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

You would not be eligible

You would not be eligible for the credit as you did not "purchase" the home and the credit is based on 10% of the purchase price which in this case would be $0. That said, even if you could construe the transfer of ownership as a sale and determine some sales price for the transaction (your mother gifts you the cash to buy the house, etc.) You still would not be able to take the first time homebuyer credit as purchases from relatives (parents, children, etc.) are ineligible for the credit.

tax credit

My husband and I seperated this year Jan, 2009 and he owned a home that was foreclosed on in 2007.I'am a first time home owner do I still qualify.Thank you

Time

From the time you mail the amended return, about how long does it take to receive the 8000$?

I agree...how long will it

I agree...how long will it take to get the money? Will it be direct deposited if my original tax return was, or should I be waiting for a check?

I'd like to know too.

I'd like to know too. According to the intro it said about 12 weeks, and Im not sure if that was the estimated time if you amended or the time it takes if you filed for credit originally. I filed for the credit on an amended return, and its been 10 weeks... so far...

The IRS says 8-12 weeks and

The IRS says 8-12 weeks and it will be a paper check, not direct deposited. I am at week 8 and still nothing.

Would love to hear when others have actually received their check???

We FINALLY received ours on

We FINALLY received ours on 6/29 here in W Virginia! I hope you get yours soon!

there backed up big time, i

there backed up big time, i am on week 14 and they said its sitiing on some guys desk and has not been looked at yet. Dont count on it coming any time soon.

We filed ours on April 4th

We filed ours on April 4th and haven't received anything as of June 20th - so at least that long.

Length of Time

I agree, we closed on our house the very end of March and filed an amended return...it is now almost July and we have heard nothing from the IRS!

6 weeks

Hi My hubby and I filled our amended tax return on May 26th. It was thru liberty tax and then sent it through the mail. Ive been trying to track my return on the irs website but everytime I do it, it says wait another week then check. But I got my return (check) on July 6th. So it took 1 day under 6 weeks. Dont get your hopes up, hopefully it will come fast for you too. Also about a week before we got it we got a letter in the mail from IRS saying they recieved it and and added our credit and we should get it in about 2 weeks, well we got it in 1 week. Also, they added interested to out 8,000. so the check was really for 8,053.97. They added 53.97 in interested, not really sure why tho.

Tax Credit time

We sent ours in on March 17th 09, and it's still sitting on the IRS Desk, 17 weeks later....

Have they sent a letter to

Have they sent a letter to the person who has the return on their desk, telling them they have exceeded their time limit? I had to do that at 12 weeks and can call back after 16 weeks and talk to a taxpayer advocate to get resolution. I am getting tired of all this waiting.

Have not owned a primary residence since August of 2005

I currently own a home in Louisiana, but it has not been my primary residence since Hurricane Katrina (2005). I am leasing a home in another state at this time. Do I qualify for the $8000 credit if I purchase a new home in my new state of residence?

relative purchase

I know you don't qualify for the tax credit if bought from a relative, does this still apply if the relative bought the house as an investment to flip the house and then is now selling it to you. I thought it was worth checking on if this still applied if it was never their primary residence.

Of course it still counts,

Of course it still counts, you're still buying it from a relative. Doesn't matter why they bought it in the first place.

New Rules

Sadly the tax credit cannot be used for the initial 3.5 percent down payment required for FHA loans as they had discussed may be an option. At least the tax credit can be applied to a down payment in excess of the required 3.5 percent, points to buy down the interest rate and/or closing costs.

Do we qualify?

My partner and I along with his mother purchased a duplex in 2004. We live on one side and his mom lives on the other with two other family members. Those two other family members are paying rent to us that is applied towards the mortgage. They now would like to rent out our side of the duplex and my partner and I are looking to purchase a single family home to move into. According to some websites I've read that if you purchased a home with a parent you still would qualify as a first time homebuyer. Would that be true in our situation? We bought the duplex so that my partner's mom would have a place to live, and we have just lived on our side with the intention of moving out eventually to our own home so that his Neice could rent our side when the time was right. That time is now and we are hopefull that we can qualify for the first time homebuyers credit?

Duplex

I hadn't heard that Joe. I know there are some very specific rules regarding purchases with relatives. You're going to have to talk to a tax attorney about your options. If you are on the property deed, I think you'll be disqualified.

On deed, but not mortgage

My wife and I file a joint tax return, I am on the deed of the home but not on the mortgage. Would I qualify as a first time buyer since I never had a mortgage in my name? Please Advise.

Ownership

The guidelines specify ownership as a requirement. As long as you meet all of the requirements, since you are on the deed you legally own the property and therefore should be elligible for the credit. Congrats on your new home!

After divorce earlier this year

In 2008 we filed married, filing seperately, --got divorced in April and have an accepted offer to purchase home myself. Can I get the full $8,000 deduction by filing an amended 2008 form or do I need to wait to file for 2009?

Amendment

You can file an amendment.

Girlfriend Helping Me with Down Payment

My girlfriend and I are looking at buying a house. The mortgage and loan will both be only in my name as she owns a condo already. I have enough in my account to pay all the closing costs on my own all in my name. I intend on claiming the credit myself as I am a first-timer. My question is that after the closing is complete is it okay if she writes me a check for half of the downpayment or will the IRS view this as being bad and me not technically purchasing the home myself? Thanks!

Ownership

Property ownership is determined by the deed. As long as you meet the guidelines, you should be fine. The money from her could simply be a gift. Talk to your tax person.

Relative

From what I have read on the 5405 document they classify relatives as parents, grandparent, children, or grandchildren. Does that mean if my fiancé and I buy a house from my cousin we would still qulify?

Relatives

Since they don't classify a cousin as a relative, then you should qualify. I would still recommend talking to your tax preparer.

Husband Purchasing Home, Student Debt

So, we're purchasing our first home in my husband's name only b/c I have too much student debt. We file our taxes jointly. We planned on amending our 2008 taxes to receive the $8000 credit. However, I came across a letter to mortgagees stating that the homebuyer tax credit could be offset against student loan obligations. Does that mean that the IRS will take into account my student loans when determining how much of a credit we can receive? Or, will they only pull my husband's credit since his name will be on the title? I can't find any information regarding "offset" so I don't know if this is a dollar for dollar offset, or only relates to defaulted loans or what. Any light into what this could mean would be very helpful. Here's link to the letter I found:

http://portal.hud.gov/pls/portal/docs/PAGE/FHA_HOME/LENDERS/MORTGAGEE_LE...

Please advise. I'm trying to figure out if we need to file separately and then only receive a $4000 tax credit. It seems that many first time homebuyers would have student loans to pay so I would expect more information to be out there if this was really a big issue.
Thanks!

Husband Purchasing Home, Student Debt

If your student loans are not in default, the IRS should not touch the refund. If the student loans are in default, try to get into student loan rehab, then file for the tax credit. Of course, consulting a professional is best.

I am the owner of a LLC that

I am the owner of a LLC that buys, sells and rents property. All of the properties are under the LLC's name. I've never been a home owner personally. Would I qualify as a 1st time home buyer for a mortgage and for the tax credit?

First Time Owner

As long as you legally meet the requirements, I don't see why not. Best to speak to your tax preparer or CPA to verify it.

Confused

I have owned a condo for 4 years and do not qualify for the tax credit. However, my condo just sold and now, my boyfriend (a first-time home buyer) and I are looking into buying a home. We will both be on the deed, but he will not be able to be on the mortgage due to credit issues. My question is, can he legally claim the tax credit? If so, can he claim the entire $8000 or only half? And even though we are not currently engaged, I suspect we will be married in the next three years. If we get married, will we have to repay the money?

Deed

If you read the guidelines, it specifies that you must the property owner, ergo be on the property deed. As to the marriage question, I don't know what the IRS would do. I doubt they would penalize you for getting married, but I wouldn't chance it. Best thing to do would be to talk to a tax attorney or other specialist. I believe he can legally claim the full credit.

how long will it take

i am planning on purchasing a house later this month.as u know now its june is it too late to get the tax credit what do i need to do?

Timeline

You're well within the time limit for the credit. You should receive the credit, provided you meet the other requirements.

PLEASE HELP!!!!!!!!!!!!!!!

Does a land contract qualify for the tax rebate. Thanks in advance for all the help.

Can I buy a home with my daughter

My dauhgter and I would be first time home owner wanting to buy a double and she would live on one side. would we each be able to get the tax break . I am married?

Credit

Looking at the guidelines, you would split the credit between you.

Tax credit

Can a first time home buyer qualify for any tax credit if they are using the property as a rental and not the principal residence?

Rental

No. As I stated, one of the requirements of the tax credit is living the home purchased for at least 3 years.

Overseas

I understand that living in the primary property for 3 years is the requirement. But what if I'm traveling overseas for 6 months. Would I still qualify? or do I have to stay in California as part of the requirement.

Primary residence

Wow, that is a tough question. I think its going to boil down to how long you are away at any given time. You will definitely need to talk to a tax specialist and explain your situation. If its work related, you might be okay. I would talk to a tax attorney and see what they say.

Moved out to sell but didn't rent

Hi. In may of 2006 I put my house up for sale. I moved out before I put the home up for sale, but did not rent it. The house did not sell and close untill november of 2006.

Since I moved out and the home no longer became my principal residence in may of 2006 would I qualify for the tax credit if I bought a home today? The only proof I have that I stopped living there is I canceled my internet and phone service. Also, I have the contract of when I listed my house with the realtor in may and a brochure of my house which shows the house empty. Would this be enough or do I have to wait until november to buy?

Ownership

According to the guidelines, it is three years prior. So if you sold your home in November of 2006, you would be considered a first time home buyer in November of 2009.

NO CREDIT

My boyfriend and me have no credit? will i still be able to get a home with no credit

do we qualify

My husband and I have a title to a mobile home which we own. My dad is as the owner of the land. We are buying a house on contract next door, but are going to rent the mobile home to my sister to help out with the monthly payment of the house. Can we qualify for the first time homebuyer credit if buying on contract? We are not buying from a family member, but will be renting the mobile home out.

Do we qualify for first time home buyers?

My husband owned an apartment in Puerto Rico were he lived for 4 years. We moved to the US last year and he sold that apartment on march 2009. On april 2009 he bought a home here in Florida. The question is:Since his apartment was outside of the US, does he qualify for the first time home buyer tax credit return???

Two people buy the house, both are first time buyers

They are single, not married or joined by law. Can both apply for the full $8000?

The home was purchased at 165,000. If split right down the middle, the vaule is 82,500, 10% being 8,250. So can both file for the first home tax credit? I mean legally they are two separate people.

Two People Buy the house...

The credit is for 10% of the purchase price of the home UP TO $8000. You cannot split the purchase price. The maximum credit allowed on a $165,000 home is still only $8000. They can split the $8000 on their returns claiming $4000 each.

About how long does it take

About how long does it take to get this refund? I filed an amendment in April of this year.

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