One tool homeowners have to help with the expense of buying a home is the first time homebuyer $8000 tax credit for purchases between January 1 and December 1, 2009. This credit, equal to 10 percent of the home’s purchase price up to a maximum of $8,000, is available for home buyers who have not owned a home within the last 3 years and unlike the previous tax credit does not have to be repaid as long as home buyers must use the residence as a principal residence for at least three years. Single taxpayers with incomes up to $75,000 and married couples with incomes up to $150,000 qualify for the full tax credit. This is a refundable tax credit, meaning that if your tax bill is less than $8000, you will get a refund for the difference.
One of the lesser known facts about this program is that buyers are allowed to get their $8000 credit without having to wait until next year’s tax return. The IRS is allowing buyers to file an amended 2008 tax return for the sole purpose of getting their $8000 this year. This is great news for the buyer who wants buy a home that needs some remodeling but is using all of their funds for their down payment.
A great website for more information on the tax credit iswww.federalhousingtaxcredit.com. Here is the exact wording from the IRS code IR 2009-27:
- File an extension. Individuals who haven’t yet filed their 2008 returns but are buying a home soon can request a six-month extension to October 15. This would be faster than waiting until next year and claiming the credit on their 2009 tax return. Even with an extension, home buyers could still file electronically, receiving their refund in as few as 10 days with direct deposit.
- File now, amend later. Individuals 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. Individuals 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. Individuals buying a home in the near future who have already filed their 2008 tax return can file an amended tax return. This will allow them to claim the homebuyer credit on the 2008 return without waiting until next year to claim it on their 2009 return.
- Claim the credit in 2009 rather than 2008. For some taxpayers who have bought a home in 2009 (or intend to), 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.
Be sure to check out the website for more details about the program or ask your tax consultant. Or check out this video from one of my favorite lenders, Brian Yampolsky of Orion Mortgage, who gives a great summary of the program. OK, he’s not exactly Steven Spielberg, but he does have some good info!
