as to whether I wanted to borrow $7500 from the IRS which leads me to believe that even my CPA was not aware of the repayment requirement.

Bottom line...lets call a spade a spade, a credit a credit and a loan a loan. In my opinion, this practice by the IRS was quite deceiving and I am waiting until the majority of takers in 2009 realize what has transpired.

Stimulus package

Does anyone know who I can contact about the $8000 stimulus package? My son bought a home last summer and filed his stimulus package right away. Here it is May 9, 2010 and he still hasn't got it. They are trying to say that he owned a home that he rented. He has talked to an advocate but this person is for the IRS and they are not getting anything done. This isn't fair, what is a person suppose to do?
Is there anyone on his side that can help him with this?

Good Idea

I like the idea of extending this credit, but I don't know why they didn't go ahead and extend it for the entire year, because we all know it's going to get extended again.

Direct Deposit to Closed Account

I baught my home back in Aprl and send my forms to ammend my taxes on April 14. The Irs Recieved on April 18. Here it is 7 months later and I'm still waiting. I sent my hud1 form back in September and have called the irs every week since. I called yesterday Nov. 9 and was told my full balance was sent Direct Deposit on Nov. 6. The would be great if I still owned that account. Now I have to wait for the funds to be sent back to them. Does anyone know how long this could take?

direct deposit to closed account

AMENDED RETURNS CAN NOT BE E-FILED OR REFUNDS DIRECT DEPOSITED
TO YOUR ACCOUNT. WHO EVER HOLD YOU THIS INFORMATION IS INCORRECT.
I WOULD BE CALLING BACK TO THE IRS AND FIND OUT WHERE YOUR
REFUND WAS MAILED TO.

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