Zillow Advice: Mortgage Rates - $15,000 tax break vs $7500

you buy the home in 2009, ...

Wed, 11 Feb 2009 22:19:00 GMT

you buy the home in 2009, you file for the tax break when you pay 2009 taxes.

It looks like the final version ...

Wed, 11 Feb 2009 21:51:00 GMT

It looks like the final version of the tax credit will be significantly less than the initial $15,000 senate version. Sources are reporting that it has been decreased to $7,500, with other strings potentially attached.

I have a question if we are ...

Tue, 10 Feb 2009 18:27:00 GMT

I have a question if we are purchaseing our home this month are we eligible for the tax credit this tax season or next tax season

From www.bloomberg.com:"The ...

Mon, 09 Feb 2009 15:14:00 GMT

From www.bloomberg.com:

"The Senate-passed credit for homebuyers, unlike the existing $7,500 credit, isn’t refundable, which means house purchasers who owe less than $15,000 in federal income tax won’t get the full benefit in a single year.

Instead, the Senate provision would allow homeowners to split the $15,000 into two separate tax credits of $7,500 to be taken in successive years. To pay $7,500 in federal taxes, a family of four would have to earn about $92,125, according to Internal Revenue Service tax tables.

No Refund

Lower-income people whose taxes over two years don’t total $15,000 won’t get the full benefit and in many cases would get a better deal under current law, which requires the government to send a check for the difference between taxes paid and the $7,500 credit.

Under existing law, the $7,500 has to be repaid. The Senate bill wouldn’t require the $15,000 credit to be repaid. In its version of the economic stimulus bill, the House agreed only to waive the repayment requirements, though it left the refundable credit at $7,500 and preserved income limits for eligible users. "

I found some information ...

Fri, 06 Feb 2009 17:45:00 GMT

I found some information that may help clarify the question of whether or not the bill is retroactive. From Wikipedia: "a sunset provision or sunset clause is a provision in a statute or regulation that terminates or repeals all or portions of the law after a specific date". We have all read that "The amendment would sunset the current $7,500 housing tax credit on the date of enactment." So I believe this means nobody will have to repay the credit.

I have no answer but rather ...

Fri, 06 Feb 2009 15:38:00 GMT

I have no answer but rather another question. If I bought my house in 2008 (after April), do I have to repay the tax credit? I don't quite understand the pharse "The amendment would sunset the current $7,500 housing
tax credit on the date of enactment." Will I still have to pay or not?

To resolve any dispute about ...

Fri, 06 Feb 2009 15:26:00 GMT

To resolve any dispute about the non refundable nature of this proposal (and why it's important):

1. A refundable credit could, hypothetically, make your tax liability negative (meaning the government issues you a check). A non refundable credit means that the credit merely reduces your tax liability to zero.

2. the text of this amendment, as proposed, indicates that it is a nonrefundable credit. This means there will be no handouts of 15k to anyone who buys a home. Your tax liability must be 15k or more in order to claim the full benefit of the credit. The relevant text of the amendment is below:

[In plain english it says that the 15k credit cannot exceed your tax liability after all other credits and deductions]

(2) LIMITATION BASED ON AMOUNT OF TAX.â€”In the case of a taxable year to which section 26(a)(2) does not apply, the credit allowed under subsection (a) for any taxable year shall not exceed the excess ofâ€”
(A) the sum of the regular tax liability (as defined in section 26(b)) plus the tax imposed by section 55, over
(B) the sum of the credits allowable under this subpart (other than this section) for the taxable year.

3. The upside, however, is that you can claim the credit on multiple tax years. So, if you only had 5k liability in 2009 you could claim the remaining 10k in 2010.

I will be doubly mad if the ...

Fri, 06 Feb 2009 14:28:00 GMT

I will be doubly mad if the new amendment removes the income limitation. I couldn't claim the 7,500 for my purchase last year due to an AGI that was too high. Grrr! Maybe they'll make it retroactive if it gets passed in time for 2008 tax season...oh wait...too late!

Martin, the bill has not ...

Fri, 06 Feb 2009 14:16:00 GMT

Martin, the bill has not passed, but they have agreed on the tax credit....

Some form of the bill will be passed, but they have agreed on the credit. And, it does not have a repayment feature. It will take effect as soon as President signs, which they say could be early next week.

Yes, the 4% proposal by the Republicans is not in the bill yet. From my understanding, the Dems want it seperate from the stimulus bill, but have not ruled it out.

Bobby and OJ....The revised ...

Fri, 06 Feb 2009 14:10:00 GMT

Bobby and OJ....The revised tax credit will be for all home buyers, just not first time home buyers....

Refundable? Do you mean is there a repayment feature? If this is your question, then "no" the new plan does not have a repayment feature.

Cert....its a tax credit. Therefore if they owe you money after the credit, it would be a refund just like any other refund.