$8,000 First Time and $6,500 Existing Home Buyer Tax Credit Expiry. 2011 Extensions Available For Certain Groups

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[Latest Update] See this article for potential 2013 tax changes, including a potential elimination of the home mortgage interest deduction.
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[Updated Nov 2011] While President Obama has not proposed a new 2012 homebuyer tax credit in his latest economic stimulus (The American Jobs Act), he has included a great new provision for existing homeowners. Basically home owners who meet certain criteria (still to be defined) can refinance to the ultra-low rates available in today’s market. Through the FHA and government owned entities, Fannie Mae and Freddie Mac, the refinance program will allow banks to ease credit and qualification standards and hence enable a larger number of Americans to get sub-4% rates. A one percent interest decrease can put more than $2,000 a year in an average family’s pocket.

I will provide a detailed update on the new qualification criteria as they become available and encourage you to subscribe (free) via RSS, Email, Facebook or Twitter to get notified of the latest updates.

30-Year Fixed, FHA Loans, VA Loans
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[Updated February 2011] The Federal Home Buyer Credit has now expired, with no further extensions currently proposed in Congress. But make sure you provide the right documentation if claiming this credit when filing your 2010 tax return in 2011. Some groups (see below) are still eligible for this credit until September 2011.

One of the most popular topics on this site, the many articles I have written on this credit are heavily commented on given the big money – up to $8,000 – on offer for home buyers. This credit has been extended 4 times already on increasingly favorable terms, dating back to the Bush presidency, and has helped thousands of families buying homes. While there has been some degree of fraud, this credit has been one of the most successful stimulus payments the Obama administration has implemented to stem the housing and financial crisis.

However. with home prices stabilizing in most markets it is highly unlikely the credit will be extended again into 2011, despite the pleas of many home buyers who just missed the cut-off (April 30th to qualify, Sep 30th to claim). Some groups like Armed forces members and certain state department employees are still eligible for the credit into 2011, but for most home buyers going forward the credit is gone for good. One credit that is still available though is the $1500 home energy efficiency credit which can lead to lower energy cost savings over the medium to longer term.

Another challenge around the home buyer credit has been claiming it. With the flood of claims and various other stimulus driven credits and tax breaks the IRS has been slow in processing this credit. 2-3 months is the average wait for most people. But you can save yourself some time by submitting the right documentation when you adjust your 2009 or file your 2010 tax returns (in 2011). Form 5405 is the official IRS form required to claim the credit and all eligible home buyers must also include with their tax return one of the following documents (better to include more than less documentation if you are unsure):

- A copy of the settlement statement showing all parties’ names and signatures if required by local law, property address, sales price, and date of purchase (before April 30th 2010 to be eligible for the credit). Normally, this is the properly executed Form HUD-1, Settlement Statement. For a newly constructed home where a settlement statement is not available, a copy of the certificate of occupancy (from the county/city office) showing the owner’s name, property address and date of the certificate.

- Existing Home Buyers who qualify for this credit must show that they lived in their old homes for a five-consecutive-year period during the eight-year period ending on the purchase date of the new home. This can be done by providing Mortgage interest statements, Property tax records or Homeowner’s insurance records

If claiming the credit in your 2010 tax returns (filed in 2011), most of the leading tax software like Turbo Tax will have step by step guides on claiming the credit in your return. There are three options for claiming the credit on a qualifying 2010 purchase:

  • If a 2009 return has not yet been filed, claim it on Form 1040 for tax-year 2009. Though these returns cannot be filed electronically, taxpayers can still use IRS Free File to prepare their return. The returns must be printed out and sent to the IRS, along with all required documentation. The IRS urges taxpayers claiming refunds to choose direct deposit.
  • If a 2009 return has already been filed, claim it on an amended return using Form 1040X.
  • Whether or not a 2009 return has been filed, wait until next year and claim it on a 2010 Form 1040.

The IRS has release the following 7 reminders for tax payers claiming the home buyer credit in 2011:

  1. You must have bought – or entered into a binding contract to buy – a principal residence located in the United States on or before April 30, 2010. If you entered into a binding contract by April 30, 2010, you must have closed on the home on or before September 30, 2010.
  2. To be considered a first-time homebuyer, you and your spouse – if you are married – must not have jointly or separately owned another principal residence during the three years prior to the date of purchase.
  3. To be considered a long-time resident homebuyer you and your spouse – if you are married – must have lived in the same principal residence for any consecutive five-year period during the eight-year period that ended on the date the new home is purchased.
  4. The maximum credit for a first-time homebuyer is $8,000, half that amount for married individuals filing separately. The maximum credit for a long-time resident homebuyer is $6,500. Married individuals filing separately are limited to $3,250.
  5. You must file a paper return and attach Form 5405, First-Time Homebuyer Credit and Repayment of the Credit with additional documents to verify the purchase. Therefore, if you claim the credit you will not be able to file electronically.
  6. New homebuyers must attach a copy of a properly executed settlement statement used to complete such purchase. Buyers of a newly constructed home, where a settlement statement is not available, must attach a copy of the dated certificate of occupancy. Mobile home purchasers who are unable to get a settlement statement must attach a copy of the retail sales contract.
  7. If you are a long-time resident claiming the credit, the IRS recommends that you also attach any documentation covering the five-consecutive-year period, including Form 1098, Mortgage Interest Statement or substitute mortgage interest statements, property tax records or homeowner’s insurance records.

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[Update July 2010] Approved! First-time home buyers now have until Sept. 30 to close on their home purchases and qualify for the $8,000/$6500 tax credit under a newly approved extension bill. The closing deadline was originally June 30. To be eligible, buyers still need a contract that was in place by April 30.

The home buyer credit, extended and expanded over the last 3 years is set to expire at the end of this month with Congress still unable to approve the extension as part of HR 4213 (see previous update below). However, recently released data for May 2010 shows worrying trends of sharply declining sales of existing and new homes. Further, inventory data and foreclosure activity have not shown any signs of improvement. All this suggests the expiration of the home buyer credit may have more of an impact than people thought.

This news and voter pressure prompted House members to take more action with the stalling of the HR 4213 bill in Congress (due to other provisions in it). As such a new bill – H.R 5623 – was introduced and approved by the House (409-5) to extend the home buyer credit for new and existing home buyers.  The bill has now passed in the Senate without amendment by unanimous consent. President Obama has also signed the bill into law. Here is a summary of the bill:

H.R. 5623Homebuyers Assistance and Improvement Act of 2010. Among other items, this bill would extend the homebuyer tax credit of up to $8,000 for the purchase of a principal residence before October 1, 2010. The current benefits apply to cover buyers who enter into contracts before April 30 and close by June 30. This bill extends the closing date to September 30, 2010.

The bill would provide any home buyer who entered into a contract on a home by April 30, 2010, but has been unable to go to closing within the required 60 days, an additional 90 days to close and qualify for the credit. This provision is estimated to cost $140 million

The approval of this bill is great news for many home buyers who signed a purchase agreement/contract prior to April 30th but are having difficulty closing before June 30th. One thing to clarify -  this bill does not extend the deadline for home buyers to sign a contract for a home and hence qualify for the tax credit (still April 30th); rather it extends the deadline for closing the transaction, from June 30 to Sept.30.

The National Association of Realtors estimates that this new extension will help about 180,000 to 200,000 homebuyers who already signed purchase agreements and were likely to miss the June 30th deadline.

The IRS has also released more details on the approved extension and required documentation (detailed in previous updates below). To avoid refund delays, those who entered into a purchase contract on or before April 30, but closed after that date, should attach to their return a copy of the pages from the signed contract showing all parties’ names and signatures if required by local law, the property address, the purchase price, and the date of the contract.

Besides filling out Form 5405, First-Time Homebuyer Credit and Repayment of the Credit, all eligible home buyers must also include with their tax return one of the following documents:

  • A copy of the settlement statement showing all parties’ names and signatures if required by local law, property address, sales price, and date of purchase. Normally, this is the properly executed Form HUD-1, Settlement Statement.
  • For mobile home purchasers who are unable to get a settlement statement, a copy of the executed retail sales contract showing all parties’ names and signatures, property address, purchase price and date of purchase.
  • For a newly constructed home where a settlement statement is not available, a copy of the certificate of occupancy (from the county/city office) showing the owner’s name, property address and date of the certificate.
  • Existing Home Buyers who qualify for this credit must must show that they lived in their old homes for a five-consecutive-year period during the eight-year period ending on the purchase date of the new home. This can be done by providing Mortgage interest statements, Property tax records or Homeowner’s insurance records

There are three options for claiming the credit on a qualifying 2010 purchase:

  • If a 2009 return has not yet been filed, claim it on Form 1040 for tax-year 2009. Though these returns cannot be filed electronically, taxpayers can still use IRS Free File to prepare their return. The returns must be printed out and sent to the IRS, along with all required documentation. The IRS urges taxpayers claiming refunds to choose direct deposit.
  • If a 2009 return has already been filed, claim it on an amended return using Form 1040X.
  • Whether or not a 2009 return has been filed, wait until next year and claim it on a 2010 Form 1040.

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[Updated - May-June 2010] Possible September 30th, 2010 Extension to Home Buyer Credit as Builders and Home Owners Struggle to Complete Home Transactions by the current June 30 2010 Tax Credit Deadline.

The U.S. Senate has approved a provision to H.R. 4213 (a jobs and tax bill) to extend incentives for first-time home buyers. The provision to extend the home buyer credit would give buyers an extra three months to close on their house. H.R. 4213  in it’s entirety still needs to be approved by the Senate (still under debate as of 6/28), before returning to the House for a final vote. Only when the bill is signed into law by the President, will the home buyer credit extension be official. Until then, home buyers must close by July 1st 2010 to qualify for the credit.

Construction crews are working around the clock to meet tight deadlines to finish houses by the end of June so purchasers can get a federal home buyer tax credit of as much as $8,000. Home buyers are similarly anxious to get settlement on an existing house or the keys to the new home before the credit expiry date. To qualify, home buyers had to sign a contract by April 30 (intention to buy) and must complete the transaction by July 1st (June 30 is the last eligible day). To complete a newly constructed home sale, builders in most of the U.S. are required to have a certificate of occupancy from local officials attesting the house is finished or at least conforms to building codes. Mortgage lenders usually require the document before closing on a loan.

Push to extend closing to September 30th 2010

With all the hoopla around claiming the credit and a strong push from various realtor groups,Senate Majority Leader Harry Reid has pushed through the senate a three-month deadline extension amid concern that a rush of buyers created too big of a backlog. New-home contracts rose 30 percent in March and 15 percent in April, the biggest two-month gain in records dating to 1963, according to the Commerce Department. About a third of the April signings were for homes under construction, and a quarter were for those that weren’t started. The National Association of Realtors asked members of Congress to consider extending the tax credit deadline to allow people more time to complete sales, said Lucien Salvant, head of public affairs for the Chicago-based trade group.

Two other Senators, D-Nev., and Sens. Johnny Isakson, R-Ga., and Chris Dodd, D-Conn, also supported an extension the to present home-buyer tax credit closing deadline to Sept. 30. The measure was offered as an amendment to H.R. 4213, a tax extension bill that is still under debate in the Senate. It is more than likely that the revised bill will be approved and this extension gets passed. I will continue to post updates and the revised IRS approved dates.

New-home sales in March and April were concentrated in houses costing less than $300,000, signaling a rise in first- time buyers seeking the tax credit. The maximum benefit of $8,000 is reserved for people who have never owned property, while current homeowners can qualify for as much as $6,500 (see qualification details in previous updates below).

“The bulk of the delays are coming from people doing short sales, but we’re also seeing people having problems closing on homes they’re having built,” said Salvant. Short sales are transactions in which a bank accepts less than the balance owed on a property.

One thing to clarify based on some reader questions: This amendment does not extend the deadline for home buyers to qualify for the tax credit; it extends the deadline for closing the transaction, from June 30 to Sept.30. Since these applications were already in the pipeline and figured into the program’s cost, the extension of the closing deadline should not incur any further government costs.

Other Home Buyer Credits still available like California Credit and 2011 Extension for Military home buyers.

In California, the federal tax benefit has been eclipsed by a $10,000 state tax credit for real estate purchased between May 1 and the end of the year. The credit applies to people who buy a new home and first-time home buyers who purchase either a new or existing property.  Florida and other hard hit states also have home buyer assistance programs.

Similarly, the home buyer credit has also been extended for members of the Armed Forces and certain federal employees serving outside the U.S. have an extra year to buy a principal residence in the U.S. and still qualify for the home buyer credit. An eligible taxpayer must buy or enter into a binding contract to buy a home by April 30, 2011, and settle on the purchase by June 30, 2011.

I will continue to monitor this tax credit as part of HR 4213′s approval and will update with new information. I encourage you to subscribe (free) via Email or RSS to get the latest updates.

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[Update May 2010] Unfortunately it looks like the chances of a further extension to the home buyer tax credit are lessening by the day as stronger housing data and focus on reducing government debt and foreclosures emerges. Bloomberg reports that purchases of new homes in the U.S. surged 27% in March, the most in almost five decades as buyers rushed to qualify for the home buyer tax credit. The annual pace of 411,000 new home sales exceeded even the highest forecast of economists. Last month’s purchase rate followed a record-low of 324,000 in February. Home sales increased in all four U.S. regions last month, led by 44 percent jump in the South.

The median price of a new home in the U.S. increased 4.3 percent in March from a year earlier to $214,000. The jump in sales brought the number of new houses on the market down to 228,000, the fewest since March 1971. The supply of homes at the current sales rate dropped to 6.7 months’ worth, the lowest level since December 2006, from 8.6 months in February. A report yesterday from the National Association of Realtors showed sales of existing homes jumped to a 5.35 million rate in March, the first increase in four months. Lawrence Yun, the group’s chief economist, said the government’s homebuyer tax credit “has done its job,” bringing more buyers into the market and stabilizing prices.

The Obama administration originally extended the credit in November 2009 and expanded it to include existing home-owners. To claim the home buyer credit you must have a signed contract by the end of April 2010, with the transaction to be completed by June 30 (see all the qualification details and claiming criteria in the updates below). You can submit an amended tax return with Form 5045 to claim the home buyer credit or file for it in your 2010 tax return.

While the home buyer credit is likely to lapse, there are some exceptions for certain groups who can claim the credit into 2011. For example Members of the Armed Forces and certain federal employees serving outside the U.S. have an extra year to buy a principal residence in the U.S. and still qualify for the home buyer credit. An eligible taxpayer must buy or enter into a binding contract to buy a home by April 30, 2011, and settle on the purchase by June 30, 2011.

I will continue to monitor this tax credit for any further updates and encourage you to subscribe (free) via Email or RSS to get the latest news along with the New Tax Breaks in the American Jobs and Closing Tax Loopholes Act of 2010 plus all the other stimulus payments in 2010 and 2011.

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[Mar 2010] With the deadline looming for the home buyer credit (see details below), many readers have asked if there is any update on a further extension of this popular tax credit. Recent housing data suggests that the housing market is still struggling with pending home sales dropping nearly 8 percent. The drop in pending (contract) home sales and unexpected declines in purchases of new and existing homes last month, adds to evidence the housing market, at the center of the worst recession since the 1930s, is still struggling to rebound. Further, the government has been forced to roll out new measures to help struggling homeowners facing foreclosure. So the question a number of realtors, housing industry members and would be home buyers are asking is that will the home buyer credit be extended again past summer?

Undoubtedly there is significant negative sentiment towards the home buyer credit, particularly from those home buyers who could not take advantage of previous versions with lower income limits; and from most conservative groups and fiscally focused politicians who want the home buyer tax credit to expire as planned. However, in addition to allaying the weakness in the housing market, extending the home buyer credit again could be a smart political move in an election year. Lawmakers, now more than ever, are looking for any successful mortgage and/or housing-related program that they can stand behind. Besides the Fed’s mortgage-backed securities (MBS) purchase program, the home buyer tax credit has been touted by some as an extraordinary success. Such, “success” can provide the necessary political cover to advocate extending the credit, especially since the simple fact is that it if doesn’t work — that is, if it’s not being utilized — that it costs nothing. Deficit issues and the concept of whether we’re rewarding those who might have bought anyway will take a back seat. Keeping home sales going promotes home price stability, and that makes for less-grumpy voters as election time rolls around.

As of yet, there are only a few official rumblings about further extending the home buyer credit for new and existing home buyers. However, if the housing market and political climate continues to deteriorate I would not be surprised to see the credit extended again (albeit with slightly different conditions) to at least the end of the year.

One thing is for sure, over the next couple of months, especially with health care reform passing and taking a back seat, we are going to hear a great deal about the first time home buyer tax credit extension. It will be very interesting to see what Washington has to say about the current state of the housing market and the possibility of an extension to this tax credit.

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[Update Jan 2010] Following Congress approval, President Obama has signed off on the bill approving an extension of the $8,000 new home buyer tax credit until April 30th 2010. Also, the new provisions in the extension are NOT retroactive. Here is a summary of the new and updated provisions and their impact on you if you have or are planning to buy a house. New IRS forms and claiming instructions are also provided.

- Qualification Period : First-time home buyers who bought after January 1, 2009 and before April 30th 2010 (with closing to take place by or on June 30, 2010), would get the $8,000 home buyer tax credit. This means you need to have purchased on or before April 30, 2010. However, in cases where a binding sales contract is signed on or by April 30, 2010, a home purchase completed (closing, final inspection etc) by June 30, 2010 will qualify. Make sure you attach a copy of the pages from the signed binding contract to make a purchase showing all parties’ names and signatures, the property address, the purchase price and the date of the contract.

- For the purposes of claiming the tax credit, the purchase date is the date when closing occurs and the title to the property transfers to the home owner. If you and your spouse claim the credit on a joint return (both of you must meet the income and past ownership criteria to qualify), each spouse is treated as having been allowed half of the credit for purposes of repaying the credit. So the total amount claimable is still only $8000.

- Income qualification limits: The home buyers’ credit would be available to individuals with a modified adjusted gross income (MAGI) of up to $125,000, or $250,000 for couples, up from $75,000 for individuals and $150,000 for couples under the original rules. The higher income limits are only for homes purchased after Nov. 6, 2009. That is, the existing MAGI phase-outs of $75,000 to $95,000 or $150,000 to $170,000 for joint filers still apply to purchases on or before Nov. 6, 2009. Those with incomes higher than the above limits do not qualify for any part of the tax credit.

- *NEW* Current Homeowners looking for a replacement primary residence could also qualify for a $6,500 (up to $3,250 for a married individual filing separately) under the new “long-time resident” provision. They must have lived in the same principal residence for any five-consecutive year period during the eight-year period that ended on the date the replacement home is purchased. This new provision also only applies to homes purchased after Nov. 6th 2009. The IRS has stepped up compliance checks involving the home buyer credit for those with past homes and they must provide a mortgage Interest Statement, Property tax records or Homeowner’s insurance records, to prove compliance with past residency criteria.

- Claiming the new home buyer credit: For qualifying purchases, taxpayers have the option of claiming the credit on either their 2009 or 2010 return. A new version of Form 5405, First-Time Home buyer Credit, is now available on the IRS website. Taxpayers claiming the credit on their 2009 returns, will not be able to file electronically because of the added documentation requirements, but instead will need to file a paper return by using the new version of Form 5405. A taxpayer who purchased a home on or before Nov. 6 and chooses to claim the credit on an original or amended 2008 return may continue to use the current version of Form 5405.

In addition to filling out a Form 5405, all eligible home buyers must include with their 2009 tax returns one of the following documents in order to receive the credit:

 

  • A copy of the settlement statement showing all parties’ names and signatures, property address, sales price, and date of purchase. Normally, this is the properly executed Form HUD-1, Settlement Statement.
  • For mobile home purchasers who are unable to get a settlement statement, a copy of the executed retail sales contract showing all parties’ names and signatures, property address, purchase price and date of purchase.
  • For a newly constructed home where a settlement statement is not available, a copy of the certificate of occupancy showing the owner’s name, property address and date of the certificate.The IRS expects to start processing 2009 tax returnsclaiming the home buyer credit in mid-February after it completes the updating and testing of systems to meet the law’s new requirements and to deter fraud related to the home buyer credit. Normally, it takes about four to eight weeks to get a refund claimed on a complete and accurate paper return where all required documents are attached. For those homebuyers filing early, the IRS expects the first refunds based on the homebuyer credit will be issued toward the end of March.

 

- The new $8000 credit can be used towards the down payment of a house bought in the credit qualifying period. You need to work with your lender to take advantage of this provision.

- Tax Credit Exclusions: Homes that cost more than $800,000 aren’t eligible for the credit and you must be over 18 years old to claim the credit (dependents are not eligible to claim the credit either). Those who sell their new home or stop using it as their main residence within three years would have to repay the credit. You cannot claim the credit if acquired your home by gift or inheritance OR if you acquired your home from a related person

- If two or more unmarried individuals buy a main home, they can allocate the credit among the individual owners using any reasonable method. The total amount allocated cannot exceed the smaller of $8,000 or 10% of the purchase price. Note: A reasonable method is any method that does not allocate all or a part of the credit to a co-owner who is not eligible to claim that part of the credit (I would go with 50/50 as a reasonable method if one person is not eligible for the credit)

- The purchase date is how you decide which credit you are eligible for. Only homes purchased from Jan 1 2009 to April 1st 2010 are eligible for the fully refundable $8000 credit. If you constructed your main home, you are treated as having purchased it on the date you first occupied it.

- Foreign or Overseas Homes: You are considered a first time home buyer when buying an American residence, even if you owned principal residence outside of the United States within the previous three years. Non-resident alien’s cannot claim the credit.

- Members of the Armed Forces and certain federal employees serving outside the U.S. have an extra year to buy a principal residence in the U.S. and still qualify for the credit. An eligible taxpayer must buy or enter into a binding contract to buy a home by April 30, 2011, and settle on the purchase by June 30, 2011.

 

For more on all the 2009 tax credits and criteria see: 2009 Federal Income Tax Guide Features All The Stimulus Recovery Tax Break Details; Which Can Help People Save When Filing Returns in 2010

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[Previous Update] Senate votes 98-0 to extend the $8,000 first-time/new home buyer tax credit until April 30, 2010. House to vote by the end of the week, with President to sign into law before Thanksgiving.

A number of people are wondering if the $8000 new home buyer credit (detailed in the updates below) expiring on November 30th will be extended to all home buyers, and potentially increased to $15,000. This is particularly the case if they are considering a purchase in the next few months because they must go through the whole home buying process and close before the end date. Well, Bloomberg news reports that according to Senator Bill Nelson of Florida (D), Senate leaders are negotiating to extend and gradually reduce the $8,000 first home buyer tax credit through 2010. Senate Majority Leader Harry Reid of Nevada and Senate Finance Committee Chairman Max Baucus of Montana, both Democrats are seeking to add the home buyers extension to legislation extending unemployment benefits for 14 weeks.

 

The Senate bill to extend the credit contains the following new provisions:

- First-time home buyers who close before April 1 would get the full $8,000, and the credit’s value would be reduced by $2,000 in each successive quarter until expiring at the end of the year.

- The plan would extend the credit, due to expire Nov. 30, to home purchases under contract by April 30, 2010, with borrowers allowed another 60 days to close the sale, according to a person familiar with the details of the agreement.

- Current Homeowners looking for a new home could also qualify for a $6,500 credit if they have lived in their existing primary residence for at least five years

- The home buyers’ credit would be available to individuals earning up to $125,000, or $250,000 for couples, up from $75,000 for individuals and $150,000 for couples under the current law.

- Tax Credit Exclusions: Homes that cost more than $800,000 aren’t eligible for the credit and you must be over 18 years old to claim the credit. Those who sell their new home or stop using it as their main residence within three years would have to repay the credit.

More than 1.2 million borrowers through Oct. 9 have claimed almost $8.5 billion of the $13.6 billion set aside for “first-time” home buyer tax credits this year. The program is aimed at easing the worst housing slump since the Great Depression and has been credited with boosting the economy and stock markets over summer. See this update and details below for the various bills under consideration to extend this tax credit.

Lawmakers are under pressure from real estate agents, mortgage brokers and home builders to extend the $8,000 credit before it expires Nov. 30. However, they are also facing pressure from governance groups and recent IRS reports claiming widespread fraud around claims for this lucrative credit. The IRS has identified 73,799 claims totaling almost $504 million that may not be from first-time home buyers. They also found that 582 taxpayers under 18 years old and ineligible to buy a home claimed almost $4 million in credits.

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[Updated October 2009] A number of people are wondering if the $8000 new home buyer credit (detailed below) expiring on December 1st will be extended to all home buyers, and potentially increased to $15,000. This is particularly the case if they are considering a purchase in the next few months because they must go through the whole home buying process and close before the end date. Further the stabilization of the housing market due to the 2008 credit and unprecedented success of the extended cash for clunkers program has shown that stimulus payments that directly help consumers seem to have the most impact. This means that the extension of the $8,000 tax credit for first-time buyers will be a hotly debated topic in Washington over the next few months. There is a reasonable chance (particularly if the housing market falters again) that the credit will get a second life and be extended for another six to 12 months, taking pressure off buyers, realty agents and settlement companies.

An extension of the $8,000 U.S. homebuyer tax credit is gaining support in the Senate as bill sponsor John Isakson said he is rallying lawmakers to continue a program that helped boost home sales by more than 1 million. “I’m working the floor now to make everyone aware that the $8,000 credit sunsets” Isakson, a Georgia Republican. His legislation would extend the program through the end of 2010, almost double the credit to $15,000 and remove restrictions that prohibit individuals who already own homes or earn $75,000 – $150,000 for couples – from getting the tax break. The bill, first introduced in June 2009, failed in a 47-50 Senate vote in August.

Even President Obama is reviewing an extension of the bill with White House spokesman Robert Gibbs telling reporters today that President’s economic team is looking at the tax credit and “evaluating the impact” on new home sales. “Through that evaluation we’ll come to something to give the president a recommendation,” Gibbs said.

As reported in the Washington post the two biggest housing trade groups – the 1.2 million-member National Association of Realtors and the National Association of Home Builders – are mounting unusually intense lobbying campaigns to make the case for extending the credit, and maybe even expanding it (to $15,000 per the original bill). The effort is targeted first at the districts of members of the two tax-writing bodies, the House Ways and Means and Senate Finance committees, but is expected to cover most other members of Congress as well, according to officials of the two groups. Delegations of home builders and realty brokers already have begun descending on district offices, delivering what Jerry Howard, president and chief executive of the builders association, calls “the hard economic facts.” They are the numbers of houses sold in each congressman’s district that are attributable to the tax credit; the economic ripple effects on local businesses, manufacturers and service industries; the number of new jobs and income generated; plus the additional tax revenue that all this activity will help produce for local governments.

On a national basis, according to economists at the National Association of Realtors, anywhere from 300,000 to 350,000 additional sales of houses will be stimulated this year by the credit. Each home sale generates about $63,000 in downstream “ripple effects” elsewhere in the economy, they say. That includes sales of furnishings, appliances, lawn mowers, landscaping and renovation materials, plus moving expenses. If you accept the numbers – and some analysts consider them a stretch – this means the housing credit provides a powerful, immediate stimulus bang for the buck. Failure to extend what may be one of the most effective pieces of the Obama administration’s 2009 stimulus legislation would cost jobs, economic growth and tax revenues, the housing groups argue.

But can any of this happen before the December 1st deadline? The key complicating factor here is Congress’s heavy load of higher-profile, pressing issues (like health-care reform) that will get attention before anything else in September and October. On top of that, a

tax-credit extension would cost billions in lost revenue – a big negative when the federal budget deficit is already wallowing in a record amount of red ink. In the end, however, given the political economics of the housing credit, the odds favor some sort of extension, probably later rather than sooner. But don’t bank on it and if you are ready to purchase a home then do so sooner rather than later

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[Updated June 2009] First-time home buyers can now use the $8,000 first home federal tax credit (detailed in previous update below) to help cover down payment and other upfront costs if they are taking out a loan backed by the Federal Housing Administration. (see FHA loan vs Conventional Loan differences). The $8,000 tax credit was made available months ago as part of the Obama administration’s stimulus package in an effort to motivate would-be buyers and jump-start the housing market. But home buyers cannot claim the tax credit until they close on their homes, and then they must wait for weeks, possibly months, after filing their tax returns to receive the money.

To help buyers who need the cash upfront, FHA is allowing private lenders, state housing agencies and some nonprofit groups to offer loans secured by the tax credit. The Department of Housing and Urban Development, which includes FHA, estimates that this tax credit advance will enable tens of thousands of families to buy homes. Under HUD’s plan, buyers cannot use the tax credit advance to pay the 3.5 percent down payment FHA mortgages require if they get the advance from a private lender. They can use it to add to that down payment or help defray closing costs.

[Updated May 14 2009] The IRS has now issued an updated Form 5405 which rules on a number of questions raised around the 2009 ($8000) and 2008 ($7500) home buyer tax credits. Here are some of the key IRS Rulings and other answers applicable to the the 200+ questions I received on this credit:

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[Update Feb 7th 2009] I received a lot of comments on an earlier article discussing details of the $800/$400 tax rebate under the economic recovery stimulus package. This is not surprising given the adverse economic climate and the large number of beneficiaries of the rebate. Another wide ranging item in the Obama administration’s 2009 stimulus package, that has garnered as many questions and interest in the media, is the proposed $15,000 first-time home buyer (owner) tax credit. This proposal aims to double the existing $7,500 first time home buyer credit in addition to making it available to all and removing the obligation to pay it back in subsequent tax years.

Firstly, here is an outline of the current home owner credit and income thresholds:

- The Credit can be claimed in this year’s tax return by filing an amendment using Form 5405. Qualifying taxpayers who buy a home this year before Dec. 1 can get up to $8,000, or $4,000 for married filing separately.

- The new $8000 credit can be used towards the down payment of a house bought in the credit qualifying period. You need to work with your lender to take advantage of this provision.

- Unfortunately you still have to pay back the existing $7,500 credit (for homes bought between April 8, 2008, and before December 31, 2008). Unlike the $8,000 credit passed recently, the existing credit was not made retroactive. You generally must repay the credit over a 15-year period in 15 equal installments, starting in 2010

- To be eligible for the home buyer credit, your modified adjusted gross income (MAGI) must be less than $95,000 or $170,000 (if married filing jointly) for the relevant tax year. The phase-out of the credit begins when your MAGI exceeds $75,000 or $150,000 (married filing jointly), meaning the amount of credit received decreases after these limits.

- You cannot claim the credit if acquired your home by gift or inheritance OR if you acquired your home from a related person

 

- If you and your spouse claim the credit on a joint return, each spouse is treated as having been allowed half of the credit for purposes of repaying the credit. So the total amount claimable is still $8000.

- [Recent Update] If you are married joint filers, both partners must meet the first-time home buyer criteria. This is to prevent double dipping, but is biased against married couples since single filers also get the $8000 credit. So if you are planning to get married this year to someone who has owned a home – you may want to buy a home first and get married in 2010.

- If two or more unmarried individuals buy a main home, they can allocate the credit among the individual owners using any reasonable method. The total amount allocated cannot exceed the smaller of $7,500 ($8,000 if you purchased your home in 2009) or 10% of the purchase price. Note: A reasonable method is any method that does not allocate all or a part of the credit to a co-owner who is not eligible to claim that part of the credit (I would go with 50/50 as a reasonable method if one person is not eligible for the credit)

- The purchase date is how you decide which credit you are eligible for. Only homes purchase from Jan 1 2009 to Dec 1 2009 are eligible for the fully refundable $8000 credit. If you constructed your main home, you are treated as having purchased it on the date you first occupied it.

__________

[Update Feb 18 2009] President Obama has now signed into law the $787 billion economic-recovery package. Unfortunately certain tax breaks, including the homer buyer tax credit, were scaled back to $8,000 (from the proposed $15,000) to get sufficient support for the stimulus bill’s approval. This is $500 more than the current home buyer tax credit (outlined below), but will only be available for qualifying home purchases this year between January 1, 2009 and December 1, 2009. Buyers who bought houses last year are still covered under the existing $7,500 home owner credit.

The Senate’s proposal to make this credit available to anyone regardless of income was also dropped and like the original $7,500 home owner tax will phase out for single taxpayers with adjusted gross incomes that exceed $75,000 (or $150,000 for married couples filing jointly). Further, if you sell the home within three years, you’ll forfeit the credit (or have to pay it back it you already claimed it).

However, the final stimulus plan did leave in the key provision that would eliminate the repayment requirement for the tax credit for first-time home buyers. This means that the home buyer tax break is a true tax credit and not a deduction, so will be an actual $8000 reduction on your next tax bill. If you don’t owe that much and purchased a house in the qualifying period, you get a check back from the IRS.

FAQs on the New and Existing Home Buyer Tax Credit

I have received a lot of questions and over 70 comments on this post about the 2009 first-time home buyer tax credit. There are still details to be worked out and rulings to be made by the IRS, but here are some of the common questions and my answers.

Q: Will home buyers who made purchases last year between April 9 and Dec. 31, 2008 be eligible for the new credit? Or is the old $7,500 credit, which currently needs to be repaid, going to also be made exempt from repayment?

Answer: No. They will continue to be covered by the original $7,500 tax credit enacted last year for first-time home buyers. They still have to repay this amount based on the updated form 5405 guidelines.

Q: Can I claim the $8000 home buyer tax credit in my 2008 returns?

A: Yes. You can include it in your 2008 returns via form 5405. If you have already filed your 2008 taxes, you can file an amendment or adjust your paycheck withholding for the credit amount so that your take home pay for the rest of the 2009 is higher (For example, $8000 over 8 months, is an extra $1000 in your monthly paycheck). Qualifying taxpayers who buy a home this year before Dec. 1 can get up to $8,000, or $4,000 for married filing separately.

Q: If we bought in July of 2008, but have not used the credit, can we use the new proposed credit? If not, can I claim the difference between the old credit and new credit?

A: No. The current $8,000 credit is only for homes purchased this year. You can only claim the old $7,500 credit. However if you bought your house in January or February of 2009 and had already filed your returns under the old credit, you would eligible to file an amendment for claiming the additional $500 under the new credit.

Q: I am interested to know if the credit will be available to those putting down 3.5% as per FHA loans or if a 5% down payment is still required ?

A: No concrete word on the down payment requirement, but since the Senate proposal for a 15K housing credit was dropped I assume their 5% requirement was also dropped and that the current 3.5% FHA limit would stay in place. Also, remember the FHA loan has certain other criteria to meet which all borrowers may not qualify for. If you do get a loan through your bank or broker most likely you will need a 10 to 20% down payment in any case.

Q: Now that the bill is finalized. If I co-buy a house with someone who is not a first time home buyer. Can I claim the whole credit?

A: Qualifying taxpayers who buy a home this year before Dec. 1 can get up to $8,000, or $4,000 for married filing separately. If two or more unmarried individuals buy a main home, they can allocate the credit among the individual owners using any reasonable method. The total amount allocated cannot exceed the smaller of $7,500 ($8,000 if you purchased your home in 2009) or 10% of the purchase price. Note: A reasonable method is any method that does not allocate all or a part of the credit to a co-owner who is not eligible to claim that part of the credit (I would go with 50/50 as a reasonable method if one person is not eligible for the credit)

See the comments below for more lots more question and answers.

The current home buyer credit (enacted last year) is equal to 10% of a properties purchase price up to $7,500, or $3,750.for a single filer. It works by reducing the 2009 tax liability OR as a credit to those who don’t owe sufficient taxes. A “first-time home buyer” is a person or couple who had no ownership interest in a principal residence in the United States during the three years ended on the purchase date of the residence for which the credit is claimed. Thus, someone who formerly owned a home, then rented for several years, could qualify. The purchase must be on or after April 9, 2008, and before July 1, 2009.

Although the current home buyer credit is termed a refundable tax credit, it is essentially an interest-free loan that must be repaid in equal amounts over 15 years, starting the year after the credit is claimed. The credit is available to joint filers with modified adjusted gross income below $150,000 and phases out once income exceeds $170,000. For single filers, the numbers are $75,000 and $95,000.

The Obama administration felt that the current home owner tax credit was not sufficient to revive the ailing housing market and as a result strongly pushed for a doubling of it in the 2009 economic stimulus package.

Key aspects of the Increased Home Buyer Tax Credit:

  • The stimulus plan (called a bill while in Congress) currently has 2 versions – The House version (aligned with what President Obama really wants) and the recently approved Senate version. The House bill did not change the tax credit amount, but added conditions that it would no longer require repayment. The Senate version of the home buyer tax credit raises the amount to $15,000, but you can only receive the credit if you owe federal income taxes. The final bill that the president signs will most likely combine the higher home buyer tax credit amount with minimal no repayment required. [I will update when this is finalized]
  • If you have already used the current $7,500 home buyer tax credit, you cannot claim the $15,000 credit as well. The tax credit cannot be used to buy a second home either.
  • Under the $15,000 Senate version of the home buyer tax credit provision, there are no income limits, unlike the current home owner tax credit which has a $150,000 income limit. Those who purchased a home in 2009 can claim the credit on their 2008 taxes (assuming the bill is approved in time).
  • Home buyers would have two years to claim the tax credit, so buyers could claim a $7,500 credit in 2009 and a $7,500 credit in 2010. Because the Senate’s version of the home buyer tax credit is paid against taxes owed, tax payers will benefit more than those with low incomes (who have a lower tax liability). Put another way, to get the full benefit of the home buyer tax credit, you would have to have tax liabilities of more than $15,000 (over 2 years).
  • A 5% down payment (as opposed to the current 3.5% FHA limit) would be required to get the $15,000 tax credit.
  • Even though the tax credit does not require repayment, buyers will have to pay it back if they sell the house less than two years after they buy it. This is to prevent investors and “flippers” from benefiting from this tax credit
  • The new tax credit would take effect when the economic stimulus bill is signed by the president into law, and it would last for one year. It is expected that a final version of the stimulus package bill will be signed by the President on February 16th – President’s day.

[Update] See this article for an overview of the key tax breaks in the final economic stimulus package. Also, read this post for more on Obama’s $75 Billion Mortgage Modification Plan.

Related:

~ $1 Trillion Revised Bank Bailout & Housing Rescue Plan

~ Should I Refinance my Mortgage and Do I Qualify

~ A look at the Pros and Cons of Reverse Mortgages

~ Paying off your mortgage – what would you do with the spare cash?

~ Key Dates and Deadlines to Receive Economic Stimulus Working ($800/$400), Social ($250), Home ($8000), Vehicle Tax Credits and Payments

~ $300M Cash for Appliances Stimulus Rebate Program Covering Air Conditioners to Refrigerators to Washers

~ Taxes and Gains I Can Exclude When Selling My Home

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Gina Blount July 10, 2012 at 4:20 pm

Are there any exceptions to paying back the credit if you sell your home prior to the three years? For example, one of the home owners losing their job.

Brian May 24, 2012 at 3:17 pm

I purchased a home in January 2009. This is my primary residence after having purchased my first home in March 2002. My CPA put me in for the $6500 tax credit, which I now believe I was eligible for the $8000 tax credit after having researched it a bit. Just last month I received a notice from the IRS telling me I owe them $6500 and over $500 in interest. How can this be? I use the new home as my primary residence and lived in my first home for almost seven years. Of course now the CPA is avoiding my calls and emails. What can I do? I also feel that according to the IRS website I should have been eligible for the $8000 credit. Please help!

Reply

andys2i May 27, 2012 at 2:25 pm

Brian – Sorry to hear this story. Unfortunately, since you (through your CPA) claimed the first version of the home buyer credit, you are now required to pay it back. To claim the later credit pf $8500, which did not need to paid back, you need to meet the eligibility criteria in the post and then claim it on an amended return using Form 1040X.

I would still suggest that you work through a CPA – a different one – as the paperwork can get complicated.

I also posted an article with more information on this : http://www.savingtoinvest.com/2012/05/help-do-i-have-to-pay-back-my-first-time-home-buyer-credit.html

Young March 26, 2012 at 10:03 pm

I purchased a home on March 2009, and credit for $6500 last year. But, I relocate to another state for a new job on Sept 2011, and sold my house on October, 2011. Should I return back IRS the credit money since I try the Turbotax, it doesn’t work on the return. Thank you.
Y

Michael March 7, 2012 at 7:14 pm

I have a question if I am still eligable for the $8000 credit due to I purchased my home in July 2009. I did not apply for the credit due to I wanted to make sure I would not rent the home and have to pay back the money. As many other had to pay back.
This July will be the (3) three year deadline which makes me eligable to claim the credit but am concerned if the $8000 credit has expired or can I still apply???

Please clarify. Thank you

sharon October 25, 2011 at 2:28 am

My mom owned her own home, but cosigned for me to buy a home. Since then I have done a loan modification with mom as the co signor again…does she qualify for the long time resident credit?

Steven L Chandler September 24, 2011 at 1:46 pm

I am a DOD contractor and working in Iraq since 2010 to present. I’m I eligible for this tax credit if I meet all other requirements?

andys2i September 24, 2011 at 8:55 pm

Yes, military staff are eligible for the credit. But you better hurry as Credit expires by Sep 30th and you must meet the purchase/income requirements outlined in the article.

Crystal Smith September 16, 2011 at 4:34 pm

I closed on my home on 6/8/2009 and I had a contract on the home from 4/29/2009. Can I claim the 6,500 tax buyer credit as I owned my other home for more than 10 years? Does that time line fit, with all the extentions they have made it hard to follow. Thank you, Crystal.

browne487 July 23, 2011 at 10:55 am

My mother purchased a home in 2010 and received the tax credit. Since then her health has deteriated. She can no longer take care of the home by herself and her only living relative lives over 85 miles away from her. She needs to be closer to that family for medical reasons. If she sells this house will she have to repay the credit due to health reasons. She is permanently disabled from these medical problems and lives on a fixed income from Social Security. She loves her home and doesn’t want to sell it but due to these medical conditions it is no longer safe for her to be this far away from her family. 1 will she have to repay this credit? 2 is there any type of relief or waiver for this type of an issue? I am sure this is not the first time this has come up.

Connie April 5, 2011 at 2:51 pm

Hello,
I am a single mother of 3. I have been trying to buy a home because I can’t afford to pay the rent I have to pay to accomodate all of us. I was buying a home last year when 4 days before closeing on the home, the economy cause a cut back at my job. I was let go along with about 6 other people. Needless to say I lost the home. I am now in the process of buying a different home and was wondering is there any relief for someone like myself, to help me in the long run. I do see that if you are in the service or buy a home overseas that the help is still there. But for someone like me, ( one of the little people), who doesn’t have alot of money to do these things, (like pay the bills), and has done everything I could to make my finances better in a place where there are no good paying jobs..lol…wheres my break…not being sarcastic…just honest…thanks

Jon March 27, 2011 at 11:54 am

I purchased a home in April 2010 and received the $8k tax credit.

Of course, now I have to move do to a change in jobs and a change in my personal life. If I close on another home and purchase another home as I sell mycurrent home, would I still be able to keep the $8k credit? Or am I basically SOL and will have to pay back the $8k no matter what?

andys2i March 27, 2011 at 12:12 pm

You would have to repay the credit, because one of the rules is that you must stay in the home for at least three years after you buy it. According to the IRS here are all the repayment criteria :

(IRS) You repay the full or part of the credit as an additional tax on your tax return when the home stops being your main home during the 36-month period following the date you purchased your home. This includes:

* You sold your main home to a related person or entity
* Your home is destroyed, condemned or disposed of under threat of condemnation and you do not purchase or rebuild a replacement home within two years.
* You converted the entire home to a rental or business property.
* You converted the home to a vacation or second home.
* You no longer live in the home for the greater number of nights in a year.
* You lost your home in a foreclosure. You must repay the credit only up to the amount of gain.

Andy9999 February 23, 2011 at 6:42 pm

I have lived in my home for 10 years and refinanced believing I would get the $6500 credit. I have paperwork stating the purchase price, 5 years worth of property tax statements, and the HUD settlement agreement….all paperwork IRS specifies. My question is…do I get the credit even though my purchase was not for a NEW home but a refinance of an existing and thus a New loan.

rose February 24, 2011 at 2:10 am

Hi,

I believe it’s only for people who bought a house and not for those who refinanced.

Ray February 11, 2011 at 10:13 am

I have pulled all of my documentation together to file my 2010 TAXES and would like to claim the tax credit for long-time residents who purchased a new home in 2010. we moved for work from one state to another and purchased a new home 27 March 2010 sold our old home 14 May 2010. We purchased the first residence 5 July 2005 for cash and the new residence 27 March 2010 with a mortgage which constitutes 4 yrs and 9 mos. My question is this, does 4 years and 9 months constitute a 5 consecutive year period under the IRS Guidelines, and can I claim the tax credit?

nihir February 11, 2011 at 8:35 am

i purchased home in oct 7 how can i qualify for 8000.00 dollars please help me

Lisa February 8, 2011 at 5:22 pm

I ‘m a first time home buyer and I entered into a contract in November 2010 and it fell out of escrow then I got another lender who kept my info in the same escow company and I finally closed in Jan 2011. Is there any possible Tax credit that I can claim or recieve? The loan is a FHA loan.

andys2i February 8, 2011 at 10:27 pm

No, per my latest update with IRS rulings on claiming the credit, “You must have bought – or entered into a binding contract to buy – a principal residence located in the United States on or before April 30, 2010. If you entered into a binding contract by April 30, 2010, you must have closed on the home on or before September 30, 2010.”

CONFUSED February 4, 2011 at 1:42 pm

I’M SO CONFUSED RIGHT NOW. I PURCHASED MY HOME IN 2007 DO I GET A TAX CREDIT FOR EXISTING HOMEBUYERS, AN IF SO HOW DO I GO ABOUT DOING THAT.

Darin January 28, 2011 at 2:03 am

We have our contract binding on 8/6/10 but we close our home on 9/24/10. Do we qualify for the first time home buyer credit since we close the deal on the (new program H.R. 5623) first time home buyer extending from July 1 to September 30?

Rosey February 5, 2011 at 3:04 pm

No. Because you need to have the contract by April 30th. The extension is only for closing.

andys2i February 8, 2011 at 10:29 pm

Rosey – Thanks for answering some of the question. I made an update to the article with some recent IRS tips on claiming the credit. Should help some of the readers.

Melissa Lopez January 20, 2011 at 3:42 pm

I am so confused as to how this tax credit works. I had applied to build a home, I believe in 2009, then again in 2010. My paperwork with USDA took so long I didn’t close until Nov. 2010, but had sign contract months before. Should I still qualify for credit?

andys2i February 8, 2011 at 10:28 pm

No, per my latest update with IRS rulings on claiming the credit, “You must have bought – or entered into a binding contract to buy – a principal residence located in the United States on or before April 30, 2010. If you entered into a binding contract by April 30, 2010, you must have closed on the home on or before September 30, 2010.”

Brian Rogers January 13, 2011 at 5:52 am

I bought my house in April 2009. I filed for my $10,000 tax credit for buying a brand new house. I got the confirmation fax being recieved within 2 days after escrow opened. I waited for my 2009 taxes w-2 ect ect. went to file and I was told by Jackson Hewitt that I only get credit if I owe money. For example. when my file was complete, that if i owed $4000.00 in back tax, that I would only then recieve $3,333 toward the balance of $4,000.00… do I would only owe what the credit left over. IS THIS RIGHT?
I was in the military at the time I filed for 2009 taxes so I usually ave. getting 3-4k back anyway… I was thonking I would get a monster check only to find out that I would get anything I though I would. Can someone clarify if this is right or if someone there doesnt know what they were telling me and shorted me money… PLEASE HELP

Kate January 29, 2011 at 12:00 am

The first time homebuyer credits (if that is what you infact filed for) are refundable. Yes, if you file for the 8k and you owe 4k you will only receive the difference but if you do not owe the government any money, the first time home buyer credits are refundable which means that if you meet all the criteria for the credit, ie….income, cost of home, date of purchase and previous ownership stipulations, you should get that money with your returns. If they did not refund you the credit, I would have them take a look at your taxes again. I am not a tax professional but the wife of a marine who purchased a home and recieved the FULL credit as we did not owe the government any money. Hope this helps.

John Q January 4, 2011 at 9:07 am

I bought my house in December 2010. Just wanted to make sure if there is any tax credit that covers that period. Thanks

Rosey February 5, 2011 at 3:07 pm

Sorry but the answer is no.

Marie Wagner December 28, 2010 at 9:25 pm

It has been 18 weeks since my tax person and I sent the correct information and as yet haven’t received the tax credit… How long will this take to receive my money..

Prescilla Ross-Young December 18, 2010 at 2:02 pm

I would like to know if it’s too late to do an amendment for the housing tax? I filed for the housing credit on the 2008 taxes, but we didn’t get our home until February 2009. I know it’s a $500 dollar difference and with the new tax there is no payback policy.

Lue M December 6, 2010 at 10:35 pm

My husband and I signed a contract to purchase our second home before April 2010. We were suppose to close on September 17, 2010. However, this was a short sale and we are waiting for leins to be satisfied before closing. Are we still eligible for the 6500.00 tax credit even though we did not close before September 30, 2010 but do have a binding contract before April 2010.

Rose January 1, 2011 at 2:37 pm

I’m sorry but you can’t.

Dorthy December 2, 2010 at 10:11 pm

We filed an amended return end of July for the existing homeowner $6500 tax credit for building a new home. the IRS received it early Aug. I called to check on the status at 12 weeks and was told it was taking 16 weeks. I just checked with them again as it has been 16 weeks. I was told it had been assigned to someone so an inquiry was filed and I was told to call back in 30 days if I dont get a response… either a call, or letter or the check. The person I talked to said it was past the 16 weeks and the check should have been issued so the inquiry will at least generate a response…. more likely another 30 days of waiting on our end. We had our tax accountants file and made sure more than enough appropriate supporting documents were attached. So to those wondering…. expect a long wait to get your credit….

Ray December 28, 2010 at 10:24 am

Just checking to see if you received your check yet. Called on 11/30 and was told the same as you…my filed has been moved to someone else for further review, std. practice with this rebate stuff. Can take up to 180 days!! Someone is supposed to contact me within 30 days…here it is 12/28 and I still have not heard anything!! I’ll just have to hold on and hope I recive it before next Christmas!!
Happy New Year to all!!

Dorthy December 29, 2010 at 1:08 am

No, nothing. No check, no letter, no call. I called last week again and they said call back January 1. that is all they would say. couldnt tell me if someone has actually even looked at my file. there are no notes indicating anything other than they received it and it was assigned to someone, whatever that means. That “someone” is obviously buried with work or doesnt care. I don’t get it. I just read a post at another site and the poster is a tax preparer. He filed for the FHB, got disallowed (he obviously would know he qualifies) and he sent his argument stating why he does indeed qualify and now they just keep telling him it is in reveiw and they need 45 days, then another 45 days needed, when he calls they only tell him another letter will be coming. it is sickening!

Ray February 14, 2011 at 11:55 am

called a few weeks ago and was told my check would be cut on 2/11, which was last Friday. As soon as I receive it, I’ll post a notice here. I have learned to be very patient. Not much else I can do.

Dorthy February 15, 2011 at 4:34 pm

We received a call from our tax advocate today that our file has been approved and she will call back next week to let us know when we can expect payment. So while I have read some posts that the tax advocate is worthless, in our case she has done a good job.

I’ll also post when we receive.

Ray March 1, 2011 at 3:36 pm

Just to let you know, I received my check in the mail yesterday. It took 8 months but I finally got it!!! Now I can pay my oil bill(haha). Take care.

Dorthy March 8, 2011 at 4:19 pm

Glad to hear you got your check. I just got a call that our’s will be mailed this friday, Mar 11th, 8 months after we filed as well. that must be the normal process time for those files that need a closer look….

dorthy March 16, 2011 at 11:20 pm

Recieved our check in the mail on Monday… took 8 months. This chapter is closed finally. Tax advocate was very helpful in getting our file settled. …

mjcturk November 13, 2010 at 2:59 pm

As a Foreign Service Officer serving overseas, I qualify for the one-year extension of the $8000 credit. I would like to buy a home — becoming a homeowner for the first time — and get the credit. However, I will not be back in the U.S. till 2012 at the earliest, so I will want to immediately rent my house out. I intend for it to be my primary residence, but I am still assigned overseas and won’t be assigned to the U.S. any time soon. Can I qualify for the $8000 credit and still rent out the place for the next 2 years? Or does being posted abroad prevent me from getting this credit?

Ray November 11, 2010 at 3:48 pm

I refiled my 2009 1040 on 7/2 and am still waiting for my $8k. It is very discouraging to have to wait so long. Just wondering if other folks are in the same boat.

Dorthy December 2, 2010 at 10:12 pm

see my poste I just left today….

Ray December 14, 2010 at 1:09 pm

Same story here. Called on 11/30 and was told it had been assigned for further review…could take up to 180 days….give me a break, this is supposed to help new homebuyers but as usual middle America gets the short end of the stick!

Dorthy February 10, 2011 at 12:20 am

Ray, gotten your check yet? Still waiting… it is now Feb 9th, 2011. I have a tax advocate who says will have an answer for me next week… We shall see….

Charles Myers November 10, 2010 at 10:28 am

Has anyone heard anything about the possibility of not having to repay the $7500 tax credit? I know it is supposed to begin repayment on my taxes this coming year.

Mike October 26, 2010 at 11:28 am

If I am ex-military can I claim the credit? I retired about 5 years ago and want to claim the credit. I live in CA.

Andy October 26, 2010 at 11:29 am

According to the IRS, Members of the uniformed services, members of the Foreign Service and employees of the intelligence community are eligible who serves on qualified official extended duty service outside of the United States for at least 90 days during the period beginning after Dec. 31, 2008, and ending before May 1, 2010.

So ex-military will NOT qualify the special extension, per the last line in the above statement.

Members of the military and certain other federal employees serving outside the U.S. have an extra year to buy a principal residence in the U.S. and qualify for the credit. Thus, an eligible taxpayer must buy, or enter into a binding contract to buy, a principal residence on or before April 30, 2011. If a binding contract is entered into by that date, the taxpayer has until June 30, 2011, to close on the purchase.

Josh October 23, 2010 at 6:59 pm

I am filing $6500 tax credit, my understanding is that I need to file Form 1040X and Form 5405. Can anyone tell me which line or section I should fill on Form 1040X?

Thanks

KAY October 22, 2010 at 7:05 pm

WHAT IF YOU RECEIVED THE $8,000.00 FEDERAL REBATE AS A FIRST TIME HOME BUYER AND AFTER
LIVING IN THE RESIDENCE FOR 1 1/2 YEARS THE CITY STATED THEY WERE PURCHASING THE
HOME FROM YOU AS THERE WAS A PROBLEM WITH SEWER THEY INSTALLED. DO YOU HAVE TO PAY
BACK THE $8,000.00 OR ARE THERE UNCONTROLLED EVENTS THAT ARE QUALIFIERS FOR NOT HAVING YOUR REBATE RECOUPED?

Christie October 20, 2010 at 11:04 pm

I do not think it is fair what so ever that the armed force members have until 2011 for the refund! Me and my husband finally got enough money to buy a house, we are closing Nov.2010 and we cant get the refund now but calfornia and armed forces can…………………………………

james November 10, 2010 at 1:18 am

GO FIGHT AND THEN BITCH!

Kate January 29, 2011 at 12:09 am

To think that the government has extended a tax credit to the very people prepared to die for this country is propostrous! How dare they? Sleep in dirt, take IED’s, watch their buddies die and be maimed, not see their spouses or children for weeks, months or years, move every 2 to 3 years trucking their families along, getting paid a whole 25 to 40 k a year after 13 years of service and the government extended them a credit….what the heck is wrong with America?

Marine wife.

russ October 20, 2010 at 1:29 pm

I had heard Obama said there were tax credits for investing in rental property for 2010.Any one have any information on that?

JR October 13, 2010 at 8:33 am

Can someone explain all this to me….IN PLAIN SIMPLE ENGLISH, Please.
My mother, who I care for, bought a house in April,2010. We we’re told at the sighning that for this 6,500.00 refund, we needed to do nothing, simply wait about 6 mo. the check would automatically be sent.
Well, that 6 mo. is here. And we need that credit in order to survive. BUT now that I look into it more, it looks like it is NOT ALL AUTOMATIC. (Why don’t the realitors understand all this?????)
Now it looks like there is again more paper work, etc, etc.
We plan on using that refund to build a ramp, and fence in the yard…..Mom hasn’t been out of that house in almost 6 mo!!!!!! AND has fallen twice chaining up the dog, as compared to just opening the door and letting her out!!!!
We are not looking for shopping money……These things we’re planned into the purchase of this house, and here we stand…..waiting, with no answers, no one to get the correct answers from.
WHAT DO I DO???????

Rosey October 15, 2010 at 11:28 pm

Your mom has to file an amended return (meaning that she has to redo her taxes claiming the credit). Keep in mind that there are also requirements that must be met to see if she is qualified for the credit. The credit WILL NOT be sent to you automatically. Also, don’t depend on what the realtor tells you. They are not the experts when it comes to taxes. Their expertise is to sell the house and get their commission. You shouldnt have depended on what they told you. I would suggest to contact the IRS to see what are the next steps that must be taken to get the credit.

Redwng1 October 11, 2010 at 9:20 pm

I just realized why I was not getting any responses…I made a mistake… we signed on April 27th,2010…not August.

Original message:
“Is there a way to file an extension after the September 30th date. Builders will not be complete with our home until October 22nd. We signed on August 27th, obviously missing the original cut off date back in June, but this is not our fault the builders are taking forever to finish?”

Rosey October 20, 2010 at 4:32 pm

Unfortunately, you cant file an extension to the original due date. The government has to file the extension if they want to.

Rosey October 11, 2010 at 2:02 pm

Here’s my situation:

I signed the contract on April 12, 2010. Price had to be amended due to change in pricing. We submitted an amended contract on June 28th. Do I qualify for the credit?

Rosey October 11, 2010 at 2:03 pm

We closed on August 5th.

andys2i October 11, 2010 at 8:45 pm

This one is tricky. The key criteria was the contract signing date – had to be before Apr 30. Was the amended contract a brand new contract, or a minor update to the existing contract (ie. only modified section had to be approved). You could submit a claim for the credit, but you should try calling the IRS before hand to check this. To me, you should qualify if the contract was for the same property.

Rosey October 13, 2010 at 1:26 am

Hello,

The contract was signed on 04/12/10. We DID NOT sign a brand new contract. The only thing I had to sign was an amendment showing that the new contract price is now $71k up from $65k.

Jason R October 9, 2010 at 6:14 pm

I just posted on the $3750 mount to be repaid.
It just occurred to me that my wife may also be receiving a letter that she also owes $3750 for the credit. That would make it the $7500 that we received and now owe back to the govenment.
Thanks;
Jason R

andys2i October 10, 2010 at 4:58 pm

That was going to be my comment. But does that mean you are filing seperaate returns? Or is your wife ineligible for the credit? I would check with an accountant or the IRS to be sure, based on your other financial data.

Jason R October 10, 2010 at 7:52 pm

We file jointly. She is a homemaker and does not have a monetary income. She did receive the credit as I did, for a total combined of $7500.

Ryan October 20, 2010 at 11:12 pm

Did your wife receive a letter as well? I don’t dare call my ex just yet, till I find out the facts. Any answers as to whether the amount was lowered from 7,500 to 3,750?

Jason R November 10, 2010 at 11:11 am

Its been a month since I received my letter and my wife still has not received one indicating she owes any amount. I will keep you updated.
Not surprising when dealing with the government

Charles Myers November 10, 2010 at 11:39 am

We have not recieved any letter telling us about the repayment.

Jason R November 29, 2010 at 12:02 pm

My wife just received the notice that she now has to begin repayment of her half of the $7500 on the 2010 tax return.
Just in time for the Holidays. Yay!

Merry Christmas All

Jason R October 9, 2010 at 6:08 pm

Hello;
We purchased a house in November of 2008 and qualified/received the $7500 tax credit. My understanding was that the $7500 had to be paid back in $500 increments starting with the 2010 tax return, and continue for the next 15 years.

I received a letter in the mail today from the IRS indicating that we only owe $3,750 and it should be paid back in $250 increments starting in the 2010 tax return. Is this a mistake on their behalf, or did the amount that needs to be refunded to the government get changed? I do not want to get my hopes up but I’m praying that the amount we owe was adjusted down.

Any help or input would be greatly appreciated.
Jason

Ryan October 20, 2010 at 10:20 pm

I got the same letter. I don’t know whether to just say nothing, or look into it in case I get screwed later. Could it be that because I got divorced, they think that my ex owes too?

Jason R November 10, 2010 at 11:13 am

I was thinking the same thing. I don’t know if I should ask because it might get corrected to the $7500 amount. That’s prob the right thing to do though.

Mija October 6, 2010 at 8:30 pm

So, Im beyond frusterated. I went into short sale contract july of 2009. I closed on the house… TODAY… October 6th.. Am I completely screwed… or is there something I can do?

Cindy October 4, 2010 at 11:16 am

It had to happen. Prices are still going down in my neighborhood and people that purchased homes and received the tax credit are now listing them as short sales, after holding them less than a year. I suspect they already sent the tax credit. Has our government given any thought has to how they will collect from people that don’t stay in the homes they purchase? I hate to join the line of people with their hand out, but I owe less on the house than it’s worth and I can afford it. I just need to sell to find appropriate employment elsewhere. Where’s the help for people like me?

janice davenport October 1, 2010 at 5:06 am

My husband bought a house in his name, but we did not get the tax credit because i had owned a home before. This new home is not in my name. Is this true

redwng1 September 28, 2010 at 8:30 am

Is there a way to file an extension after the September 30th date. Builders will not be complete with our home until October 22nd. We signed on August 27th, obviously missing the original cut off date back in June, but this is not our fault the builders are taking forever to finish?

Bill Stanton September 22, 2010 at 4:34 pm

My situation trying to figure out if somehow we can get the tax credit for first time homebuyers we entered into a contract and had it before apr 2010 and since then the tax credit has extended twice but our contractor has dragged their butts on getting it done and it dosent look like it will be done before the deadline at the end of sept 2010 just wondering if its gonna be extended for people that were under contract before the deadline but the contractors havent finished the work yet, anyone got any ideas on if they are gonna extend it again so the contractors can finish the work or if there is some way i can still get it
~Bill

Rosie September 19, 2010 at 1:28 pm

Here’s my dilemna at the time: I and my spouse purchased a home on 12/15/2009, which was a move-up/repeat home buyers (existing home owners) purchasing a principal residence transaction. I used Turbo Tax (as I always have for the past 4 years) to calculate my taxes for 2009 and gave all the information in to the tax software and it came back that we were qualified for the refund. So I made copies of what I read on the IRS website as to what I had to send in and mailed it certified with a return notice on March 16, 2010. Initially I sent in copies of the following with Form 1040 Income Tax Return 2009 on March 16/2010:
Form 1040
W2′s
Schedule D (Land we sold in 2009 and purchased in 2007)
Form 2441
Form 8863
Schdule L
Form 5405
Schdule M
Signed HUD Settlement Statement (12/15/2009 Purchase of New Residence)
Form 1098 Copy B (2009 for Existing Home & Land that the existing home sits on)
2009 Tax Statements form the Appraisal & Tax assessor
Insurance Policy Declaration
I received the certified notice with a March 24,2010 date stamped by the IRS. Then I received a letter from the IRS dated April 19,2010 regarding that the Information on our return is in the process of being reviewed and they will contact us within 45 days. We received a letter from the IRS dated May 21, 2010 saying that they’re examining our 2009 federal tax return and that we need to provide additional information to substantiate the Tax Credits & Long Term Residence Credit. So we sent in a copies of the following that has been requested by the IRS via certified mail dated 6/16/10:
Current Mortgage Loan Statement dated 6/1/10 from Chase
Recent Pay statement (within the last 2 months) showing name and new address
Change of address confirmation from the U.S. Post Office showing your former address and new address
Copies of tax statements and cancelled checks for at least 5 years (copy of bank estatement and bank statement pages showing the payments)
Copies of annual mortgage interest statements for 5 years (Form 1098 Copy B)
We received the certified return notice from the IRS with date stamped 6/22/10. On July 5, 2010 we received 4 identical letters sent 2 per envelope from Dennis Kidd, Operations Manager, Examination of IRS stated, “Thank you for your correspondence, which was received on 6/22/10. We will review your response and you should receive a reply from us within the next 30 days”. Then on August 2, 2010 we received 4 identical letters sent 2 per envelope from Dennis Kidd, Operations Manager, Examination of IRS stating, “We are reviewing your response dated 6/22/10. You Should receive a reply from us by 9/5/10″. Lastly, we received a 4 identical letters sent 2 per envelope dated 9/13/10 from Dennis Kidd, Operations Manager, Examination of IRS stated, “Please accept our apology for not being able to review your response dated 6/22/10. We are still reviewing your response and will reply by 10/15/10″. In the letters dated July 5th, August 2nd, and September 13th all stated that, “You don’t need to respond to this letter; however if you have questions or need additional information, please call the person whose name and telephone number are shown above”, but there’s no name in the Person to Contact other than Dennis Kidd’s signature at the bottom of the letter. At this point from all the correspondence that I have received from Dennis Kidd, Office Manager, Examination IRS that I know I will have to contact him and ask when or will I ever get this refund. I would like to receive feedback from anyone out there that have received their refund from IRS or have had similar experience on move-up/repeat home buyers (existing home owners) purchasing a principal residence transaction.

Sincerely,
Rosie

frustrated October 15, 2010 at 10:14 pm

i understand your situation, i was faced with the same situation. i mailed in al the documents they asked for twiced. i closed on the home in in mid september, but have not moved due to having to have everything hooked up becaused i bought a mobile home. now they tell me i cannot take the credit because i did not moved in before sept 30th. if the deadline for closing is sept 30th how can i move in before that time if i closed on the 29th then it would be impossible to moved in without having all the utilities hooked up. i wish i new how to write congress and let them know that they need to be more clear in explaining the qualification terms.

v frolich November 7, 2010 at 7:35 pm

Rosie I have been fighting the IRS over the tax credit for almost a year. Got the same letter you got. Two letters duplicate in the same envelope etc. Don’t know what to do except go postal.
vfrolich

Rosie November 8, 2010 at 2:37 pm

I called the IRS during the later part of September and I talk with an agent who told me that they have been bogged down with the tax credit and they were in the process of hiring due to the high volume of returns submitted for the home tax credit. My case was finally issued to an agent and that I would be hearing from them soon. Those letters that we’re getting from the IRS is automatically generated from the system if the return hasn’t been assigned to an agent. The agent also told me that I could call back in 2 weeks if I haven’t heard anything. I extended my invitation to him, for the IRS to come and audit me. I was patient in the weeks to follow and low and behold the refund was deposited in to my checking account. I hope all goes well for you.

Shiquita September 14, 2010 at 8:46 pm

I’m the single mother of two small childern. I have been under contract sine March. Paid my earnest money, I had the apprasil done, and the home inpection. Only later to be hit with the home had not been forclosed on properly. They asked that i give them some time to run it correctly that has been since May. Now my realitor nor the listing agent had not heard anything from anyone. I have made phones calls myself and nothing. You would think the person who cashed the check would have given some type of info. Well now it seems most definitely i well be missing out on the tax credit for the second time and I had no control over this situation. This has been very upsetting for me. And it seem that the bank in which owns the home doesn’t CARE…….

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