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

Land purchase

I'm buying land in April 09 and planning on putting a mobile home on it this year (and occupying it). Would i qualify for the credit? if so, would I include the land purchase price as well as the trailer cost? Thanks

Married, buying new home in cash, but will need to refinance

I purchased a home in 2004 when I was single and am now married (2007), but never put my husband on the deed. We are buying a home in another state because we are moving there in about 2 months permanently (and selling my current home). We are buying the new home with cash, but will want to refinance it relatively soon. If we just put him on the deed for the new house, can I be on the refinancing loan or will that void the qualification? We don't want to think we can do something that we can't. Thank you.

Am I eligible

I read somewhere that as a single parent that only owned a home with a current ex-spouse in the last three years I would be eligible for the $8,000 credit as a first time buyer. Is that correct?

Help!!!

My husband and I have been married for years and have always filed separately. I filed for divorce in January and still have not had a court hearing. He has his house now, just in his name and I have never purchased a home before. Wondering if I purchase a home before our divorce is final, do I still qualify for this tax credit.

Purchasing

You may not be eligible if you were on the title to the home he is living in.

Can my finance claim credit?

I think I may have a unique situation. My fiance and I bought a house in September of 2008. I previously owned a condo so I don't qualify. Because of her poor credit I applied for and obtained the mortgage in my name only and because she could not be there at closing, the home is in my name and not hers. She has already filed her 1040ez. If we add her to the title, can she file an amended return to claim the credit or would she have to be added to the mortgage as well?

To further complicate things, we are in the process of re-financing the home for a lower interest rate and will probably re-close on the new deal later this month.

We are getting married in July, but I doubt that makes any difference.

tax credit eligibility

Will I get the $8000 is my fiance and I purchase a home within this time period (Jan1,09 -Nov 30,09). We will be married by the time we purchase the home.

Can we ammend our 2008 returns and claim for the credit even though we are now married and purchased the house together?

tax credit

Reading the through the rules, I don't see why you won't be able to claim the credit, as long as you meet the other qualifications.

Wife: Owns mobile home - Husband: owns rent house

I purchased a mobile home and 1 acre of land in 2006 before I got married. In June 2007 I married my husband. He is not on deed or note. We both have lived there since we got married. My husband owns a rent house that he bought when he was 17 and we still have it and it is in his name only. My husband has nothing homesteaded. We are looking to buy our 1st home together this summer. Would either of us qualify?

Eligibility

Under the bill qualifications listings, I don't think so since you both own property.

I have read that rental

I have read that rental houses don't count that it has to be your primary residence, but yours would count which unfortunatly would cut him out of it too since you are already married.

I qualify for the $8000 but my fiance does not . Will I get it?

Hi,

My fiance and I are getting married in June and are in the process of getting a home. We are both first time home buyers. We may purchase the home before we get married, as well as we may not. I would qualify under the income limit but he will not be.
1.) Which income is used to determine the eligibility, is it the total wages/total annual gross income before tax?

2.) Since we would have already filed our taxes as singles, will I still qualify for the tax credit since he will also be on the title of the house?

3) If I qualify, can I file an ammended 2008 tax return and get the tax credit?

4) He may be qualified for a part of the tax credit, would he also have to file an ammendment to his returns or will he not be eligible if I am getting the credit?

5) Since we will be married, does that mean we will have to consider both incomes to know if we are eligible?

I would greatly appreciate your assistance in answering my questions

Eligibility

If you are not married when you purchase the home, you should be able to split the credit. Your fiance may be eligible. IF your combined income would be under the 150k cap, then it would behoove you to wait until you are married before buying a home. That being said, if you purchase before that the joint income cap would not apply. The IRS is leaning towards splitting the credit when there are more than one buyers claiming it. If you can swing it, the best thing to do would be to have you buy the property in your name only (on the title), your fiance can still be on the loan. That way you legally own it outright and can claim the full credit. After you get married, you can add him to the title if you want to.

In 2005 I owned a home with

In 2005 I owned a home with my now ex-husband. He purchased the home; however I was on the deed. I am now off the deed. I am now looking to purchase a home and was wondering if I would be eligible for the 8000k tax credit because technically I am a first time homebuyer.
Thank you so much!

Off the deed

As long as your name was off of the title and you legally didn't own the house any longer in 2005, you are now considered a first time home buyer under the bill. You'll have to meet the other qualifications of course, but you are eligible for the credit. Feel free to contact us if you need any further assistance.

2008 Tax Credit Pay Back

Hello, I bought my home in 2008 and therefore have to pay back my credit (LOAN)...I'm quite frustrated that now in 2009 I would not only get 500 dollars more but would not have to pay back the 8,000 at all! For those of us angered, and I can't possibly be the only one, what can we do to fight for an amendment that would eliminate the requirement that the credit be paid back. If the economy truly wanted to be stimulated we wouldnt be asked to pay back a credit...why should I even spend it in the first place...

Your comments and feedback will be appreciated. Hopefully we can get this corrected and fair for all of us suffering in an economy whether it be 2008 or 2009 when we bought our home.

screwed in 2008

I closed as a first time home buyer 3/20/2008 and therefore am not elligible for the $7500 interest free loan. So glad that everyone who bought 3 weeks after me getto reap the benefits!

Paying it back

You're not the only person upset about that. There has been talk on Capitol Hill about amending the provision to remove the stipulation that it must be paid back, but nothing definitive has been done yet. All I can suggest is that you write your senators and congressmen asking them to change the ruling.

Mobile Homes

Ok, My husband purchased a mobile home about 5 years ago and his father co-signed with him. We are in the process of construction and it should be done in July. The mobile home is not on a set foundation and didn't even cost over $17,000 when we purchased it! It is on my fathers land so we don't pay any land taxs. Will this mobile home disqualify us as First Time Home Buyers?

Crystal, I believe the

Crystal, I believe the cutoff is three years. It would appear to me that you qualify, but I'm not a professional. A quick call(ok maybe not so quick with the hold time lol) wouldn't hurt. I called them about a question, wasn't on hold long, received an answer and peace of mind all at once. Good Luck.

Joint on the loan not on the deed? Definition of "living" in?

Hi,

I am not a first time homebuyer, but my 18 year old daughter could be. I think someone in this family needs to get that $8,000 hot check Obama is writing. I am thinking my daughter could buy the house in her name, and I would be joint with her on the loan, so that she could qualify, but I would not be on the deed. She could keep the $8,000 and we either take the value of the payments out of her inheritance in the will, or she signs the home over to us in three years.

Could it be used as a vacation home (not a rental) and qualify as "living in" the home? How many months a year constitutes "living in the home"?

Any help on reaping back the tax money we are paying to finance this program is appreciated.

Living requirements

I believe its three years. After that, you could do what you like with the property. As long as its just your daughter on the title, she should be able to qualify for the tax credit, provided she lives in the house for the three year period. Afterwards, you could use it as a rental or vacation home.

Cannot be purchased from family

Form 5405 clearly states that the home cannot be aquired from someone that is related to you in order to be eligible for the credit.

So you cannot sell the home to your daughter for her to get the credit. Otherwise everyone would be selling their homes to their children to get "easy money".

Brad

Link here: http://www.irs.gov/pub/irs-pdf/f5405.pdf

Re-financing Tax Credit ?

My husband bought our home in Dec 2006, the mortgage was in his name only as previously the house he had owned before. Now he is re-financing this April 09 and my name will be added to the mortgage etc. Do I qualify for the tax credit as I haven't owned a home in my name for over 10 years?

Refinancing

For married taxpayers, the law tests the homeownership history of both the home buyer and his/her spouse. So because your husband has owned a principal residence and still does, you will not qualify for the first-time home buyer tax credit.

Refinance existing home, are we eligible for credit?

I purchased our current home prior to getting married. My wife and I have lived here together for 4 years, but her name is NOT on the home loan. Can we refinance and put the loan under her name as primary and be eligible to receive the $8000 tax credit?

Refinancing not a qualifier

No, because you already own the house and occupy it.

Eligibility with parents as cosigners

If you were single and purchased a home and both of your parents cosigned the mortage and were on the deed would you qualify for the credit, considering that your parents are still married?

2008 tax credit

My boyfriend and I bought our first house in June 2008. We are both first time home buyers. The mortgage is in both names and so is the deed. I claimed the interest on the house as well as the tax credit and we got the $7500. My question is since we are filing seperatly can he claim the tax as well? We are getting ready to file his taxes and if he can get it for him as well I would like to add it on. Pleae answer me as soon as you can! Thank you for your time.

Tax credit

The credit is $7,500 total. They doubt they'll let him claim it again on the property since you already have. Your best bet would be to speak to a tax attorney as far as the legalities are concerned. That credit also needs to be repaid over time.

I own, wife never has, buy in her name only?

I currently own a home in my name only. I got married in October, but am still the only one on the home. My wife has never owned a home, if she buys the home in her name ONLY, will she qualify for the tax credit?

It's all in the definition of "first-time"

I think the short answer is, no. Look to the definition. The gov't/IRS etc. is into "economic reality." So they don't leave open the chance for a household/family to double dip.

http://www.federalhousingtaxcredit.com/faq.php#2

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.

For example, if you have not owned a home in the past three years but your spouse has owned a principal residence, neither you nor your spouse qualifies for the first-time home buyer tax credit. However, unmarried joint purchasers may allocate the credit amount to any buyer who qualifies as a first-time buyer, such as may occur if a parent jointly purchases a home with a son or daughter. Ownership of a vacation home or rental property not used as a principal residence does not disqualify a buyer as a first-time home buyer.

Qualifications

According to the information the IRS posted, you should be able to do that. I would definitely discuss it with your tax preparer as well.

The IRS doesn't allow

The IRS doesn't allow amended returns to be efiled. They have to be mailed.

married couple

hello,
So, my husband and I got married in July 2006.
we bought a home on Nov 26, 2008. It was my husband first time purchasing a home and he is the primary on our loan, we usally file jointly and he is the primary on our tax return i am secondary.

This is the big question mark, I bought a home with my parents- I was the primary on the loan, prior to getting married 3-4 years before we purchased our house recently. I am wondering if I could prove that I was not making the payments to that home in the last three years prior to us buying the new home and that it was not my principal residence. ( But I am still presently as I speak still on the loan but my parents make all their payments and I do not live there.)
The thing is proving that I was using it as my main residence. I can prove two years that it was not my main residence because I officially changed my license address and started diverting my mail to our new apartment).

Please help .. us with your answer.. we are so sad that we feel that we can audit it due to this confusion.. and gosh we really need the loan.. we really need a new roof on the house we bought ;)

Better to extend or ammend?

I am planning to purchase my very first house next month...it is set to close escrow on May 8th. My taxes have been prepared but have not been efiled because I am curious how best to file.

1) I read that ammended returns cannot be efiled...what about extended returns, cna they be EFILED?

2) Is it possible to get the credit BEFORE closing if I am able to show in my 2008 taxes that I am in escrow? If so, I can file right now and get the house credit along with my regular income tax credit, which would help with closing costs, etc.

3) My significant other is a joint buyer (also a first time home buyer, and also meets the income requirements). Is it true that the two of us get $7500, split between us, rather than $8,000?

Thank you so much for help on understanding this bill.

Filing

If you are getting a refund, I don't think it will matter much. If you file after April 15th, you'll have to mail it in. Since you are buying this year, you will qualify for up to 10% of the home value, capping at $8,000. You should be able to split the tax credit between the two of you, once you move in. Now if you are already getting a refund, you can go ahead and efile your taxes, then do the amendment to claim the additional credit. If you are planning on using that money towards the home (upgrades, etc) then you might want to file now, take whatever refund you were getting and then file the amendment. You probably should talk to a tax attorney to see how you can get the biggest benefit. It may end up you are better off claiming the credit on next year's return.

mobile home

As a first time home buyer, does a mobile home qualify for the credit.

Mobile Home

According to the bill, any home that will be used as a principal residence will qualify for the credit. That includes manufactured homes AKA mobile homes. So as long as you qualify under the rest of the conditions, you should be able to get the credit.

Hi, I just bought a new home

Hi,

I just bought a new home with my dad in february 2009. My name is on the deed of trust only and not on the mortgage. This is my first home and my dads but my dad's salary exceeds the income limit. Would I be able to qualify for the $8000 tax credit if I am currently working and earn less than the income limit?

Why you are on the Trust

Why you are on the Trust Deed and not the deed, warranty or otherwise is beyond my understanding? Do you know why this is? Sounds like you are responsible for the performance of the loan even though you are not "on the morgage." I honestly don't know why you are on the deed of trust and but no the owner of the property.

Qualifications

The provision only addresses married and single people's income. If you dad is not on the title, then legally he doesn't own the property.

FIRST TIME HOME BUYER W/ GF

I PURCHASED MY FIRST HOME THIS JULY, MY GF'S CREDIT HAD BEEN DAMAGED BY FRAUD SO SHE WAS KEPT OFF THE LOAN FOR QUALIFYING PURPOSES. I MAKE MORE THEN THE INCOME LIMIT ALLOWS BUT, HER INCOME WOULD QUALIFY. SHE IS NOT ON THE MORTGAGE BUT IS ON THE DEED OF TRUST...

WE FILE INDIVIDUAL SINCE NOT MARRIED, WOULD SHE BE ELIGIBLE FOR THE CREDIT?

I AM TELLING HER SHE IS, SHE DOESN'T THINK SO. THANK YOU IN ADVANCE!

Eligibility

I'm pretty sure she is as well, although I think it will be for a portion of the credit since the property is owned jointly. However, part of something is definitely better than nothing! These types of situations aren't crystal clear in the bill, so you will probably need to speak to a tax attorney to be certain. Congrats on the purchase of your first home!

First time home buyer before we get married

My fiance and I are planning I to get married in July 2009. I own a home now and he has never owned. He is planning to purchase a home before we get married in July but when we file next year for 2009 will he be eligible for his half of the the first time home buyer credit if we file married but seperate? Since he will buy the house before we are married and we do not live together now and never have I can't justify why he shouldnt be eligible for that credit. Someone please tell me where I can find this information.

Eligible

Since he never owned a home, he should be able to claim the credit. Of course, he still needs to meet the other qualifications regarding income, etc.

Home Buyer Tax Credit

We are going to purchase a home with our daughter (who will be a first time home buyer)... We own our own home. The loan will be in our name (she will not be on the loan) but the home will be deeded to all three of us. She will be claiming the mortgage interest on the home. Does she qualify for the credit?

I will be buying my 1st

I will be buying my 1st house on 18th april 2009. I have filed for the tax return. My question, when would I get the refund? I am wondering if I can get it sooner (before closing) I can put it in the down payment.

Thanks!

Down Payment

No you cannot. It can only be filed after closing on the home. www.realtor.org has some FAQs where it answers that question.

tax credit

I already mailed by ammended 1040x. When will I receive my $8000.00 ?

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