Sorry to get everyone’s hopes up.
No, really. I probably shouldn’t have done it.
But since I brought up the subject of a possible $15,000 tax credit for anyone who buys a home, I feel somewhat responsible for bringing you the news of what actually passed.
The good news is that there is an $8000 tax credit available for first time home-buyers! On Friday, both the House and the Senate passed the American Recovery and Reinvestment Act of 2009 and President Obama is expected to sign it into law early next week.
$8000 tax credit highlights include:
- The $8000 tax credit is available only to first-time home buyers
- The $8000 tax credit is available only when the first-time home buyers buy a primary residence
- The $8000 tax credit is available only to first-time home buyers buying a primary residence between January 1, 2009 and December 1, 2009
- The $8000 tax credit does not require repayment
- The $8000 tax credit is claimed on a tax return and reduces the tax liability. If the credit is more than the tax liability, the unused credit will be issued as a check to the person claiming the credit
- If you sell the home within 3 years, the entire $8000 tax credit is recaptured
For those of you who have been asking questions about the possible tax credit - the good news is that we now know what has been passed into law.
What this legislation should do is encourage first time home-buyers to buy a home. What it will probably not do is encourage everyone who isn’t a first time home-buyer to buy a home.
And it remains to be seen exactly how much it will help the overall real estate market turn around.
Last 5 posts in Approval/Qualification Process
- $8000 Tax Credit is Extended through April 30, 2010...and it's been Expanded! - November 6th, 2009
- How to Boost Your Credit Score – Part 2 - November 2nd, 2009
- Is It Harder to Get a Mortgage? Perception is Reality.... - October 29th, 2009
- RateWatch October 28 - Sustainable? Depends on what you mean. - October 28th, 2009
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- Categories: Approval/Qualification Process, Costs and Fees
Comments
79 Comments so far
Jamahl
Hi. For those of us who took advantage of the current $7500 tax credit (loan) will we still be required to pay it back or has than requirement been removed?
Joey
Is there a salary bracket for this tax, just like in the first bill? Say if you are earning more than 75K or 150 jointly you are not qualified for the tax credit?
KTDen
I will be buying a home this year (2009). Can I use the $8000 as a down payment or I can only get it when I file my 2009 tax return? If I can use the $8000 credit for downpayment, how?
Ashok
Yes. As far as i understood and know for those of us who took advantage of the current $7500 tax credit (loan) will we still be required to pay it back. The non refundable is for only people who are closing their homes before 1st of December and the amount is $8000. But if you sell the house before 3 years of closing you have to pay back $8000 credit which you got. The max limit is <=150000 for couple.
Ashok
Yes. As far as i understood and know for those of us who took advantage of the current $7500 tax credit (loan) will we still be required to pay it back. The non refundable is for only people who are closing their homes before 1st of December 2009 and who bought after 1st of Jan 2009. The tax credit amount is $8000. But if you sell the house before 3 years of closing you have to pay back $8000 credit which you got. The max limit is <=150000 for couple. Yesterday I talked to two people (Tax consultant and the Realtor) and asked what happens to the people who signed a contract in 2008 and closing the home in 2009 before Dec 1st 2009 and they said the closing is what matters, not when you signed the contract. If it is wrong somebody please correct me and if you know that is not true please correct me.
Ashok
The max limit is <=150000 for couple is relating to the salary limit and the contract i talked about is relating to the new home purchase.
Larry
Closing on house this Wednesday (02/18/09). Can the new home buyers tax credit ($8k) be claimed in the 2008 tax year, or need to wait for 2009?
Justin McHood
@Jamahl,
Thanks for stopping by and asking a question. My understanding is that if you took advantage of the $7,500 tax credit you are required to pay it back.
@Joey,
Thanks for stopping by: Here is a pretty easy-to-understand chart that outlines income bracket qualifications as well as other items related to the tax credit:
http://www.phoenixrealestateguy.com/government_affairs_tax_credit_chart_021308.pdf
(Thanks http://www.PhoenixRealEstateGuy.com)
@KTDen,
Thanks for asking a question. The answer is that you cannot use the $8,000 for a down payment, you can only claim it as a tax credit once you file your 2009 taxes in 2010 if you meet all of the criteria.
@Ashok,
Thanks for sharing your expertise! It is my understanding that the closing is what matters - and by referring to the easy-to-understand .pdf, it covers the other stuff as well.
@Larry,
My understanding is that you will need to wait to file your 2009 taxes.
**** NOTE ****
I am not an accountant or lawyer. Please do not rely on any information here as 100% accurate and then try to sue me or anyone else if we are wrong and you take anything said here to be legal or accounting advice.
Please talk with your lawyer or accountant about your situation - and if we are right, tell them how smart we are. If we are wrong, tell them that we are just bloggers who couldn’t get into law school because we couldn’t pass the LSAT!
Thanks all,
Justin
Mike H
If i am on the title of a home, but not on the loan can i be considered a new home buyer? I am getting removed from the title of the current house and looking to buy a new home completely in my name.
Thanks,
Justin McHood
@Mike,
Hmmm. I am not 100% sure. Here is some information I found on HUD’s website relating to this and I will keep looking and let you know when I find something.
Chapter 3
Miscellaneous Policies
Page 3-02
One of FHA’s highest priorities is to assist homebuyers with the purchase of their first home. FHA tracks the number of first-time buyers assisted by our programs. Consequently, it is very important that the information is entered accurately in FHA Connection.
In order to help lenders properly identify first-time homebuyers, we are clarifying the definition of what constitutes a first-time homebuyer. 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.
kazinmich
I think they should make the $7500 tax credit non-repayable also. I purchased my first home on Dec 30th, so I have to pay it back. I’m a single mom trying to ’stimulate’ the economy, I make too much to qualify for most of the stimulus, but really not enough for a single mom either. I fall in the grey area.
jtugg
My wife and I bought a house in July of 2008. We were planning on getting the $7500 credit when we filed our taxes. Now, with the passing of this new $8000 credit with new date guidelines, are we still eligible to get the original $7500 credit?
Justin McHood
@kazinmich,
Thanks for stopping by and sharing. I wish I had better news for you, but I don’t. If it helps at all, I can tell you that you are not alone in feeling that you are in the “grey area” where you make too much to qualify for the stimulus but not enough for a single mom — I talk with many (many, many, many) people who are in this boat every day.
My best advice is to hang tough, continue to invest in yourself through education and know that when it all comes down to it - both you and your family are counting on you and you alone to provide… don’t wait for the government to “help out” in any way, there is only probable heartbreak in this strategy.
Oh, and call me if you ever feel like you need a pep-talk. In high school, people used to tell me that I gave a pretty good “locker room speech”.
But trust me, you are not alone out there.
@jtugg,
Yes.
Double-check what I am about to say with your accountant.
You bought a house under the “old” stimulus plan, which means that you can claim it for your 2008 taxes - which is the good news. The bad news is that you will need to pay it back according to the guidelines of the 2008 stimulus plan.
@Mike H
Still looking. Don’t think that I have forgot about you.
Thanks again to you both for commenting,
Justin
Bruce
I will be a first time homebuyer, but as I can’t afford to buy where I’m living I’d like to consider using the tax credit towards a small rental property. Can I do this, or do I fail to get it on the ‘primary residence’ criteria?
Thanks
Art
@ Justin
I’m neither a lawyer or accountant too, but I did read through the wording of both the original and new home-buyer’s credit and I think it will be possible to claim the $8000 on an ‘08 tax return. Specifically the part of the original bill that let you do this (36g) read:
“(g) Election to Treat Purchase in Prior Year.–In the case of a
purchase of a principal residence after December 31, 2008, and before
July 1, 2009, a taxpayer may elect to treat such purchase as made on
December 31, 2008, for purposes of this section (other than subsection
(c)).
and the new bill has a section that states:
(2)Conforming Amendment - Section 36(g) is amended by striking “July 1, 2009″ and inserting “December 1, 2009″
So it looks like just as with the original credit, all you have to do is amend your income tax return once you close on a house.
Mike
This is how you can use it towards your down payment.
If you anticipate using the tax credit, you can change your W-4 and have less taxes taken out of your paycheck. There is a calculator on the IRS website that will help determine how many deductions to claim in anticipation of the $8000 credit.
When you get your paycheck, take the amount that you normally would have paid to taxes and immediatley put it into a seperate savings account. If you make around $60k a year, you could put about $700 a month into savings instead of it be withheld by the government. Cut other expenses, add in more to this amount. Within 6-12 months, you could have $8000 to put towards a down payment or closing costs on a home.
Depending upon your situation, it might be just enough to get you into that home you have been wanting.
sam76
I closed on my first home Jan 15th 09. I did file my taxes already and took 7500 first time homebuyers credit. would i be able to amend my tax return and get the new 8000 that won’t have to be paid back or i have to take 7500 that i filed for and pay it back.
$15,000 or $8,000 Tax Credit: It’s not a Big Deal | Financial Intelligence
[...] Read SHARETHIS.addEntry({ title: “$15,000 or $8,000 Tax Credit: It’s not a Big Deal”, url: “http://www.figence.com/2009/02/18/15000-or-8000-tax-credit-its-not-a-big-deal/” }); [...]
Kristine
I live in Connecticut and am currently in the process of buying my first home/condo. Previous to the stimulus bill being signed, I wasn’t eligible for the $7,500 tax credit because I’m using a CHFA program for financing.
However, now that the new $8,000 tax credit is available, and some things have changed with it…I was wondering if I would now be eligible to use it. (even thought I’m still going through CHFA) I can’t find that answer any where. Would you know?? Thanks
Sara
So I have an interesting question. I talked to the IRS today..on hold for 45 minutes before. Anyway, I told them my situation and they told me what would happen under the current 7500 law because they don’t have all the details for the 2009 yet. Anyway, I am planning on getting a home built and getting married May 23, 2009. Now the kicker is my fiance has owned a home in the past three years. Now I ask the IRS if I closed before the wedding could I amend my taxes in 08 because I was single and still get the credit. She said yes. I also said if the house doesn’t close till after the wedding like June 1st but I amend my taxes to the 08 they go off of the 08 return not 09. She said if I filied in 09 as married filing seperate I would still get nothing because he has owned a home. So my question is…has anything changed about amending to 08 even if the house doesn’t close till July 09? We could get the house closed by May but if it won’t matter based on my 08 status then we may as well not rush and let it finish in July. Thanks in advance for the help.
Justin McHood
@Bruce,
Thanks for asking a question! My understanding is that it needs to be a “primary residence”. Don’t hate me.
@Art,
Thanks for sharing. I need more smart friends like you. Please share more with us as you want, we need all the help we can get.
@Mike,
Creative! I like it. You can also be my new friend along with Art and please continue to share your wisdom. There are lots of people who you can help just by sharing.
@sam76,
I don’t know for sure. I want to say that if you closed on your home in ‘09, you shouldn’t take any credit until you file your ‘09 taxes… but I have been wrong before. Please ask your accountant - they will know for sure.
@Kristine,
I live in the desert in Arizona and I am not even 5% familiar with CHFA… BUT… I think that it is written so that if you buy a home and you are a first time home buyer, you qualify. So, if I were you I would start with my loan officer and after he doesn’t know - ask your accountant. After they don’t know, keep searching. You can also always contact me directly if you are still having troubles finding an answer - I have a few smart friends who may be able to help us/you.
@Sara,
It took me at least 3 full minutes to get past the part where you actually called the IRS. Wow, that must have hurt. Whoever you are going to marry on May 23, is a lucky man - so make sure he is aware of that.
I have to officially punt on your situation however - you need to call your accountant. If he wants to charge you for giving you the answer, offer to take him to lunch and possibly even give him a wedding invitation in exchange for just helping you get the answer.
If this were a multiple choice test… and I had to pick an answer… based on whatever-it-is-that-I-am-supposed-to-know… I would select the answer that says:
Make sure you close before you get married and then you should qualify.
Thanks all - after reading all of these and doing my best, I feel like I am 100% sure that I am not the smartest-guy-in-this-room.
Justin
Jason
I see that the benefit begins to phase out at over $75,000 and completely caps at $95,000. What are the benefits between those two income levels?
Michele
If a person purchases a home in the 2009 calendar year but does the purchase through a land contract is that person eligible for the $8000 tax credit??
Justin McHood
@Jason,
Good question and nice work on making a good living!
I haven’t been able to find a “phase out schedule” for the $8,000 tax credit, but here is an idea that might give you a rough idea of what to expect:
Go to http://www.irs.gov and look at IRS form 5405 which is the current form used for the $7,500 tax credit.
I am guessing that the calculation for those who are over the limits will be roughly the same.
Oh, and don’t forget to ask your accountant just to be sure - I am not an accountant. Or lawyer. So officially, that is not “advice” just “conversation”.
@Michele,
Thanks for stopping by and asking a question!
By removing one section of your question, it reads:
“If a person purchases a home in the 2009 calendar year is that person eligible for the $8000 tax credit?”
And the answer to that part of the question is “yes” assuming that they are a first time home buyer, meet the income qualifications, etc.
The curveball in your question is this part:
“but does the purchase through a land contract…”
And I don’t know the answer to that. If I had to guess, I would say yes - but please check with your lawyer and accountant and Realtor.
Justin
Kevin
I am looking a purchasing a house. If I purchase it now that the 2009 Stimulus Act has been signed into law, can I receive teh $8,000 credit on my 2008 Tax Return?
Justin McHood
@Kevin,
Thanks for stopping by and asking a question.
The answer is “not to my knowledge. You must buy the home between Jan 1 and December 1 of 2009 and then claim it on your 2009 tax return.”
If anyone knows differently, please advise.
Justin
Charlie
I changed job status from W-2 employee to 1099 contractor less than a year ago. My only option to buy a house this year seems to be taking on a co-borrower. If that co-borrower has purchased a house within the last 3 years or exceeds the $95k cap, would that prevent me from getting the $8000 credit?
alisa
Larry: you are able to claim the $8000 on you 2008 taxes. Please follow the link below.
http://www.federalhousingtaxcredit.com/2009/faq.php#12
alisa
Sam76: you are able to amend your return and get the $8000. Follow the link below..
http://www.federalhousingtaxcredit.com/2009/faq.php#12
alisa
kevin: yes you can claim the $8000. follow the link below..
http://www.federalhousingtaxcredit.com/2009/faq.php#12
Justin McHood
@alisa,
Thanks for sharing that… X3!
Justin
Jay
Is it your gross pay or your taxable income to fit in the bracket.
Jon
@Sara - Is there any way you can have your normal wedding as planned, but DON’T go through with the legal wedding/marriage certificate until after you close on your house? I know it’s possible in some churches to be married from the church’s point of view, but single from the State’s point of view. You may need to have an open minded pastor to do this, but it could be worth exploring that option. Maybe offer to donate $1k of your refund to the church if he can work something out for you
Good luck!
Gob
Let me run this by you all. I’ve been thinking about this a lot. Why couldn’t you amend your 2008 taxes to receive the $8000 before you close on a house? I don’t think they will ask for an actual closing date before issuing you the money if it is similar to the $7500 deal. They only ask for an estimated close date. So you could gamble that you will be closing by December 1, 2009, while using the $8000 as your down payment. Worst case scenario, you can’t close and have to give the money back? What do you all think?
Justin McHood
@Jon,
Hands down, you win comment of the day.
Thanks for commenting!
Justin
@Gob,
I think that *officially*, I probably shouldn’t comment on that — so I will use Warren Buffet as a mouthpiece:
“It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you’ll do things differently.”
AND — I really do appreciate you stopping by and commenting…
Justin
Sara
ROB…I would totally do that and we are not even getting married in a church!! We contacted the minister service we are using has yet to call us back but I am sure they will. I would consider us married May 23, 2009 but for 8000 I would sign the certificate July 2009 if need be lol! I am in TN so I am not sure how that would work lol or if that is possible.
Justin McHood
@Jay,
Sorry - I overlooked your comment at first.
Here is a good answer to your question (hat tip to @alisa for sharing this site):
http://www.federalhousingtaxcredit.com/2009/faq.php#4
Justin
Elena
I am having a very hard time understanding how anyone lucky enough to by their house in January of 2009 (I bought mine in August of 2008 not even knowing anything about a credit) can get 8,000.00 free and just because I received my loan 4 months too soon, I’m required to pay my credit back. I think the stimulus is a good thing, a great thing and it will help a lot of people, but I really feel that, either we all should have to pay back the credit or we should all receive our credit without having to pay it back. The economy wasn’t any better when I bought my house and as a matter of fact, interest rates were higher. Congrats to the 2009 buyers however, at least one group of home owners will get something given to them for a change.
Justin McHood
@Elena,
Reading your comment reminds me of the old adage:
“Is now a great time to buy?”
Maybe people who are considering buying a home could ask it differently:
“Is the government going to give out any better handouts in the future?”
And watch their Realtor try to answer that one.
Justin
PS Of course I would answer if I knew. Or even if I thought I might know.
Elena
True enough, but then again, I’m pretty sure I’m not the only one who feels the way I do. Like I said…wonderful that the government gave anything at all, but to hold people who got into houses 4 months apart at completely different standards just doesn’t seem right. Then again, when has anything the government done seemed right? Oh well, at least some people wont have to worry about paying back anything, which is great, I’m happy for them. Just wish they’d have taken it across the boards instead of just for a certain year, I can’t help but think that someone who closed their loan on Dec. 30th probably wishes they had waited til January 1st.
Wise GUy
I spoke to my Tax Agent just today and he said as soon as I go into escrow I could file my 2008 taxes and claim the $8000 dollars as well. He also said I would get my return just before I close escrow so that I could use it for my down payment and closing cost if any. This makes sense because after all it is a First time Home Buyers Credit, meaning they will help you get your first home. If I had the money for a down payment and closing cost why then would I need the $8000!!! It would just be greed!!!
kazinmich
Justin – Thank you for thoughts. I have to think of the $7500 as if they didn’t come out with this $8000 I would have been very happy – happier than my coworkers who bought there’s a year or so before over priced and no incentive. I got what I wanted, at the price I wanted, and I have a nice little cushion in the bank.
Elena – I feel slighted too that they didn’t retro the not having to pay back the $7500. I purchased my house on December 30th. I am happy however I am getting the full $7500 to put directly into savings for the what-if’s of home buying. I can sleep comfortably at night knowing that if it goes wrong, I can fix it. I’m still hoping enough people write their legislative committee on up to forgo the repayment, but given the stimulus the gov’t is going to need every penny it can get over the next decade…
Wise Guy – If you don’t have money for a down payment, will you have money for an emergency fund? I know a lot of people who afford their homes, have to live paycheck to paycheck because they had to go out and put in a new furnace, or a new roof, something unexpected, or worse, one of them lost their job. Also, do you have money for the inspection? For the survey (if needed) and other miscellaneous charges you have to pay prior to closing? You may get it back at the closing, however you need to have this up front. You should have a couple grand for the pre-closing costs alone.
When I purchased my home, I was approved for 50 to 80k more than I wanted to spend. I do have a boyfriend and between the two of us we bring home decent money. If we were together on a loan, we could have gotten approved for wayyyy more house than we needed, even with the market the way it is. Instead, we looked at the market and put down our needs, then wants, then price range we are comfortable paying for with only one of our incomes. I then purchased the house myself, on my income solely. I was very happy that qualify for the $7500. That ensured that after I purchased my house, I still had a good emergency fund.
It’s hard buying a home right now. All these foreclosures – a lot that have sat through a cold winter (not good). I was fortunate enough to find a house that fit my needs, some of my wants, a few bonuses (built in 2004 & some wooded acerage) and within my price range. I went through a long short sale process, but when said and done, I only paid $129k for a house that appraised at $170k. Worse are the taxes based on $198k. There is so much to consider when buying a house – whether short sale, foreclosure or a normal purchase. Make sure you have a good mortgage guy who will give you the worst case scenario! Who can answer the important questions. Some one you can trust. My guys were absolutely wonderful, and I’d recommend them to anyone – especially if they are in Michigan. The good faith estimate was only pennies difference than the final loan. Yeah, they were that good.
Larry
I already filed and got my 2008 refund from the federal government.
What if $8000 is higher than the total amount of taxes that I owed/paid? Does the govt just cut a check for the $8000 or do they just knock it off the taxes owed?
Andrew
I have a rental property that my tenant wanted to buy on contract a few years ago. She didnt have any down payment and couldnt get financed through the bank so we didnt do anything about it. Anyways with this credit i was wondering if it can be used if she buys the house from me on contract?
Rob
I had my taxes done today, with plans to file an amended return after I close on the house in 3 weeks. My tax person told me that this wasn’t allowed and I’ll have to either file an amendment for the 7500 “loan”, or wait till next year and claim the 8000 tax credit. Is this right? Why can’t I file an amendment this year for the 8000 tax credit, since I am a first time homebuyer in 2009?
Kelly
So I closed on my house on Jan 7th 2009 and took advantage of the tax credit of 7500 on my 2008 taxes. Am I able to amend them and take the 8000 credit and it fall into the credit and not the loan?
Suz
@Andrew-Same question here. Does a contract for deed fulfill the requirement as far as the change of ownership and transfer of property????
@Rob and Kelly-You should be able to amend your taxes. per the federal housing tax website:
http://www.federalhousingtaxcredit.com/2009/faq.php#12
If I’m qualified for the tax credit and buy a home in 2009, can I apply the tax credit against my 2008 tax return?
Yes. The law allows taxpayers to choose (”elect”) to treat qualified home purchases in 2009 as if the purchase occurred on December 31, 2008. This means that the 2008 income limit (MAGI) applies and the election accelerates when the credit can be claimed (tax filing for 2008 returns instead of for 2009 returns). A benefit of this election is that a home buyer in 2009 will know their 2008 MAGI with certainty, thereby helping the buyer know whether the income limit will reduce their credit amount.
Taxpayers buying a home who wish to claim it on their 2008 tax return, but who have already submitted their 2008 return to the IRS, may file an amended 2008 return claiming the tax credit. You should consult with a tax professional to determine how to arrange this.
For a home purchase in 2009, can I choose whether to treat the purchase as occurring in 2008 or 2009, depending on in which year my credit amount is the largest?
Yes. If the applicable income phaseout would reduce your home buyer tax credit amount in 2009 and a larger credit would be available using the 2008 MAGI amounts, then you can choose the year that yields the largest credit amount.
Justin McHood
@Larry,
Thanks for stopping by - I think you can find your answer here:
http://www.federalhousingtaxcredit.com/2009/faq.php#11
http://www.federalhousingtaxcredit.com/2009/faq.php#12
http://www.federalhousingtaxcredit.com/2009/faq.php#20
The way the credit works is that if you don’t owe enough in taxes, you will actually get a check back for whatever unused credit you had.
@Andrew,
Don’t flame me, but I don’t know. Let me keep looking for an answer to this one. My hunch is that it might… so let me keep looking.
@Rob/@Kelly,
Special thanks to @Suz for answering your questions.
@Suz,
Thanks! Come back and visit on a regular basis, I need all the help I can get.
Thanks All,
Justin
Kristin
If I live with my fiance in his condo(he is the only one on the loan/title) am I able to purchase the condo from him since I have never owned a home and get the $8k credit? They would not have any issues with that correct? He plans on buying a home soon anyway to fix up to either sell or eventually live in, so it would be better to not have a loan anymore on his name anyhow. We will not be getting married til 2010.
Bob Thomson
This really sucks! I mean if we really wanted to simulate the economy, the people who profitted from the rise of real estate will not continue to invest in to real estate. How fair is this to people who was gifted a home from a family member. They want to get the credit as well.
Frank
I’m looking to purchase a home this year, and I’m a first time home buyer. I will be getting married as well before I purchase a house. What is the cut off date for qualifying for the $8000 tax-credit, since i have seen some places say up until December 31, 2009, others say December 1,2009, some say septemeber some even july or june??? So what is the final cut off date to buy a home. Next question is, if I buy a house together with my wife and we are both first time home buyers, would we both get the $8,000 tax-credit, or is just for one of us since we are only buying one house. And if we would both get it, does it get capped off at $15,000 if we are filing jointly, or how would that work???
BB
I can’t believe it. I bought my house Dec 31st of 2008. I’m out of 8,000
Brian Brady
Not to worry, BB. You can still claim the credit with this IRS Form 5405:
http://www.irs.gov/pub/irs-pdf/f5405.pdf
Jamie
My husband and I are purchasing our first house as of 3/16/09. We are first time home buyers but due to me being back on my job for only 2 months (after taking a year off to finish school) the banks will not count my income. This left us with needing a co-borrower. His parents are co-borrowing for us but they purchased a house 2 or 3 years ago. Are we as the primary borrowers able to still take the 8000 dollar tax credit for 2009 taxes? How does this work with a co-borrower?
AR TAYLOR
i was able to pay cash for my first home, i now have an equity loan on it. could i still qualify for firt time mortgage loan?? i’m disable and i need to move closer to family and friends, i need to sell my current home and purchase a home there. any options for disabled w/poor to fair credit rating??
Doris
Does anyone know IF the $8,000 tax credit is available for those on NON-taxable disability income with NO TAXABLE INCOME? I have not found any information specifically related to NON-TAXABLE INCOME.
Would be first time home owner, well within the income limits, with small professional disability & Social Security Disability income, both non-taxable.
Thanks for any and all info. Please give reference sites as this could well determine whether one can buy or not.
scarface8581
I am one of the unlucky and rather upset buyers of a home in 08. My fiance and I were on the fence about buying a house this past summer and when we found out about the 7500 tax credit we decided to go ahead and make the plunge. Now 5 months after we closed on the house they not only get $500 more, they don’t have to repay it! To me that is not right of them to do that to all who made their first purchase last year. Think about all the people they sucked in with this tax credit last year. I’m hoping I am not the only one writing their local and state reps in regards to this issue. It’s not fair to make such a huge change like that and not include all the people who took advantage of the credit the year before. Please people write your elected officials and maybe we can make some changes.
Kazinmich
scarface - can you please tell me the best way to locate the names/addresses of the correct local & state reps to write for this? I’ve been wanting to, I just don’t know who to write?
I also was waiting months on a short sale - the main reason I decided to buy last year was the tax credit. Well, It took almost six months, and the last week of the year, I told them if we didn’t close by Dec 31st I wasn’t buying it - sending Everyone in a panic!! I ended up closing on Dec 30th. It’s really nice having the money in the bank right now, sitting in my new home, but it’s saddening that we have to pay it back. I don’t even care about an extra 500 they receive. But at the same time, I can’t complain too much, because had they never come out with the $8000 non-payback I would be happy…
neil
i got my $7500 tax credit which i will have to pay back.now i hear that there is no 15k tax credit as i was planning to buy another house.do u think that they might come up with something so that we don’t have to pay that $7500 back? this is totally unfair now that i will have to pay this money back.
Averi
My husband and I are waiting while the banks approve the short sale that we are hoping to purchase.(2 months already) We are currently living in the house that I bought before we got married and this Feb we refinanced it under both our names. Since he has never bought a house will he qualify for the $8000. even if he is now on the refinanced house?
Ben
I am purchasing a home on contract, am I eligible for an $8000 tax credit?
Justin McHood
Hi Everyone,
I swear I left answers to each of your individual comments starting with @Jamie… somehow the comment monster must have eaten it.
Weird.
Ok, so the answers to your question is one of two things —
1. You can find your question and answer here: http://www.federalhousingtaxcredit.com/
or
2. Ask your CPA/accountant to be 100% certain.
Often the answer to your questions is “I don’t know for sure…” and I refer to the above website for answers, so I thought I would arm you with my source of information.
And when that site doesn’t cover my situation… I ask a CPA.
Justin
Brittany
I am a first time home buyer and am looking at buying my parents home.I was told from a friend that I would not be eligible for the $8,000 tax credit because it is a stipulation that you cant purchase from a family member. Is this accurate? I plan on it being my primary residence so I don’t understand why it would matter who your buying from! Thanks
Julie
On the $8,000 tax credit is there a “minimum” income?
For example, if a person is buying a home and the only source of income is from social security. Are they able to do the tax credit if they file a tax return?
Justin McHood
@Brittany,
Thanks for stopping by and commenting. Sorry for the delay in getting back to you, this got lost in my email box. As long as you have a purchase contract, it is my understanding that you will be eligible. Verify this with your accountant to be sure though.
@Julie,
Thanks for stopping by! It is my understanding that there is no minimum income requirements for the tax credit. Verify this with your accountant to be sure though.
Justin
hike108
An acquaintenance approached my son, requested that he “buy” his home and then rent it back to him as a way to get lower mortgage payments. He promised my son that he would collect the $8,000 tax credit and only have to come up with $4,000 down payment. On checking, I realized that my son would have to live in the house himself for three years; he could not rent it out. This man promised to pay the appraisal and closing costs, if my son would buy the house at its full price. I managed to derail this sale but feel that unscrupulous person could take advantage of naive persons in this way. My son thought he would clear $4,000 and help this man out. oy!
michael
Please tell me what happens if you purchase a home and close after Dec 1, 2009. Lets say that you close on Dec. 20th, 2009-Can you still file for the 8,000 credit in 2010?
Dustin Linker
I have a question. If I purchase the home from a relative do i still get qualify for the credit?
Justin McHood
@hike108,
Be careful!
@Michael,
It is my understanding that any home that is closed after December 1, 2009 is not eligible for the credit. Double check, but that is my understanding.
@Dustin,
It is my understanding that as long as you qualify for the first time homebuyer portion, it doesn’t matter who you buy it from.
All, you can get many of your questions answered here:
http://www.federalhousingtaxcredit.com/
Best,
Justin
Chris
I have a question. I am 23 years, and starting my first job for this year. My yearly salary is 90k, but since I started work on June 1, 2009, I will not have a total gross income greather than the alloted amount for 2009. Am I still elgible to recieve the total 8000 credit?
thank you
Justin McHood
@Chris,
My answer would be “I think so, yes” that you will qualify for the credit because your MAGI will be lower than the limits since I assume you will only be working 6 months of the year — or 45k. BUT you need to consult your tax professional for the final answer. I am not a CPA, just a loan officer.
Here is some information that will give you a general idea about the income limits — I found the information on:
http://www.federalhousingtaxcredit.com/
# Are there any income limits for claiming the tax credit?
Yes. The income limit for single taxpayers is $75,000; the limit is $150,000 for married taxpayers filing a joint return. The tax credit amount is reduced for buyers with a modified adjusted gross income (MAGI) of more than $75,000 for single taxpayers and $150,000 for married taxpayers filing a joint return. The phaseout range for the tax credit program is equal to $20,000. That is, the tax credit amount is reduced to zero for taxpayers with MAGI of more than $95,000 (single) or $170,000 (married) and is reduced proportionally for taxpayers with MAGIs between these amounts.
# What is “modified adjusted gross income”?
Modified adjusted gross income or MAGI is defined by the IRS. To find it, a taxpayer must first determine “adjusted gross income” or AGI. AGI is total income for a year minus certain deductions (known as “adjustments” or “above-the-line deductions”), but before itemized deductions from Schedule A or personal exemptions are subtracted. On Forms 1040 and 1040A, AGI is the last number on page 1 and first number on page 2 of the form. For Form 1040-EZ, AGI appears on line 4 (as of 2007). Note that AGI includes all forms of income including wages, salaries, interest income, dividends and capital gains.
To determine modified adjusted gross income (MAGI), add to AGI certain amounts of foreign-earned income. See IRS Form 5405 for more details.
# If my modified adjusted gross income (MAGI) is above the limit, do I qualify for any tax credit?
Possibly. It depends on your income. Partial credits of less than $8,000 are available for some taxpayers whose MAGI exceeds the phaseout limits.
# Can you give me an example of how the partial tax credit is determined?
Just as an example, assume that a married couple has a modified adjusted gross income of $160,000. The applicable phaseout to qualify for the tax credit is $150,000, and the couple is $10,000 over this amount. Dividing $10,000 by the phaseout range of $20,000 yields 0.5. When you subtract 0.5 from 1.0, the result is 0.5. To determine the amount of the partial first-time home buyer tax credit that is available to this couple, multiply $8,000 by 0.5. The result is $4,000.
Here’s another example: assume that an individual home buyer has a modified adjusted gross income of $88,000. The buyer’s income exceeds $75,000 by $13,000. Dividing $13,000 by the phaseout range of $20,000 yields 0.65. When you subtract 0.65 from 1.0, the result is 0.35. Multiplying $8,000 by 0.35 shows that the buyer is eligible for a partial tax credit of $2,800.
Please remember that these examples are intended to provide a general idea of how the tax credit might be applied in different circumstances. You should always consult your tax advisor for information relating to your specific circumstances.
Adrian
My wife and I just purchased a home but it wont finish building by Nov. 30th, 2009 and I highly doubt we will close by Dec 1, 2009 will I lose out on the incentive?
Terri
Adrian,
That’s a question for your tax person. I doubt if you would qualify if the house closes after Dec.1 09; however, watch close at Sen Isakson is trying to embelish the current credit of $8 to $15, which would be great for you in your case.
Kristal
Question…..We purchased a home in April 2009. Our 2008 income was over the $170k for couples so we were unable to claim the tax credit on our 2008 taxes before April 15th 2009. In 2009, we will have an income under the required amount, so can we recieve the tax credit when we file our 2009 taxes?
Kristal
Question…..We purchased a home in April 2009. Our 2008 income was over the $170k for couples so we were unable to claim the tax credit on our 2008 taxes before April 15th 2009. In 2009, we will have an income under the required amount, so can we recieve the tax credit when we file our 2009 taxes?
tedd
Im buying my mothers home from her trust an am I aloud to get the $8000.0 tax cerdit this year in sept 2009?
tedd
Im buying my mothers home from her trust an am I aloud to get the $8000.0 tax cerdit this year in sept 2009? what rules do sblings go by ?
ismael
my parents own a rental property which i rent from them.
they add me to the tittle to qualified for home st to reduce tax.
now my question is i want to buy my first house
do i qualified for the $8000.00 tax credit?
lenny
If i dont owe any money and i buy a house and a first time buyer, and amend last years taxes do i get a check