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

First Time Home Buyer

The IRS states that if you haven't had the home as your primary residence for three years, (you rented the property out and live in a rental), then you can qualify for hte credit.

Purchase from Parent's Estate

My Mother's Estate is selling her home. I am buying the home from my brothers. I inherited my interest, but I do not think brothers are consider relatives, according to Form 5405.

I qualify in all other respects; Income, have not owned a home for 3 years, etc.

Would I qualify for the Credit.

Not married

My boyfriend and I purchased a home together we are both on the deed and all the paper work, how do we file our taxes our 2008 taxes were not filed together do we need to wait until 2009 and file taxes together or is there a way for us to claim the 8000 with us file separate.

You can file seperately.

You can file seperately. One of the fist questions on the tax credit form is "Are you a 50% owner or 100% owner of the home?" Both of you need to file as 50% owners.

I actually had the same

I actually had the same issue. You can split it up however you wish. If you both want to amend your taxes and get 4,000, you can do that. I actually just amended my taxes and got back the 8,000 (we are sharing it of course).

We are in the process of

We are in the process of amending our taxes, how long did it take you to get the credit once the amendment was filed?

Tax Credit

We filed ours on March 17th 2009, it's July 9th and we still havent received it.

When we call they say they have it and a credit is due, it's just still "processing".

me either june 14

16 weeks amendment

qualifications if cash purchase

my daughter has never owned property and we are buying her a town home with cash. Can we have it put in her name and have her take the deduction even though she has very little income because she is still in college. She is 23 years old. There would be no mortgage.

Why in the world should she

Why in the world should she be eligible for the tax credit?!?!?! Isn't this to help people who actually have to pay for their own homes, not a gift from someone?? Aren't you trying to defraud the system??

WOW, I think you shouldn't

WOW, I think you shouldn't be buying your kid a house. that shoes she'll never have financial responsability ever. ARRgh

First Time Home Buyer Tax Credit

My husband and I puchased the home we rented in Oct . 2007 with a VA loan. We had a 6.5 interest rate . We refinanced March. 2009 at 5%. We had not owned a home in 8 years. We also owe a IRS debt from a family business in which we are making payments . Do we qualify for this first time home buyers package even tho the money will go back to the IRS?

Qualifiying

No, sorry.

Down payment requirement

Is the USDA an eligible loan since there is no down payment. There seems to be confusion as to the downpayment requirements.

Loan

I'm not sure. I can refer you to someone if you like.

My son is 18 years old and

My son is 18 years old and he never filed tax on his own. Now is going to college and I want to buy a home for him. Since he never own a home before, could he qualify for this $8000 tax credit even if I paid for him ( of course, he will be the owner of this property)?

Thanks

Qualifying

He would need to meet the other qualifications as well as live in the home for 3 years. Talk to your tax preparer. He should be the only one on the deed as well.

Buying Land Count Ad First Time Home?

Hopefuly you can tell me if i qualify for the 09 tax credit if i buy land only. There are no structures on the land, the land may or may not have address. If my answer is no, know this, I do plan on building a house on the land, and maybe living in a mobile home on the land untill the house is finished. Is there any loophole that may be able to help my situation. I have never owned a home.

Put a mobile home on it

You *might* qualify if you put a mobile home on the land and live in that. But you might have to live it in for 3 years. You really need to speak to a tax attorney about it, since you want to build a home on the land.

buying a HOME

im wondering if i purchase and and put a home on it could i combined the price i paid for the land and home to recieve th tax rcedit.., not the land does have two trailers on it as well so it does have a home on it ..

Hi, I am curious about my

Hi, I am curious about my qualification for the 8000 tax credit. My husband and I just paid off a small mobile home that was purchased as a "starter place". The home was originally financed in my husband's name with my mother as a co-signer. After five years, the balloon payment on the mortgage was refinanced in my husband's and my name. Does it sound like either of us would qualify in any way? Does a mobile home even count as a "home".

My wife is a 1st Time home buyer

I have owned my current home for 5+ years and have recently married. My wife has never owned a home. We would like to move to a larger home and were curious if we would be eligible for the tax credit in her name. We would like to both be on the new mortgage, but it is not a necessity as she would qualify on her own. Thanks

Similar Situation

I have a very similar question, I am getting married in September, I own a home but my future husband has never owned a home. We are looking at buying a larger home (and putting it in his name alone in hopes of getting the tax credit) does he need need to purchase before we get married or would he still qualify as long as it is only in his name once we are married?

Taxes

Per the IRS: Eligibility for the first-time homebuyer credit is determined on the date of purchase. If Taxpayer A, a first-time homebuyer, buys a house and then later that year marries Taxpayer B, not a first-time homebuyer, the credit is allowable to Taxpayer A. Taxpayer A may take the maximum credit.

was this answered?

I didn't see an answer.

HELP!!!!

Filed our 2008 taxes as married filling jointly. I currently own a house which I bought in 2007. The mortgage and the deed are both under my Son and my name ONLY. My husband is not. My husband is in the process of buying a home, will close next month. Will he qualify to claim the $8000 tax credit?

First Time Homebuyer Credit

We purchased our home in February 2008 - I've gone over the form 5405 and it says purchases after April 8th - am I reading this right? So anyone who purchases a home in 2008 from January to March is not eligible for the credit? Or do we still qualify? I'm really confused.
Thanks

7500 credit

You are reading it correctly. You had to purchase within a specific time frame.

my ex-husband and i owned a

my ex-husband and i owned a home, we got divorce almost a year ago and he stayed with the home, which i QCD to him, i moved into my parents house until i purchase a new home in Jan. 2009. Do i qualify for the $8,000.00 credit? Thanks

Ownership

Since you have owned a home within the prior three years, you are not eligible.

MORTGAGE INTEREST

I BOUGHT A HOME AND MY UNCLE LIVES W/ME...HE PAYS THE MORTGAGE...HOW COULD I GO ABOUT DEDUCTING THE INTEREST ON MY TAXES..HE ISNT FILING ANYKIND OF RENTAL CREDIT..I KNOW NOT MOST ETHICAL THING TO DO, BUT AM SURE PEOPLE DO IT..ALSO WOULD IT BE BEST FOR HIM TO PAY ME AND THEN I SEND CHECK TO MORTGAGE COMPANY OR HAVE HIM PAY SOMEONE ELSE AND THEY MAKE THE PAYMNT..THANK YOU FOR RESPONSE..

buying home from my parent

my wife and i got married in november 2008. we have never owned a home and are going to buy my dads house. do we still qualify for the tax credit?

Buying from a Relative

According to IRS doc 5405, you can not claim the credit per section 8:

8. You acquired your home from a related person.A related person includes: parents, grandparents, spouse, children or grandchildren.

I believe this person will

I believe this person will still qaulify for the tax credit because they are buying it and it's not being giving to them as a gift or etc.

Stay at home mom

My husband and I just financed our home that we had built. Since I am a stay at home mom, my husband was the only one on the loan (deed) and the house is currently in his name only. I am assuming I am not the only one in this situation, but I am wondering if that may be an issue (neither one of us has ever owned a home previously) with getting the tax credit...

Who owns the house your husband bought

What state are you in? Was the house purchased in your husbands name because of credit issues?
In Texas, and many other states, anything purchased during marriage becomes community property. In other words, you own half.

8000 credit single mom

in 2000 my husband at the time bought a house, my name was on the mortgage and on the deed, i never payed any payments to the mortgage only he did. we got divorced in 2007, he kept the house and my name was taken off the deed and mortgage..i am a single mom and had been renting a apartment since 2007.i am buying a home this year .do i still qualify for the tax credit?

DEED

You have been a property owner in the prior three years, so you are not eligible.

coop purchase

Does purchasinng of a coop qualify for a tax credit under the new first home owner bill. This is my first home.

Primary Residence

I lived and rented a home in California and then bought a home in Arizona, which I am going to now move to. I have not owned a home for the prior 3 years. My question is, even though my primary residence was California when I purchased the home, I am moving into the home within 6 weeks of purchase and Arizona will then be my primary residence. Would I still qualify for the credit?

Qualify as 1st time homeowner after foreclosure

On September 7th, 2006 a substitute trustee's deed was issued to the mortgage company in a foreclosure sale on a house I owned. If you look up the title information it shows the deed was recorded as a permanent record on 12/27/06. The house sold again to a individual in March of 2007. I assume I was no longer considered the homeowner after the house sold on 9/7/06 but I want to be sure I am eligible for the $8000 if I purchase a home AFTER 9/7/2009. Everyone seems to have a different idea on what date to use - who would have the final answer - the IRS? Thanks for your help.

Mobile home do not own land

I have lived in a mobile home for the past 11 years in my husbands name, I am buying a house tomorrow, in my name, I know that married makes us both as owning that mobile home. Question is, I heard from my mortgage lady that another client has been told, that if you don't own the land the mobile home sits on, then you qualify (and the deed to the land is tied up in someone elses home that will take my mobile home if they default on their loan since it is sitting on their land). Do I qualify as a first time home buyer. No clear answers previously. And I heard it from a friend who heard it from a friend who heard it from another, does not work for me.

Per IRS guidelines (see

Per IRS guidelines (see instructions to form 5405) the first time homebuyer credit follows the rules for principal residences set out in the deductible mortgage interest rules. Publication 936 states a principal residence is any dwelling unit with cooking, sleeping and toilet facilities. As such a boat, motorhome, trailer, mobile home, etc. may be considered principal residences. Your mortgage lady is wrong, categorization as a principal residence has no bearing on if you own the land or not (as a boat qualifies but is not situated on land at all). Since you owned a mobile home that qualified as your principal residence during the three years prior to buying a house you would be ineligible to take the first-time homebuyer credit.

Definition of a relative

Me and my spouse file jointly… If my spouse were to buy a home from her mother-in-law (my mom) with only her name on the deed, being an in-law, would she be considered a relative? And would we qualify for the credit?

Purchasing a land contract home

If we are listed as the primary resident, homestead, and are purchasing the home through land contract... Does this qualify us?

land contract

do land contract buyers qualify in michigan for 1st time tax credit?

Qualification guidelines

One of the guidelines for qualifying is that you have to live in the property for three years.

Getting married in 2009

I'm getting married this year 2009. Will we qualify for the higher married income limit and get the credit?

simple questions

i qualify for this, and i want to amend my 2008 tax to get the $8k asap. what exactly do i need to do? just fill out the 1040x form and the first time homeowner form and send them both in? i'm not paying a tax person to do this, i'm sure i can handle it, i just want to know exactly how do i amend my 08 taxes..i did the 1040ez form for 2008 and that was it.... thanks for the help!

Would I be considered a first time homebuyer???

My mom put my name on a house that my dad and her owned together after he died. She removed her name from it. Technically, I own this home-even though I never bought it. It was gifted. I live in it with my mom. I have never had a mortgage and I have never bought a home of my own.

I want to buy a new home and was wondering would I be considered a first time home buyer? I am interested in the $8000 tax credit.

Post new comment

The content of this field is kept private and will not be shown publicly.