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

time for check

We were told by both our accountant and the mortgage lender we should receive the check in about six weeks. If you look on the irs website it says 12-14 weeks. I spoke with an IRS agent and they told us our accountant was incorrect - it is 12-14 weeks. The IRS agent also told us not to expect it before then because on the first time home buyers credit the irs agents open the paperwork and mark it received, but, don't go back to it until generally week eleven, so, you can't even get a status on it. It has been about 8 weeks for us so far.

I have been waiting 10 weeks

I have been waiting 10 weeks now. Call the irs main number and keep pressing 0, and just let them know that you want to check the status on your amended tax return. We call about every 2 weeks and we have not heard anything back yet. They won't even tell us that they received the paperwork. But everyone says wait the entire 12 weeks. We file on March 30,2009 and did priorty mail.

Been waiting 11 weeks!

I sent my amended return in March and they tell me that they received it March 26 but it is still being processed and if I don't hear anything about it by June 26 then give them a call. I still call them every Monday to see if anything has changed. My cousin sent hers in a week later and they wouldn't tell her that it was recieved until week 8 so I don't know what their deal is actually but I guess we will all have to wait and see.

Dont qualify

I received the credit with the intensions of buy this year however i used the money to pay off debt in order to increase my credit score to help with getting the loan. I am saving to have atleast closing cost. my fear is if at the end i dont qualify? How does the pay back work? fine? Please help. I am a single mother and working my butt off to get a home.

Can you spell "Tax Fraud"?

Can you spell "Tax Fraud"? The form asks for the date that you closed on the property. Assuming you filled this in, you have a problem.

I have never owned a home

I have never owned a home before and am planning on purchasing a home in the near future. Would I be eligible for the tax credit if I decided to rent the house out to a tenant instead of living in it? If not how long would I have to live there before I can rent it out?

Occupancy

No. You must live in the home for at least 3 years first as stated above. After that, you could rent it out.

Tax Credit for Land and Home

I am looking at buying a small lot and constructing a small home on it as my primary residence. I will be building the home mostly myself, with a few things subcontracted out. If I spend say, 20,000 on a lot and get a construction loan for 30,000, will I get a tax credit for the entire 50,000, or for only the 30,000 for the house, or at all? And can I use additional tax credits for energy star certified products on top of the 8,000. Do I need to hire a GC to get the credit, or can I get it based on the construction loan amout? Thank you for any help.

Relative

My great-grandmother passed away 2 years ago and willed her house to my grandmother. My grandmother is now selling the house to my husband and me. Is there any way to get around the "buying from a relative" exception? What if we put the house only in my husband's name (since he is not related to my grandmother)?

Would love an answer to this

Would love an answer to this also.

Out of country?

My husband and I are currently looking to buy a home. I was added as a joint owner to the title, though not on a mortgage, of a home in Canada where I resided for 6 months out of the year. (I am a Canadian citizen, and was just recently given permanent residency in the United States, which is where my other 6 months were spent.) However, I am no longer on the title of this property.

Does this disqualify me and my husband from the tax credit?

daddys house

do i quilify if my dad owns my house and now im buying it from him?

ROFL

ROFL

Cannot purchase home from relatives

You cannot take the credit if you purchase the home from a relative. See IRS Form 5405 for their definition of related parties.

L Jern

I am married and my wife and

I am married and my wife and i looking to buy a condo/home and take advantage of he credit. The hitch is this...my dad is going to help out with the down-payment, hence be a part owner (on the title). My wife and i are first time home buyers, my dad is not. Can i still take advantage of the credit?

Co-signers do not exclude you from qualifying

See this excerpt from the IRS Website FAQ.

S2. Taxpayer A is a single first-time home buyer. Taxpayer B (parent) cosigns for A and does not qualify. Both names are on the mortgage. Can Taxpayer A claim the credit and, if so, how much?

A. Yes. Taxpayer B is not a first-time homebuyer and cannot claim any portion of the credit, but A may claim the entire credit ($7,500 for purchase in 2008; $8,000 for purchase in 2009), if the home was purchased as Taxpayer A's primary residence.

L Jern

Hard time finding answers

Here's my situation. I'm in college and my parents want to help me by a house near my school for me to live in. I've never owned a home before, so i am eligible for the first time home buyer tax credit. Everything seemed to be all set- i was going to co-sign a loan with my parents, but that plan fell through because I have no credit history and the "kiddie condo" loan we wanted requires me to have one. Now, my parents want to pay cash for the house and have me slowly pay them back through monthly payments. If they buy the house that way can i still "own" the house and get the tax credit? Thanks for your help!

Co-signers do not exclude you from qualifying

You would have to purchase the home with them to qualify. I would suggest you find someone that does FHA loans. They allow you to be a student and have your parents co-sign on the loan. The downpayment is 3.5% and is the best loan for children and parents that need to purchase together to qualify.

This is the excerpt from IRS on the tax credit:

S2. Taxpayer A is a single first-time home buyer. Taxpayer B (parent) cosigns for A and does not qualify. Both names are on the mortgage. Can Taxpayer A claim the credit and, if so, how much?

A. Yes. Taxpayer B is not a first-time homebuyer and cannot claim any portion of the credit, but A may claim the entire credit ($7,500 for purchase in 2008; $8,000 for purchase in 2009), if the home was purchased as Taxpayer A's primary residence.

L Jern

Confusing Mobile Home Situation

My wife and I have owned and lived in a single-wide mobile home since 2005, and we have a title of ownership. We also pay property taxes. However, we do not own the land. Our mobile home is a part of a university mobile home park. So the university owns the land, while we own the mobile home.

Also, we paid cash for our mobile home directly to the previous owner. So we did not have a mortgage on the home.

We are wanting to buy a home in 2009. If we do not own the land, do we qualify for the tax credit?

Mobile Home should not be considered real property

In the world of mortgage lending, ownership of a mobile home where you do not own the land, is not considered to be ownership of real property. If the mobile home was attached to a fixed foundation, it becomes eligible for financing because of the ownership of land. I would think that when the IRS refers to having "owned" a primary residence, they are also referring to real property with deeded title.

LJern

Mobile home and tax credit

It is very confusing. I haven't found the full answer. But according to the FHA - they don't disqualify you for the credit if you don't own the land - it is all the IRS. I've been on hold and have had to hang up -so I don't know your answe either. I am still looking. Will continue to try to get through to an IRS agent. I am in a simliar situation in MN and am applying for county stimulus monies - and I qualify from the county - but we are trying to find out on the federal level - if the credits can be claimed. Good luck.

Mobile Home

I too am in a similar situation and then I saw this website....www.hometownamerica.com they are a mobile home community that is land leased and the buyers are receiving the same $8000 tax credit.

First Time Home Buyer

I sold my house on Agust 1, 2006 and have not purchased since then. I had a real estae agent look up the old property and it says the deed for the property was transferred August 9, 2006. I am looking at buying a house and want to know if I can buy a new home after August 2, 2009 or if I have to wait until August 10, 2009. Like I said before, we actually signed all of the paperwork on August 1, 2006. Also, what is the best way to verify all of this information?

Thanks,
John

Deed is valid on date of execution

You would look at the date on the deed of ownership that transferred title from you to the new owner. The county recorded date is the date that document arrived at the county. To be safe, you could take the latter of these 2 dates so you don't have to worry.

Contract Purchase

I have a question regarding the first-time homebuyers credit. My husband & I purchased a home from my parents on contract 5 years ago. The home has been in my family for over 100 years. We need to do some major renovations so took out a New Contruction Loan through a bank and they are going to take over the contract so now we will be paying the bank instead of my parents. We close in probably a month or so. So my question is, since we purchased the house on contract before and are now actually going to a bank, do we qualify for the credit? I did not know if contract homebuying count or not. Thank you.

Cannot purchase home from relatives

See IRS form 5405. You cannot purchase a property from relatives and qualify for the tax credit.

L Jern

Would I still qualify???

Long story short.... Do I have to be a cosigner on the loan in order to qualify for the tax rebate? Or can I be put on the deed when the property is purchased and still qualify? I am a first time homebuyer... and I will be on the deed, but not the loan. Any advice? Thanks

Loan not required to get tax credit

There is nothing in the guidelines for IRS that you are required to be obligated on a a mortgage in order to qualify for the credit. If you read their guidelines closely, it appears you could purchase a new residence and pay cash and still qualify as long as you meet all the other requirements. There is nothing in the guidelines that makes any reference about a loan, mortgage or obligation that is a requirement for the credit.

LJern

Is home ownership mortgage

Is home ownership mortgage or deed determined? I know the tax credit is for first time home buyers or someone who hasn't owned a home in 3 years. Is the MORTGAGE what determines who owns a home? Or the DEED? I am not on the mortgage of our current home, but am on the deed/taxes. It was done like that because 10 years ago I owned a property that hadn't sold and we couldn't add me onto the mortgage due to debt to income ratios. Does that mean I cannot claim the credit on our new home if I get the mortgage in my name with a co-signer who is NOT a 1st time buyer that will be on the deed?

Deed determines ownership

A deed always determines ownership and is what the IRS is looking for to determine qualification for the first time home buyer tax credit. You can be obligated on a mortgage to repay the loan and have no ownership interest a property. Definitely the deed....

LJern

Hi. I was wondering if you

Hi. I was wondering if you got an answer to this question? I am in a similar situation (was on the deed but not the loan for a house sold Dec.2007) and have not been able to find out an answer. Please let me know what you found out!

Deed

The Deed means you have an ownership interest in your current property and hence would not be able to claim the first time home buyer credit. I'm assuming your current home is your primary residence. If it was a vacation or rental property you would be able to claim the credit
Christopher Jenkins, CPA

DEED

My name is only on a deed to a home. This is not my primary residence nor have I lived there in the last three years. I rent an apartment and have for over three years will I qualify for the tax credit?

Thank you! I kept thinking

Thank you! I kept thinking I couldn't but actually had a lawyer say that she believed I could still claim the credit.

Christopher, So if I have

Christopher,

So if I have never owned a home before, and my name is put on my new house's deed but not on the mortgage, I qualify?

Deed

As long as you meet the other requirements, yes. You would have to live in the property for 3 years, meet the income requirements, etc.

Mobile Home ??

My husband and I are looking to buy a home, however I dont work or have good credit so he will be on the loan along w/my father in law. Could we qualify for the tax credit we file joint every year, but 2 years ago my brother bought a mobile home and it is in my name and my niece, it was never financed just bought cash. It is on a lot in a mobile park but my name isnt on it. Do you think we would still qualify for the credit?

Mobile Home

If, in the past three years, you lived in the mobile home as your primary residence you would not qualify. If you never lived in it and otherwise meet the qualifications you would be eligible for the credit.
Christopher Jenkins, CPA

My husband and I were

My husband and I were seperated for a while then reconcilliated our relationship in December of last year. We rented a property until just recently when we bought a house. If we both claimed head of household for 2008, since we did live in two seperate homes, how would we amend our return (s) for 2008 in order to get the credit?

Filed our taxes for 2008 as

Filed our taxes for 2008 as Married filing jointly, and are still married. But I am buying a house on my own. I will be the only one on the mortgage and deed and I make under 75k so I qualify for the credit. (jointly we make under $150K) My husband owes a federal non-tax debt. Will they offset my $8000 tax credit, or is that soley his debt when I amend our taxes or will they take $4000 of it even though it's not his tax credit? (State AZ)

Husband's Debt

If you amend your joint return they will take the entire $8000 against the debt. If you file 2009 as Married Filing Seperately the limit is $4000 each so you will lose $4000 of it.
Christopher Jenkins, CPA

FIRST TIME HOME OWNER

Hi,

My father is 70 years old and owns a condo which he has been living in for over 10years. I think he used Fannie Mae when he purchase 10years ago. He wants to buy a house he feels he needs more room. Can he be considred a first time home buyer even though he is a home owner for over 10years? Also do you know how I could get a llist of forecloesd home for the Hollywood, FL area.

QUALIFYING

IF YOU OWN A CONDO AND WANT TO BUY A SINGLE HOME, CAN YOU BE QUALIFYED AS "FIRST TIME HOME BUYER? THANK YOU. ELAINE

First Time Home Owner

A condominium is considered a home so he would not qualify unless he had moved out of the condo three years ago and had started renting it out.
Christopher Jenkins, CPA

How long will it take to get the Tax credit from the IRS

I am going to be closing next week on a new home, I understand that I will be in line to recieve the $8,000 tax credit. I am going to amend my taxing with the same agent that I filed my 2008 taxes with shortly after closing. Has there been any length of time that has been out when I will recieve the tax credit?

Thank you

How Long Will It Take To Recieve The Check From IRS?

I to filed an amendment on my 2008 tax returns for the credit. It has been 8 weeks since I sent in my amendment (registered mail) and I haven't seen the check. Has anyone actually recieved their check? If so how long did it take?

tax check

I have ammended my taxes to and havem't seen anything? What about you?

Ammended Taxes

I'm in the same boat as y'all. Though we are only 4 weeks out. Our accountant said it could take up to 12 weeks. My Fiancee and I were really hoping it would come in sooner as we are paying for our wedding as well and could really use the money.

Please post up if you've received your check and if you could give us a time line.

-John

Ive been waiting for 7

Ive been waiting for 7 weeks...

forever it seems

I have been waiting for 11 weeks!

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