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

Nope, sorry.

I bought my house around this time as well. Sorry, the dates are set, and January 2008 means you were a few months early for the repayable credit and a year early for the non-repayable credit. Sorry, you and I lose both ways. :o(

Eligibility

I own a mobile home that is not on a permanente foundation, does this mean I qualify?

According to one person at

According to one person at the IRS, a tax attorney and two accountants, you would not qualify.....if you own a dwelling that is your primary residence you don't qualify. This includes an RV, camper, houseboat or otherwise. It has nothing to do with owning the land it sits on. We spent two weeks investigating this for a client and this is what they told us.

Mobile homes and the credit.

Here in Virginia, Mobles homes may be considered personal property.
According to code 1.121 (department of treasury regulations) "(b) Residence.—(1) In general.—Whether property is used by the taxpayer as the taxpayer's residence depends upon all the facts and circumstances. A property used by the taxpayer as the taxpayer's residence may include a houseboat, a house trailer, or the house or apartment that the taxpayer is entitled to occupy as a tenant-stockholder in a cooperative housing corporation (as those terms are defined in section 216(b)(1) and (2)). Property used by the taxpayer as the taxpayer's residence does not include personal property that is not a fixture under local law."
So it apears that if said mobile home is considered "personal property" rather than "Real Property" then the first time homeowners credit would apply.

special circumstances?

What if you are a cosigner on another property? My name is on a property that belongs to my mom? That property is financed through an individual and not a bank. I recently bought a home, closed Jan 28th. Do I qualify for this? I am in agreement with the past home owners too. They deserve something for being able to hold on to what they have or for being able to get rid of it in a responsible manner.

Circumstances

That's a good question. I'm sure when they drafted this bill no one thought of that. I think that if you are legally listed as a "owner" on the property, than you aren't eligible. However, if you are only listed on the loan and not the title, than legally you don't "own" the property, you're just financially responsible. You'll need to see how the title to the property is drawn up. Hopefully as more of these type of questions come up, the Fed will make some decisions and share them with the rest of us.

sold my house by contract

sold my house by contract until my friend could establish a loan .he ended up buying the house.It s been over three years would i be able to quilify for this credit even thoug i was selling the house to him.for the first year which was stated in the contract.

Love this Bill

i will be purchasing a home this year, and it gives me an incestive to go out, hurry up and buy. Great boost for the economy if you ask me!

Dont like this bill

I'm 25 years old purchased a house 4 years a go and i've worked hard to to pay for my house and now you get a bunch of money for nothing. So if you look at it from my point of view i had to pay for my house and i also have to pay for the house your going to buy because that money has to come from somewhere. I think eveyone should not be so lazey and get a job and quite living off unemployment and the people that have jobs. Before you no it the working people of this country are going to run out of money for the goverment to take and then its going to get a lot worse than it is now.

really?

I am going to take "your" money... I was in the military for eight years, I have a full time job now, I have paid taxes since I was 15, I have never been on welfare, I pay all of my bills, I am not lazy, and unlike you I know how to spell and the difference between no and KNOW....have a nice day

lazy not lazy
everyone not eveyone
quit not quite
know not no
government not goverment
it's not its

Thanks!

Thanks for saying what I was thinking. I too was in the military and have worked hard all my life. Some people are just plain ignorant!

yes, really

the personal attacks calling someone lazy or whatever might be uncalled for but he's still right.

the government shouldn't be subsidizing a certain industry (housing) by stealing money from the tax payers just to prop up the powerful lobbyists (big investment banks) that got overleveraged in mortgage backed securities and other real estate based paper garbage. now the taxpayers are all on the hook for bailing out these banks, both indirectly by the government giving people money to buy these overpriced homes, and now directly through TARP and other stupid bailout programs where the government just hands the banks cash in plain sight of everyone.

so he has a valid point, regardless of whether you were in the military or were never on welfare or whatever. (p.s. i was also in the military and got 8000 for my FTHBTC... but i still don't think it was fair that my parents bought a home about a year before I did and were not able to get any tax rebate)

tax credit

Is this for First Time Home buyers only? If it is, it is extremely unfair. My husband and I have worked all our 30 years of married life and before. We have an average income together under 80,000. We are still in our first home and were thinking about building a smaller home for retirement. We are still a few years away but have not tried to sell what we have in fear of what is instore to come with the job markets, economy, etc. If we were eligible to get an $8,000 tax credit to buy or build a new home this could be the incentive we are looking for to give us the final nudge to move forward.

as long as you have not

as long as you have not bought a home in the last 3 years you qualify.

unless you buy from a

unless you buy from a relative

Qualification

IRS denied my first-time homebuyer credit even though I was renting for three years, nine months prior to buying the home I'm in now. Sent me a "CP-11" form stating that reason for disallowing the credit is that "our records show a previous homeownership that would disqualify you from receiving the credit." I've spent over two hours on hold, talked to five different people at the IRS, and nobody could tell me anything. I finally called the Tax Advocate office and they were extremely rude and unwilling to help.

Eligibility

According to the bill, if you have not owned a home in the last 3 years, then you are considered a First Time Home Buyer under the legislation and eligible for the tax credit, 10% of the home's purchase price up to $8,000. According to HUD, A first-time homebuyer is an individual who meets any one of the following criteria:

* An individual who has had no ownership in a principal residence during the 3-year period ending on the date of purchase of the property. This includes a spouse (if either meets the above test, they are considered first-time homebuyers.
* A single parent who has only owned with a former spouse while married.
* An individual who is a displaced homemaker and has only owned with a spouse.
* An individual who has only owned a principal residence not permanently affixed to a permanent foundation in accordance with applicable regulations.
* An individual who has only owned a property that was not in compliance with State, local or model building codes and which cannot be brought into compliance for less than the cost of constructing a permanent structure. Per hud.gov/offices/hsg/sfh/ref/sfhp3-02.cfm

So if I'm reading this correctly, if your current residence is listed in only one of your name's, then your spouse could be considered a first time home buyer.

So...it is not clear yet...

So, by the definition of qualified, my spouse is qualified as he has not owned or had interest in home ownership for the past 3 years....as his name was not on the title or the loan of the Condo that I purchased in 2004 and sold in 2007. We just purchased, jointly, a new home this January, 2009. By the qualified definition, he should be able to claim this credit. However, I am also seeing that if one spouse is not qualified, neither is. SO confusing! WHY would we not qualify and an unmarried couple in same situation would? Does anyone know the answer to this???

I think I qualify

So based on bullet point #4 and if I am reading and understanding it correctly, if I own a mobile home that is not on a permanente foundation then I should qualify for this since my husband and I are planning to build a house this fall.

So based on what you have

So based on what you have written, a divorced and now single parent, who moved out of the home she shared with her former spouse, and was therefore displaced (as in the second and third asterisks in your answer) would be eligible, even if it was during the 3 yr time frame, since (at least according to HUD's definition) only one of the above criteria is necessary)? Such is the case with me, and although he is still living in the old house, I received no money out of it. I moved out in 06, dovorced in 07 and bought a new home, the first home I myself bought, in Aug 08. I am not on the mortgage of the previous house, although I am on the deed. Thanks.

'09 tax credit

To be eligible for up to 10% of the home's value (capped at $8k) tax credit, the home has to be purchased between January 1, 2009 and December 1, 2009. You may be eligible for the $7,500 tax credit from the 2008 bill. That one does have to be repaid over time, but you'll need to speak to a tax specialist.

eligibility

so if i owned a house with my spouse but know im divorced, i am eligible?

Eligibility

Depends on how long you have been divorced and if both of your names were on the title of the house you jointed owned. If its been less than 3 years and you owned the house jointly, then you probably won't be eligible unfortunately.

* A single parent who has

* A single parent who has only owned with a former spouse while married.

the way i read this is the 3 year rule doesn't matter..hmmmm..i wish they would define it a little better! thx.

I agree with "hate this bill"

This is B.S. I bought a house made my payments on time everytime and had to sell because my squadron had to do a home port change to another state., Did I mention I had to pony up 18K for the buyers closing costs just to sell. I did what I had to do and did not go into forclosure or short sale. I think I am entitled to the "tax refund". God forbid someone be responable and get rewarded!!!

thank you

Thank You for your service.

no

this $8,000 one doesn't have to be paid back. last years $7500 one was just a loan. this obama one is different.

Thank You

I'm a first time home buyer and almost purchased in December. Wow what a difference a couple months make. Now I don't have to repay a bigger amount. Perfect!
People who qualify please be smart with your money. The government is giving you money free and clear to invest.

Bill

I'm not sure why you would hate a bill that will help restore our economy.

@Tax Refund: Under the Housing and Economic Recovery Act of 2008, people who bought a home on or after April 9, 2008 and before January 1, 2009 can get a $7,500 tax credit as a qualified first-time home buyer. Unlike the new bill, the $7,500 credit under the 2008 HER Act has to be repaid but it can be over a 15 year period. See http:/ /www.federalhousingtaxcredit.com/glance.php for the details. The $8,000 tax credit under the new stimulous bill does not have to be repaid.

tax refund

You forgot to mention that this has to be paid back!

Hate this bill

This is bull shit because what about the people that have purchased a house before this and are helping the economy right now. Seems like everyone that does what they need to do to survive has been s*@t on.

It's actually helping the

It's actually helping the existing housing market, and saving the economy. That's what this whole thing is about...

Taxing details

Thanks for outlining the details. We so often forget to read the fine print and in this case we certainly want to do that!

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