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

Can you let me know how long

Can you let me know how long it took till you got your return?

Time to receive your refund

Doing an e-file will get your return to you faster, as to an actual time frame the IRS hasn't posted any info yet. I don't see why it would take longer than last year.

first time credit q's

my husband baught our home in september 24th 2008 and it was our first neither of us have ever owned 1 before. so we do qualify for the credit we have to pay back and we filed it on march 6th 2009 and we mailed it in that same day we live in minnesota. so my question is when or how long does it take to actually get that credit to us in the mail cause we didnt e-file we sent in the mailbox ya know approximately how long do you think it will take and is this a federal tax credit or considered coming from the state???????? thanks for your time..

celsey.

You would qualify for the

You would qualify for the $7500 credit which has to be paid back. Mailing a return at this point will probably take about 6 weeks at the most for it to be processed and the check to be on the way to you in the mail. The IRS has gotten better regarding its processing but the majority of taxpayers wait until March to file their returns and returns that are mailed have to be processed by hand and take a little longer. The credit is coming from the Federal government and has no implications for the state.

do i qualify for first time home buyer credit

I bought my house in 2006 and i want to know if i was qualify for tax credit. I know someone who bought a house in 2007 that was qualify. But when I calles H&R Block they say it only qualify for 2008. Someone else told me it go three year back.

Qualifying

No, you don't qualify for either tax credit. There are very specific dates in which you had to buy your house in order to qualify.

tax credit

i recently refinanced my home wich were a townhouse take money out buy a next home in close december 08 am i quailfield for tax credit

Tax credit 2008

I closed on my house, March 20th 2008(missed it by 19 days), so I will not qualify for the 2008 tax credit. I think it's unfair. I think anybody who bought a house in 2008 should qualify. Why were those specific dates chosen? Do you know if there is any talk about possibly amending the dates.

Great info

I keep getting a lot of inquiries about these topics here in my state of UTAH.. Keep posting as much info as you can get on it.. My real estate office is bombaded with inquiries, because most of the public are at a loss on how they get additional info. Everyone who has questions, please get a hold of your realtor or loan officer asap.. There are many incentives the govt. is coming out with, but you need to educate yourselves with them.

Forgot to take credit

This is very foolish of me but i bought house in 2004 and never claimed Time Home buyers credit. Is it too late to claim it?
thanks.

First time home buyer credit 2008

We just amended our taxes to get the 7500 tax credit but do I have to mail the return in or can I e-file? I'm not sure it worked when I hit efile.

AMENDED RETURNS

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

Amended returns must be

Amended returns must be mailed.

first time home buyer and divorce

I got separated in Sept 2006 and was divorced in December 2007. We owned a house that was completely payed off. She stayed in the house and I moved out. I am now remarried and building a home and our move in date will probably be in May 2009. Im just not sure about how this works with divorce. Will I be eligible?

Could this be true?

My husband is a realtor. He has been approached by individuals wanting to give their children cash to buy a house to get the credit. Is their no minimum income levels on this credit or restrictions against buying with gifted cash? I did see that you could not take the credit if you were given the house, but not if you were given the money to buy the house.

Please Help!

My husband purchased a house (in his name only ) at the beginning of our marriage 40 years ago. Of course, the house is paid off. I recently purchased a house Dec. 08 in my name only. If we file our taxes jointly, will I qualify for the tax credit? I am a first time home buyer.

I need to find an answer...

I wanted to check to see if my husband qualifies for this. He purchased a home on Feb 12th of 09. Then after reading the fine print, it seems as though we don't qualify (even though the house is not in my name) because I owned a house and sold it back in August of 07. At the time I sold it we were not even engaged. Does he qualify if he files seperately?

Building

My fiance owns 102 acres in a rural area where he previously had a house. He lost the house in a fire 3 years ago. With the tax money from the fire he paid off the mortgage for the property and we have been holding on to it. We have been renting a home in a different town since the fire. Now with this tax credit and low interest rates we are considering getting a loan and rebuilding. I have never owned a home before. If we take out the loan to build the house in both of our names will I qualify for the credit?

What if your spouse was a CO-Signer?

So my question is... Can I get the tax credit if my spouse and I bought our house this year, but my spouse cosigned a house in 2005 for my sister and never lived in it? Would that be consider her principal residence? My spouse never paid one cent and never claimed it on our tax. Can anyone help?

Q: My husband is not a first-time home buyer, but I am -- can we still qualify for the tax credit?

You would only qualify if your husband (or spouse) has NOT owned a principal residence in the three (3) years prior to purchasing the new home.

If someone is added on to a

If someone is added on to a home loan and deed on a refi do they qualify as a fthb??

Also a displaced homemaker that is still married purchasing a home on her own--can she get a partial credit filing separately??

Great info

I do real estate in Salt Lake City UTAH. Very well put, we get a lot of the same questions about how it works. The Utah State legislature actually just passed an additional $6000 Grant for all new construction homes this week.. Maybe you all will see something similar as well.

15 years no pay??

A friend of mine, who recently bought a home, said she was told that as long as she does not sell her home in 15 years she does not have to pay the $7500 back. Is that true?

15 years

If she bought it in 2008, she has to pay it back. Go to H&R Blocks website, which will confirm it. She would have to pay $500 a year for 15 years (taken out of her tax refund or added to her tax bill). However, if she bought it in 2009, she would get $8000 and never have to pay it back as long as she lives in it for 36 months (part of the stimulus bill). It's totally unfair for 2008 first time home buyers. I'm one of them. I bought my house on Dec. 12, 2008. If I had waited two more weeks, I would have a $15,000 swing. I'll never be a first time home buyer again, so I'm screwed. I helped the housing market by buying it (a HUD foreclosure no less), and then they give the guy who buys the house two weeks after me the reward.

Which credit would I be

Which credit would I be eligible for? My husband and I were living in a mobile home that a friend bought for us and we were re-paying him. He signed the title over to us November 2008, with a lein on it in his name. Now, I am pretty sure I qualify for the 7500 credit, but what if I went this year and borrowed the money from a bank to pay the home off. Would I be eligible for the 8000 credit instead? Does this "Friend" count as a bank and the fact that he put the title in our name with a lein, declare us 1st time homebuyers? I am a little confused.

Building a new home

I am currently building a new home. I have read that the home is considered "purchased" on the date its occupied. I will not be moved in before April 15, but for sure will be in before Dec. 31 2009. Can I take the credit on my 2008 tax return or do I have to wait til 09 tax return?

Tax Details Inquiry

I am new to the market and looking to buy investment properties. I understand that the credit would apply to only the first home I purchased as a principal home as a first time home buyer. Question is how long does the house need to be listed as a principal residence? I do not plan to sell the house within 3 years as I want to rent it out as some point, therefore no longer making it a primary residence.

Three years

You have to live in house for three years. After that, you can move and rent it out. Otherwise, you'll have to repay the credit.

Qualify or Not

Does my spouse qualify for the credit if he has never owned a home, and we are going to build a home in the window?

NO.

He is your spouse. One spouse cannot take the credit if the other spouse does not qualify. This would be different if you were unrelated.

only one may qualify

I owned and sold a house in the past three years. My wife purchased her first house August 2008 in her name after we were married, I co signed but not on the mortgage/deed. Do we qualify if filing jointly? Could we file separate and receive the whole credit?

Contract for deed

If we buy a home Contract For Deed does that qualify? We have been told by our realtor that he believes it does. What do we need to do?

Rental Property

I bought a house as my principal residence in Jan 2006. My circumstances changed, I moved in May of the same year, and I've been renting it out ever since. If I buy a house after May of this year, can I qualify?

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. 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.

can we take both?

Ok, so I bought a house in Jan 2009 and claimed the 7500.00 credit on my 2008 return. I understand that i have to pay that one back at $500.00/year for 15 years. Can i take the new $8000.00 in 2009?

Adjust your return

File a 1040X to adjust your return.

Good Question

That's a great question, one of which I'm sure you're not the only person asking. I don't see why not, since you have to pay the first one back. You'll need to speak with a tax specialist. I haven't read anything stating you can't, but it is the government after all.

Two Questions

Two questions: I own a home and am about to refinance and add my fiance on both the loan and the deed--does he qualify?

My Parents are divorcing, he will get the house and she is buying a new house. Does she qualify??

qualifying

I doubt he'll qualify because you already own the home in question and the bill is geared toward buying a home outright. That being said, you may have found a loophole. As for your parents, if your mom was not on the title, then she legally hasn't owned the home. There is a provision regarding spouses and divorce. I listed the qualification guidelines according to HUD in the comments.

How many buyers can get the credit?

So if my significant other and I buy a house together but we are not married, would we both be able to receive the tax credit?

from IRS website (http://www.irs.gov/newsroom/article/0,,id=1879

Q: If two unmarried people buy a house together, how do they determine how much each may take of the credit?

A: Two unmarried individuals buying a principal residence may allocate the credit among the individual owners in any reasonable manner. The total amount allocated between the owners may not exceed the smaller of $7500 or 10% of the purchase price of the house.

First Time Home Buyers

I bought my house in January 2008 and I'm filled as single and have never owned a home before..do i qualify for the 7500? I'm kinda confused on this

No

No. You bought before the largest fall in the market & before the credit start date.

Not Fair To New Home Buyers of 2008

I purchased a new home in Sept 2008 and a friend of mine bought and closed her home Dec. 30, 2008. Although we are elibible for a $7,500 Tax Credit that has to be repaid over the next 15 years. New home buyers in 2009 gets a bigger credit and don't have to repay it. This is not fair to those who bought months or even days earlier. Congress should amend the tax act of 2008 and forgive the repayment as it is allowed for 2009 buyers.
Personally, I think both should be paid back to help the deficit. My beef is that this is not fair.

I agree

I absolutely agree with you and you aren't the only person talking about. There are talks on capitol hill about amending the bill so the credit does not have to be repaid. IF that comes to pass, I'll post the information.

Tricky question

My wife purchased a house in 2007 before we got married in 2008. The house is still completely in her name. I know that the IRS prevents us from claiming the credit if she "sells" the house to me (I have never bought a home).

Can my wife sell the house to a friend of ours, who in turn sells the house to me, in order for me to claim the credit?

Sorry Tricky Question

The tax credit for married people is a bit more stringent - if she doesn't qualify you don't qualify. She is ineligible because she's owned a primary residence within the past 3 years so you are deemed to have owned one also.

Confused

I bought my home in Georgia on 6/01 and decided to move to NYC in 2008. It's been on the market for the past year and has not my primary residence since. Last week I just closed on a new home in NY. Do I qualify?

first time home buyer

MY HUSBAND AND I BOUGHT A HOME IN JUNE 2006, AFTER 30 YEARS OF MARRIAGE WE FINALLY WERE ABLE TO BUY A HOME. WILL WE QUALIFY FOR
ANY OF THE PROGRAMS, WE HAVE ALWAYS PAID OUR MONTHLY MORTGAGE
EVEN THE PASS FEW MONTHS WERE VERY DIFFICULT BUT WE PAID THE MORTGAGE. ONCE AGAIN WOULD WE QUALIFY?

3 Years

If the house isn't in both of your names, than a spouse may qualify. I listed the qualification guidelines further down in the comments according to HUD.

tax credit qualification

I purchased a house in january of 2008, why cant i take advantage of the tax credit

2009

For this credit, your home has to be purchased this year up to December 1. You may qualify for the $7,500 credit President Bush passed last year.

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