TAX CREDIT – LAST MINUTE CRAM GUIDE

Got a lot of folks asking me a bunch of questions about the $8000 First Time Home buyer tax credit, so I thought I might try to answer it here.

Only 2 Weeks?  I though it was until Dec 1st.

Right! Unless you have cash, it’ll likely take your lender about 30 days to work through the loan process.

What do you mean I don’t qualify?

If you owned a home in the last 3 years, sorry you don’t.  Also if you are just insanely successful and make over $90K a year, then you’ll just have to suck it up and buy a home during the best time ever to buy one.

See the thinking was that anyone making $90K a year would have already saw what a no-brainer decision it was to buy a home. (the crowd is making noises now).

Will I get my money at closing?

NOPE! You can amend your taxes or wait until next year.

Here’s the form to claim it.

The filing options to consider are:

• File an extension. Taxpayers who haven’t yet filed their 2008 returns but are buying a home soon can request a six-month extension to October 15.  This step would be faster than waiting until next year to claim it on the 2009 tax return.  Even with an extension, taxpayers could still file electronically, receiving their refund in as few as 10 days with direct deposit.
• File now, amend later. Taxpayers due a sizable refund for their 2008 tax return but who also are considering buying a house in the next few months can file their return now and claim the credit later.  Taxpayers would file their 2008 tax forms as usual, then follow up with an amended return later this year to claim the homebuyer credit.
• Amend the 2008 tax return. Taxpayers buying a home in the near future who have already filed their 2008 tax return can consider filing an amended tax return. The amended tax return will allow them to claim the homebuyer credit on the 2008 return without waiting until next year to claim it on the 2009 return.

How much do I have to pay back?

Generally, there is no requirement to pay back the credit for a principal residence purchased in 2009. The obligation to repay the credit on a home purchased in 2009 arises only if the home ceases to be your principal residence within 36 months from the date of purchase. The full amount of the credit received becomes due on the return for the year the home ceased being your principal residence.

If I claim the first-time homebuyer credit for a purchase in 2009 and stop using the property as my principal residence before the 36 month period expires after I purchase, how is the credit repaid and how long would I have to repay it?

A. If, within 36 months of the date of purchase, the property is no longer used as your principal residence, you are required to repay the credit. Repayment of the full amount of the credit is due at that time the income tax return for the year the home ceased to be your principal residence is due. The full amount of the credit is reflected as additional tax on that year’s tax return. Form 5405 and its instructions will be revised for tax year 2009 to include information about repayment of the credit.

Claim the credit in 2009 rather than 2008. For some taxpayers, it may make more financial sense to wait and claim the homebuyer credit next year when they file the 2009 tax return rather than claiming it now on the 2008 tax return. This could benefit taxpayers who might qualify for a higher credit on the 2009 tax return. This could include people who have less income in 2009 than 2008 because of factors such as a job loss or drop in investment income.

Tagged as: 1st time home buyer tax credit., 2009, buyers, credit, first time home buyer, For Buyers, Home Buyer, home buyers, obama, Tax Bill, tax credit