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

Marriage

As long as your combined income will be below the $150k cap, you should be ok.

New home

I owned a house in another state which I sold in April, 2007. I did not live in that home since Nov. 2005. I did not rent it out. I had moved to another state in 2005 and could not sell it until 2007. Can I qualify for the credit, even though I owned the home until APril, 2007?

First Time Buyer Definition

The guidelines state to be considered a first time buyer, you must not have owned property for the prior three years.

marital status and tax credit

I married my wife in 2005. We stayed together 3 months in her home she bought 4 years before the marriage. I am not on her mortgage or a deed. I am a first time buyer, since we did not divorce I want to know if I buy me a house will her owning her house keep me from getting the tax credit or can I get her to sign something so I can get my house without her house interfering. I am trying to get approved for a FHA loan and she has a FHA loan can I take the $8,000 tax credit.

My question is the same with

My question is the same with one exception. If my husband owned a home that we lived in (he has owned it for 50 years), my name is not on the deed, and we become legally separated before I buy a new home, do I qualify for the $8000 credit?

divorced

hi

My name wasnt on the deed when the house was purchased. Anyway, we divorced last year, so do i qualify for first time buyer

Qualifications

Since you didn't own the property, you should qualify.

My parents live in the House

I currently own a home which my parents live in. Technically, the mortgage was just put under my name because I have good credit. I do not live there and they pay the mortage on it every month. I plan on buying a new house at the end of this year. Would I still qualify for the credit? The new house will be my primary residence. The house my parents live in is technically a rental??

FIRST TIME

"I currently own a home " then you will not qualify for the credit.

Response

Why not? If that property is not his primary residence and is used as a rental then he would qualify as per the FHA definition of a 1st time home buyer from the Federal Housing web site:

What is the definition of a first-time home buyer?
The law defines "first-time home buyer" as a buyer who has not owned a principal residence during the three-year period prior to the purchase. For married taxpayers, the law tests the homeownership history of both the home buyer and his/her spouse.

How Long Does it Take?

My wife and I just bought a home in April 2009 and we both qualify for the tax credit. We actually already amended our taxes to receive the tax credit. How long will it take for us to receive our check?

In-law home purchasing

My brother in law my purchase my townhouse from me. He wants to make sure that he is still eligible since we are in-laws. I purchased the home before my husband and I met and he is not on the deed. Does my brother-in-law qualify since he is not a blood relative and my husband is not the owner of the home?

Sell home to fiance?

I have owned my home for five years and the deed/mortage is only in my name. My fiance lives elsewhere and has not owned a home in five years, We are thinking of selling my house to him -- sell at a price that would give us a little cash back at closing, the loan that he could get would probably be at a lower interest rate than mine, and he should be eligible for the first home buyer credit. But we don't know much about the paperwork involved in doing this and not sure if we are seeing any pitfalls.....What do you think?

8000 credit

first off I live in Az. . I am married and I own a home , my husbands name isn't on anything. We are planning on purchasing another home only under my husbands name because my credit isn't all that great anymore. I have heard that even though the new home would be under only my husbands name that he is technically still responsible for me ( they still pull my credit and so on ) . He is a first time buyer and we dont make much. Do we still qualify for the credit , and if so would we file our taxes separetly next year?

HELP PLEASE

My boyfriend and I are looking at mobile homes. Neither of us have ever owned a home before, so we should qualify for the credit, but my question is i've heard of using the credit as a down payment, we will be moving in a park, not on private land, so how does that work? we already filed taxes and recieved returns, so do we have to file a seperate form for the credit and wait for the credit to come before we try to buy? how long would that take? I'm so confused.

Real Property or Not

As long as the mobile home is considered real property, you may qualify for the credit. As for using the credit as the down payment, you'll need to talk to tax professional. Once you buy a propery, you can file an amendment and get the credit on your '08 taxes.

home purchased before marriage

I purchased a condo before I was married. My husband owned a home 6 years ago, but hasn't owned one since. I have never added his name to the condo's mortage or deed. We are planning on selling the condo in order to purchase a new home this year. Our combined income is less than $150,000. Would we qualify for the 1st time home buyer credit, since I owned the home before we were married? Would the deed for the new home have to be under my husband's name only? Could the mortage be in both our names? Would we still be able to file our 2009 year-end taxes jointly?

Tax planning

You'll need to plan your taxes with your tax preparer. If you meet the criteria, I don't see why you wouldn't qualify but there are stipulations regarding family.

First Time Home Buyers Credit

I am on the deed of my fiances townhouse. We called the IRS to verify if I qualify to receive the First Time Home Buyers Credit. They told me that I had to be on specific documents that I was on and I sent in an Amendment. So, he received half and should receive mine soon. However, I am thinking of buying my own home this year and the mortgage would be financed in my name only. Can you qualify to receive the credit twice?

In a word

No, since once you own a home, you are no longer a first time buyer under the guidelines.

Purchase from estate of my Step-grandfather

I am buying the home of my deceased step-grandfather from his estate.

Woud I be prohibited from takeing the credit?

Or am I a valid case since 1- he is not ancestoral by blood and 2- it is a purchase from the estate not from him????

My fiancee used to own a house...

I never own a house and would qualify for the tax credit, but we are planning to get married and since she used to own a house, we are wondering if it would affect my status of first time buyer. I will be the only one on the deed and mortgage, but we would file together.

Should we wait till we get the house first before getting married?

Better to wait

Since you are qualified to get the full credit, I would buy the property first and claim the credit before getting married. You might want to file separately or simply file an amendment to your 2008 taxes and claim it there.

Mobile Home....I read

Mobile Home....I read previously about the mobile home....so if the mobile was on our personal property tax bill, we will qualify for a first time home buyer?

Mobile Home

If you currently own a mobile home and it is listed as real property, you will not be considered a first time home buyer.

How does divorce affect the credit?

My wife and I are divorcing (will be final this year). She currently owns a home, my name is not on the deed, I am purchasing a home this year, will I still qualify?

Qualifications

As long as you meet the other qualifications, since you didn't legally own the home you should qualify.

More divorce clarification

What about if I purchase before my divorce is final? I will still be legally married at time of purchase, and my (soon to be ex) spouse owns the marital home (my name is not on deed, and never has been). Does that disqualify me as a 1st time buyer because I'm not officially divorced yet? I'm wondering if I should wait until divorce is final before purchasing.

Thanks for any clarification.

Divorced - tax credit?

I was married for 25 years in 2006, living in my present residence with my then-husband for 21 years at that time. In Dec. of 2006 he left and we were divorced in October 2008. I remained in the house with my teenage son. Ex husband pays the mortgage in lieu of child support. I am going to be buying him out of the house. Will I be eligible for the credit? BTW, my name is on the deed but I haven't bought real estate since the purchase of this home in 1985. Thanks for any help!

Ineligible

You legally own the property jointly and would in essence, be buying your own home. To be considered a first time buyer, you can't have owned property for the last 3 years.

first time home buyer

iam on social security iam buying a used mobile home do i qualify for first time home buyer tax credit i do not file income tax

Real Property

As long as the mobile home is considered real property (check with your agent) and you meet the other guidelines, you should qualify.

i got a refund this year...

say i got a $1000 dollar refund on my 2008 return. later on in 2009 i buy a house. how does the tax credit work if i did not owe the IRS any taxes? do they just cut me a check for the 10% of the buying price of the house, or do i get nothing because i owed nothing? thanks!

Tax Credit

It works exactly like that. Its a tax credit, which means if you get the full 10% of the purchase price back in full.

Ok here is my situation, I

Ok here is my situation, I own a home that currently is my primary residence. I bought this home in 2007. I am in the process of buying a new home (new primary residence) with my Sister (never owned a home). We will both live in the property as our primary residences but I will be the only one on the mortage as she is not working right now. We will both be on the deed, does she qualify for the credit?

Deed

She should qualify for the credit, but because you are also on the deed she may only qualify for half. You really need to speak to a tax expert before the home closes. It may be to your advantage to have only your sister on the deed.

WANT TO BUY A NEW HOUSE...?

My husband and I are on the title with our present home, but we want to buy another home. Because I don't have the 10% for the down payment. I was wondering if it was a good idea to remove him from tittle? The loan for this home is only under my name. If I remove him my husband from tittle do you think he can qualify as a first time buyer? What do you recommend?

Qualifications

I don't think it will matter if you remove him, because he has already been on the title.

Some one please help

Really Simple question. I own my home and have lived in it for 5 years. It is my home and my home only. My GF and I plan on buying a house in Florida and rent mine out now. Once again the house is in my name and my name only. If we use her name on the mortgage, and I cosign for her mortgage she would be eligble for the 8K correct??? We will be living there for over 3 years and she makes under the amount together and once again we ARE NOT married yet. Does it matter if we get married over the next 3 years?

Not so simple.
Also, What if she is unemployed in most of 08 and didn't have much of a tax liability. Do they really just cut an 8k check come tax time to her?

Also, What about private financing? Does it have to be a bank loan?
Can it be an FHA, with only 5-10 percent Down.

PLEASE ANSWER ME, i would really really really appreciate it. Thanks.

Deed

As long as she meets the other criteria and her name is on the deed, she should get the full credit. Your name can not be on the deed, but the loan should be ok. As far as the financing goes, there is no mention of anything specific in the regs.

Bought a house Sept 2008

When I had my taxes done, my accountant said that I would qualify for the $8000 first time home buyer tax credit. I bought my house in September 2008 and thought that I would get the $7,500 that would need to be repaid over 15 years. However, she said that an ammendment was made and I would now receive the $8,000 and it would not need to be repaid.
I have looked for information online about this, but haven't found anything. I'm more interested to now if I will be repaying this over 15 years, so that I can set some money aside for repayment.

Prior Credit

There had been talk of amending the first prior credit, but I haven't heard anything about it being done. I would plan on paying it back....worse case you save an extra $500 for a rainy day.

Tax credit daughter in law

My husband and i tried to buy a house two years ago 2007 and our credit wasnt good enough so his parents put it in there name we've live in it for two years and i got my credit good enough to get it in my name we closed today april 23 2009 would i qualify for the $8000 tax credit since its in my name and their not my father or mother and we are the only ones who lived there and should i keep my husbands name off the title?

Rules

There are some rules about family purchases. You'll need to talk to a tax professional to see if you can claim the credit.

Not Married

My fiance and I are hoping to buy a house together this year. We are not getting married until 2010. I currently own a home and am planning to sell shortly. He has never owned a home and makes less than the income stated for the credit. I am confident that he qualifies for the $8000 first time home buyer credit. My question is, when we close should I stay off the title/deed in order for him to qualify for the full $8,000, and be added later? If I am on the deed also, will he only qualify for $4,000? We will both be on the mortgage, but from reading the blogs, I take it the mortgage makes no difference. I just want to make sure "he" (we) get the full benefit. Thanks for your time.

Stay off the Deed

Yes, you need to stay off the deed. Reading the regs you have to live in the house 3 years, legally own it and make under a certain amount per year.

Fiance question

My fiance and I are planning to buy a house, hopefully before the 12-01 deadline. I own a home now which I am selling. Am I right in assuming that if we are both on the mortgage and the deed of the new home, he can qualify as a first time buyer and claim the credit? (he has never owned b4). Thanks. His income is low enough too, FYI.

Deed

You'll need to speak to a tax attorney. You may need to stay off of the deed in order for him to get the full credit.

Tax Credit

We are thinking about buying a small house for my daughter (paying cash - it's about 40,000). We were going to set up a contract for deed because her credit is not very good.
I think I understood you to say that if both our names are on the deed, she would not qualify for the tax credit (4,000) because our name is on it too and we already own a home.
So BOTH people on the deed have to have never owned a home, correct?

Onwership

The regs state that anyone that hasn't owned a home in 3 years is considered a first time buyer. So anyone on the deed must meet that requirement.

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