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

Cash for clunkers was not a

Cash for clunkers was not a tax credit, just government money incentivizing auto purchases. The homebuyer's credit is an actual reduction in the amount of tax you've already paid, or will owe for 2009 income. It is impossible for it to be included in gross income when the credit is actually coming from witheld tax calculated from gross income.

I'm in the same boat. Mailed

I'm in the same boat. Mailed to atl. Accepted on 7/9. Sent to a processor on 7/28. Nothing yet. I'll keep you posted.

We Closed on June 29th, IRS

We Closed on June 29th, IRS recieved July 1st told me not to call back until after OCT 21st. Their was supposed to be between 8-12 weeks. I am hoping to get before I file next year. This is a frustrating situation & its very hard to get anything out of them.

Do both spouses have to live in the New House?

My Husband and I would like to buy a fix-up property in Michigan using the first-time home buyer credit. (We qualify in every way for the credit.) As he is currently unemployed, we're hoping that he could move into the new home and begin fixing it up while I stay in Arizona (where we currently rent) and keep my good-paying job until the economy picks up in Michigan and I can find work there.

My question is, do both spouses have to live in the house to qualify for the credit??

You might want to call the

You might want to call the IRS to find out for sure.

You could possibly have both of you listed as residents at your new home. Have your current address as your temp work address. Lots of people work one place and live another. it's just a thought.

I got Mine in 4 Weeks

I submitted mine on July 21, and it was mailed out on Aug 21, I received it Monday August, 24, 2009! I was told it would be 14-16 weeks..... which would have sucked!!! YeaaaaY Me!

check

i was just wondering where u sent ur return??

How could it be true?

That someone could possibly get their refund in 4 weeks, when I have been waiting 16 weeks and call the IRS every other week??

yeah that sux

I am still waiting form 05/18! Nice......Good for you - sux to be the rest of us!

I RECEIVED MY CHECK WITHIN 4 WEEKS!!!

I FILED AN AMENDMENT FOR MY TAX CREDIT. IT WAS RECEIVED BY THE IRS ON JULY 22 AND I RECEVIED IT TODAY AUGUST 24!!!

congrats. That's another

congrats. That's another thing that gets me about those idiots. My amended return was received on May 18th and I still have nothing from them. Good to know that some people have actually received their money. Otherwise, I'd be ready to assume it was nothing more than a scam.

Please Help Me

Would you please help fill out my form. please email to kynardshontae@yahoo.com

I have just close on a house

I have just close on a house August 17. I am doing an adendum to my 08 tax return. I filed married in 08, but will legally be divorced Sept 1, 2009. Since it is an adendum to my 08 taxes will this affect my ex's taxes in any way. Would she also be eligible for the stimulus if she wanted to close on a house in 09. She does not plan on buying this year, but was curious how it would work.

REFUND!!!

I just got off the phone with the IRS and after being put on hold for about 15 minutes (not inculding the 15+ minutes waiting to get someone on the line), I was informed by a very NICE (to my surprise) rep. that my ammended return was processed this week and a check would be mailed out on Sept. 4th. in the amount of $8089.03. If the check is infact mailed on Sept. 4th it will have only taken 4 weeks. I mailed my return to the Fresno CA office on August 5th. Woohoo!!!!!

Fesno location, HUD? deed?

I also just mailed mine today to the Fresno Location, did you include any copies of your mortgage paperwork (HUD, deed?)

Update on : Yay... I just called the IRS today 8/17/09

Hello, just an updated. I recived my tax credit Monday 8/24/09. It took 12weeks, we filed 5/26/09. Glad the waiting game is over. :)

got tax credit check last night!!!

amended return on May 26th and got check yesterday 8/25. it was for $8106, 100 in interest for some reason, not sure what that was for but we'll take it!!

I sent my amendment in on

I sent my amendment in on the same day, so I'm crossing my fingers that I'll get my very soon. Hopefully!

Examination/Audit

My husband and I received the dreadful examination/audit letter today from the IRS. After providing the requested documents to the IRS for verification, when can we expect the check? Can anyone provide insight?

Examination/.Audit

I submitted my paper work on March 18th, 2009, home was purchased on March 4th 2009. Sixteen weeks later still no information on my status.....four week later got the letter from the irs requesting the HUD-1 form......sent that in and now its almost September and still no infromation. I have contacted the Tax Payer Advocate, both Senators from the state of Florida....all l ever hear is six to eight weeks down the road. What a crock of crap this is. My dog could have figured this out in less time than the IRS.

Paul Niemeyer

examination notice

I too received a notice of the examination of records. I have already waited 14 weeks before receiving this letter. Has anyone received their money after the examination notice and How much longer did it take?

audit examination

I too received a letter after 15 weeks. I will fax the paper in the morning. Has anyone gotten their money after returning requested info. TIRed and Frustrasted witht the whole mess.

My amendment for this tax

My amendment for this tax credit went into the examination process on July 16 after a 16 week wait and as of today, nothing has changed. I sent the paperwork by fax on August 4 and they do show that it was received on August 6. I was told that I would be receiving a letter dated August 14 sometime before September 6 just stating that they did receive my paperwork. Haven't seen it yet. They did tell me that they do have 60 days from the day they receive my paperwork back to finish the examination and make a determination. So, you will more than likely still be waiting for a while.

EXAMINER LETTER

I got the same letter on Saturday. I called the number on the letter and was informed I could FAX the requested info. Also I asked how long it would take after they receive the info and the rep stated an additional 6 weeks...UGH! I have been waiting since May 2009 and it's going through the Kansas Ciy center. Hope this helps.

Received my check today!!!

Received my check today!!! Closed on my house in June. I mailed the 1040X, the 5405 and a copy of my HUD 1 on July 24th. I am in Kansas City, MO so my documents were mailed to the Kansas City processing site. I called the IRS today and the lady told me the check mailed on August 21, you can imagine my surprise when I came home to see the check in my mailbox... Total amount $ 8079.29. To address some previous questions - The check comes in a regular envelope but the window shows that government print thing. I think I received my check so quickly because I have never owned a house before, I have always claimed single and i live in the midwest...That is just my theory... .Anyway for all of you still waiting...Don't lose hope God always provides :)

1st time credit

I am really happy for you.

I am in Jefferson City, Mo. 1st home, file single...pretty close to your stats. I closed on my house 6/29. File at my local IRS office the next week and the Rep told me 3 to 6 weeks....I am still waiting. I called last monday and they said they had my paperwork but due to the large number of returns they were now getting it was taking 12 to 18 weeks. I understand there is probably wayyyy to many returns for too few employees. Trying to be patient but like most people that money would certainly come in handy right now with having just purchased a new home. I am hoping your good luck rubs off on me!!!:)

K

Messed UP

What is messed up is if you owed the IRS 8000 they would hound your ass and take your money from your check and damn bank account in efforts to get it back. IRS is scam and needs to be abolished. I was told I was recieving my check and then all of a sudden after that huge mortgage scam went through. They told me I was under investigation and would get back to me in 30 days.....

Scam...?

Scam...?

Sounds like you should pay your taxes when they are due and you wouldn't have this problem....

tax rebate

I've read that the rebate relates to taxes due for the "given year" meaning 2008 which I do not owe any taxes for and assumed I would get a refund. Well I was told today that I will not get any refund because of taxes due from previous years. So much for this helping me.

Back Taxes

Anytime you owe for previous years they will keep ALL refunds toward the balance due. We have been making monthly payments for taxes owed for the past two years. We still owe over 3k. So we will only receive just a little over 4k in our check.
I am thrilled that when they take part of our credit to cover this will have this off our backs. Plus no more monthly payments. That's over a hundred a month extra cash we're able to use for other things. It does suck that we've been making these monthly payments even though we know they will have their money as soon as the finish processing us. It's been over 12 weeks now.

tax specialist

Just wondering, how many of you filled out your own paperwork on your own? I want to do an ammendment to my 2008 returns, so I have to complete the 1040X and the 5405. These two forms seem fairly simple, but I want to make sure that I have do them correctly. I called today for an estimate and the tax specialist said it would cost me a minimum of $200. Do you all think that it's important to have a specialist do it for you - or is fairly straightforward? P.S. I got the feeling that the tax people just want to take advantage of me on this.

Tax Specialist

Find your local IRS office and take the Forms to them and they will fill them out and make sure they are correct. Your date you give them the forms is the date the IRS will begin the processing time. Make darn sure you include a copy of your HUD-1 document from your house closing as that will speed things up by at least a couple of months or more.

RE: Tax Specialist

I filed it on my own and it was very easy. I sent in the 1040X, 5405 and a document that showed our names, closing date and loan amount. We are in week 12 and are still waiting but I called last week and they said it will be mailed out Friday. I also recieved a letter saying we will get it within two weeks. I would not pay someone to do this for you.

I did it myself...it's easy.

I did it myself...it's easy. I use TurboTax to file my taxes so it's certainly easier that way than manually looking through documents. Don't waste your time getting ripped off by a so called specialist.

$200? That sounds kind of

$200? That sounds kind of high dollar. I had my CPA take care of it for me, as I trust him to handle my numbers. He does excellent work, is a straightforward guy, and gives honest answers. My fee was $40. If you're knowledgeable and patient enough to get through all the paperwork, save the money and do it yourself. If you're like me and worried about making a mistake and then getting hounded by the IRS like a common criminal, buy the piece of mind. Just shop around before you do it. Sounds like the "specialist" you called is just a specialist at separating people from excess amounts of money....steer clear! Good luck!

"filling out own paperwork"

I don't think it matters much. My Husband and I had a tax professional file our ammendment the last week of April, and we are still waiting. Apparently, our return got picked up by the Auditing department. The lady I spoke to assured me that it had nothing to do with our return, but that they randomly select returns for further review. This whole process it very stressful. If they take much longer, I think it may have been more advantageous for my Husband and I to have just claimed the tax credit on our 2009 return. I hope everyone the best. I know we could all use the extra financial boost in this tough economy.

As long as you have your

As long as you have your original 1040 you filed, a printer and a patient mind, you can do this for yourself. $200 is way too much for something you can do yourself.

Tax software

I use H&R Blocks software to prepare our taxes. I filed out return back in the spring. So when we bought our house in May I just went back into it, the forms are there for the 1049x and the5405. It's so easy to do this way. You might be able to pick up the software at Staples or Office Depot I think it's only about 39 or 49 something like that. 200 does seem excessive to filing.

if you need help just leave a message on here. I'll check back. Good luck.

you need to do your paper

you need to do your paper work yourself. my husband and i had pay $60 to have a tax professional to do our and he mess up and send the wrong paperwork. so the IRS send us the right paper to fill out so we had to start the process all over again. so now we have to way 12 to 16 weeks.

Preparing forms

Save the $200 and fill out the forms yourself. It is pretty simple to complete. I would suggest including your HUD-1 Settlement statement with all signatures. After 15 weeks of waiting I now have to provide that one form. Wish I had known when I sent the amended return! Good luck to you!

Please allow 12 weeks before calling.

A lot of you are complaining on how long it's taking. I am to waiting day by day for our check.

It has always taken 8-12 weeks or longer to process an amended tax return. This is not new for this year. By calling before the 12 weeks is up you're only delaying it for everyone since it takes more man power to asnwer phones, check status, etc.
Amended returns have always been handled a bit differently that regular filed returns. So these do take longer. Please allow them the full 12 weeks before calling. It's only fair to be considerate of others.

Filed April 15th. No

Filed April 15th. No response as of August 30th.

Have you called them? You

Have you called them? You should call and ask for a advocate. That is unbelievable. April 15th???

Hi, just to correct

Hi, just to correct something: The people who answer the IRS phones are NOT the same people (thank God) who process/examine our returns.

So calling doesn't hurt anything. I'm on freaking week 18 and still nothing. The guy actually said to me that it was "found money" and that I "shouldn't mind waiting as long as it takes no matter how long" that is.

Wow.

It's not "found money" it's our taxpayer's money--our money.

They don't have their system in any kind of shape to process so many amended returns. And the normal average for a normal amended return is 8 weeks, by the way.

I agree but, the process has

I agree but, the process has been extended to 16 weeks this year and they have said that in most cases it is taking the entire 16 weeks or more. I am currently on week 22 and I do call them at least once a week because I want to stay updated on my status.

Called today after reading comments left on here.

We bought our house in May. I mailed our amended return on May 28th to Atlanta.
I called the 800 829-0582 ext 462 today. I was told they received it June 1st that it took 8-12 weeks to process.

Hi all, I have been trying

Hi all, I have been trying to determine if I qualify for the tax credit. If anyone could help me i would greatly appreciate it! I just got married in june and we are looking to buy a house with the tax credit but my husband has owned a house a year ago. Would it be legit if the house was only in my name to make me a first time home buyer? Thanks in advance!

That is something you could

That is something you could do, but if you need his income to qualify for the mortgage it wouldn't be possible.

Do I qualify if my parent is the mortgage holder?

My (unmarried) father is paying cash to purchase my first house, whereupon I pay him monthly mortgage payments. He will be the mortgage holder and listed as the first Deed of Trust, but the house will otherwise only be in my name. Basically, it's as if he is the bank.
Do I qualify for the tax credit?

It is important to note that

It is important to note that you cannot purchase a home from your ancestors (parents, grandparents, etc.), your lineal descendants (children, grandchildren, etc.) or your spouse. Please consult with your tax advisor for more information. Also see IRS Form 5405.
(hope this helps, but not sure of your exact arrangement)

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