Home buyer tax credit

[dnoblett]

Someone mentioned this to me the other day, a friend who took advantage of that $8000 home buyer tax credit got informed by IRS that they will be repaying it over 15 years.

 

I had to look it up, and yep its actually a 15 year interest free loan of $8000.

 

IR-2008-106, Sept. 16, 2008 WASHINGTON — First-time homebuyers should begin planning now to take advantage of a new tax credit included in the recently enacted Housing and Economic Recovery Act of 2008.

 

Available for a limited time only, the credit:

 

• Applies to home purchases after April 8, 2008, and before Jan. 1, 2009.
• Reduces a taxpayer’s tax bill or increases his or her refund, dollar for dollar.
• Is fully refundable, meaning that the credit will be paid out to eligible taxpayers, even if they owe no tax or the credit is more than the tax that they owe.

However, the credit operates much like an interest-free loan, because it must be repaid over a 15-year period. So, for example, an eligible taxpayer who buys a home today and properly claims the maximum available credit of $7,500 on his or her 2008 federal income tax return must begin repaying the credit by including one-fifteenth of this amount, or $500, as an additional tax on his or her 2010 return.

http://www.irs.gov/n...=186831,00.html Edited November 10, 2010 by dnoblett (see edit history)

[Daviation]

Similar to the bailouts, there were actually two tax credits and they are often confused.

 

The article posted refers to the first one of $7500. And, as noted, it was not really a tax credit... rather just an interest free loan.

 

The second tax credit (the one that was extended and FINALLY ended if contracted by 4/30/2010 and closed before 9/30/2010) was an actual tax credit of $8000.

[dnoblett]

Similar to the bailouts, there were actually two tax credits and they are often confused.

 

The article posted refers to the first one of $7500. And, as noted, it was not really a tax credit... rather just an interest free loan.

 

The second tax credit (the one that was extended and FINALLY ended if contracted by 4/30/2010 and closed before 9/30/2010) was an actual tax credit of $8000.

Good to know, goes to show how screwed up tax rules are.

 

For 2009 Home Purchases

 

The American Recovery and Reinvestment Act of 2009 expanded the first-time homebuyer credit by increasing the credit amount to $8,000 for purchases made in 2009 before Dec. 1. However, the new Worker, Homeownership and Business Assistance Act of 2009 has extended the deadline. Now, taxpayers who have a binding contract to purchase a home before May 1, 2010, are eligible for the credit. Buyers must close on the home before July 1, 2010. [Added Nov. 12, 2009]

 

For home purchased in 2009, the credit does not have to be paid back unless the home ceases to be the taxpayer's main residence within a three-year period following the purchase.

http://www.irs.gov/n...=204671,00.html Edited November 10, 2010 by dnoblett (see edit history)

[Turbo SS1414]

I just got one fat check for 8,000 plus interest about a month ago. I did have to send in alot of proof but i got a lump sum and not lots of mini payments.

 

Oh i didnt see that this was the old tax credit where it was just a loan. After that expiration they just gave out the $8,000 for free. not a loan.

Edited November 16, 2010 by Turbo SS1414 (see edit history)