[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. 5623 – Homebuyers 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.
I will continue to monitor the status of this credit for any new information or future extensions and update accordingly. I encourage you to subscribe (free) via Email or RSS to get the latest updates.
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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.
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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:
- 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.
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[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:
[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?
More Related posts:
- 2010 $8,000 First-Time Homebuyer Tax Credit Extension Approved and Expanded with $6,500 For Existing Home Owners
- Another 2010 Home Buyer Tax Credit Extension Unlikely Based on Stronger Housing Data. Armed Forces Members Have Till 2011 To Claim Credit
- New Bills for 2010 Home Buyer Credit and Unemployment Insurance Extension
- 2010 Home Buyer Credit Expiration, Key Dates and Another Possible Extension
- Updates on 2010 Government Tax Credits – Home Buyer Credit Filing Extension, $250 SSI and Medicare Gap Payments, Teacher Credits and Unemployment Insurance
{ 146 comments… read them below or add one }
We bought our second house in 2009. We closed in October. We expected to receive the $6500 tax credit, but our tax preparer said that we had to close on the house between November 1, 2009, and April 30, 2010. Are we eligible for the tax credit? Should I file an amended return?
I hope administration officials realize that giving potential home buyers the notion that a home buyer tax credit MIGHT be revived will absolutely and unequivocally depress home sales over the next several months – the administration should have Donovan or another HUD spokesperson explicitly state that there is no plan to revive the home buyer tax credit in the foreseeable future – and they should do this SOON!!!!
Hi Andy,
I know you having been stating all along that an extension of the closing date does not seem likely, however, now that the numbers are in for July, and are much worse than predicted, do you think there may be reconsideration? A good solid date like contract & close by 12/31/10 to finish the year off with a good number of transactions and then perhaps something a little different for 2011, maybe a lesser amount that would appease those who were unable to purchase in 2010 and let the holdouts know that it’s not going up and to purchase while they are ahead? (sorry, but I get carried away with ideas)
Anyway, I am asking because I was under contract prior to 4/30, but had to back out after inspection due to severe hidden problems with the house and am now set to close on another one 9/20.
Thanks,
Laura
I agree the housing numbers/outlook is pretty bad. However the mood in Washington regarding more spending is even worse, so I don’t think Obama is going to push through another credit extension. But the good new is that interest rates are getting lower and lower so new buyers are getting amazing rates (4.25% is the lowest I have heard for a 30yr fixed).
Anyway, there are sure to be more stimulus payments in the works, so maybe you will luck out somewhere else. Also don’t forget all the home energy rebates you may be entitled to.
I saw state of union over the weekend and HUD Secretary Shaun Donovan said that yet another home buyer tax credit could be possible. This one could involve not just first time/move-up buyers, but a credit for buyers purchasing foreclosed properties or short sales (when the bank allows you to buy a home for less than the value of the outstanding mortgage).
Still early days, but given the success of this credit I could see one targeting foreclosed properties as a real shot. Particularly if August numbers are bad.
my wife and I closed on our house in June of this year. We met the may 30th deadline. however, we just got a denial letter from the irs on an amended return for first time home buyers. it stated we claimed tax credit/proceeds from sale etc.
We sold a house that was her mothers after she pasted away..we never lived in..and only became my wives because of her mothers death less than a year before..it was an inheritance. Is this grounds for being denied the FTHB credit?
I work with someone who was not informed about the tax credit available and found out beyond the two week period of closing. Is there any recourse for her? The escrow company blamed it on her broker who was out of the picture by that time. Thanks for any input.
My husband and I were under contract for a home on April 12, 2010. We had a mold test done on a Monday, and we were suppose to close on Friday. We received the results of the mold count on Thursday, and needless to say, they practically begged us not to move in. They said that the mold count was so high, that the walls and carpet would have to be replaced before we move in, “the walls.” So we did not get that house, but went under contract for another home in May. Are there any loop holes where we could still qualify for the FTHBC? It is not our fault, and there was no way for us to move into that home. If we would have, we would have had to use that $8000 plus more for the repairs. And whose to say that the mold would not have come back. Please, is there anyone that can help us?
My husband and I recently married and purchased a home in January 2010. He had owned and lived in his home for over 5 years. I am I first time home buyer and moved in with him after we got married September 2009. We received our tax credit, however our homebuyers tax credit was not included. We have not received a letter yet explaining when/if we will get that credit. Does anyone know if they send two separate checks? Or if we wouldn’t qualify?
Further stimulus to the ‘housing market’ without the cooperation of lending institutions to ease credit and stem the tide of foreclosures will have little if any effect toward economic recovery and stabilization of the housing sector . . . regardless of how low home loan interest rates fall and unemployment remains at or close to its present levels!!!
We purchased a home in mid-2008 and receieved the $7,500 tax credit. That tax credit is more of a loan and not a real credit as it is to be repaid over 15 years. Is there any action in congress to eliminate the repayment. I have written to all the Senators and Congressional reps that I can find and get no real response. Does anyone know of any action?
Thanks,
Unfortunately no. The older $7,500 credit had different rules with each future $8k a better deal. Like the marriage penalty for couples this is another unfair aspect of the credit. Let me know if you hear the Senators like Tina (one of the past commenters) did.
Hi Andy -
We were under contract on April 16, 2010 and closed on our new home together on June 14, 2010…so we were within the requisite timeframe.
The reason we were denied any of the credit is due to the MARRIAGE PENALTY. Because we were not of the same ownership status (.i. a married couple has to BOTH be either a 1st time home buyer EACH or they both have had to been long time residents of the same home for 5 of the last 8 years.) SO – we canceled each other out.
I appreciate your answer, and I just wanted to clarify the facts for you and ask if you new anything about the status of the bill that was sponsored by Rep. Eliot Engel (D-NY17) to remove this marriage penalty. I am calling his office today to find out the status – it was introduced in March 2010 and is in the House Ways & Means Committee. I promise you I will pursue this until their is a vote because this is ludicrous to hard-working, tax paying citizens who are married. We are not the only couple who is left holding the short end of the stick. You can google this topic on the Internet and there are TONS of irrate taxpayers such as ourselves.
Please let me know if you want me to keep you in the loop regarding my contacts, info I find out, etc.
My husband and I are thinking of putting a website together to campaign for all of us married people who are being penalized by the way the law is written.
Thanks, Tina and Alan
Click here to view an article: http://www.realestaterama.com/2010/03/18/home-buying-experts-support-new-legislation-to-remove-home-buyer-tax-credit-marriage-penalty-ID06809.html
Here’s the article as well:
AVONDALE, AZ – March 18, 2010 – (RealEstateRama) — The National Association of Exclusive Buyer Agents (NAEBA) expresses support for legislation recently introduced by Representative Eliot Engel (D-NY17) that would amend the Internal Revenue Code of 1986 eliminating the so called “marriage penalty” from the Home Buyer Tax Credit.
The current guidelines require both spouses to have the same exact ownership history in order to claim the tax credit, a standard that does not apply to unmarried couples, effectively penalizing married homebuyers.
“We applaud Representative Engel’s leadership on this issue and fully support this legislation that will make the current homebuyer tax credit section of the Internal Revenue Code of 1986 more equitable for all potential home buyers,” said Benjamin Clark, 2010 President of NAEBA.
The Worker, Home ownership, and Business Assistance Act of 2009 provides a tax credit of up to $8,000 for qualified first-time home buyers purchasing a principal residence and a tax credit of up to $6500 for repeat home buyers who have owned a home for five consecutive years out of the prior eight years. The tax credit is available for eligible purchasers who are in contract by April 30, 2010 and close by June 30, 2010.
H.R. 4701, introduced by Representative Eliot Engel (D-NY17), would provide relief to certain married couples who would otherwise be ineligible for the first-time homebuyer credit. The bill provides that married individuals filing a joint return would qualify for the appropriate credit even where one spouse is ineligible. For example, if one spouse is a first-time homebuyer and the other is ineligible, the couple would be treated as first-time homebuyers. However, such a couple could qualify for up to $4,000.00, as opposed to the full $8,000.00 tax credit had both spouses been first time homebuyers. The bill has recently been introduced in the House.
Hi, My wife and I wanted to move out of our house and we only have been there for a year. I know we have to pay back the 8,000.00 credit, but I was wondering how that process works
Thanks
WHY DO I HAVE TO PAY MY $7500 CREDIT BACK WHEN EVERYONE ELSE GETS FREE MONEY?? I BOUGHT AND PAID DURING THIS WHOLE STUPID SITUATION WHILE EVERYONE ELSE WAS GETTING UNEMPLOYMENT. MY HUSBAND WAS LAID OFF TOO, BUT WE STILL HAD TO PAY. I SHOULDN’T GET PENALIZED FOR CONTRIBUTING TO THE ECONOMY.
Hi Andy – my husband & I just got our IRS letter denying us any pof the $8,000 or $6,500 home buyer tax credit. We married in 2008, I owned my home since 2001 which we sold in May 2010 to buy our 1st home together on June 14, 2010. My husband qualifies as a first time home buyer & I qualify as a long-time resident buyer, but our ownership status is not the same, so we cancel each other out and have 0 tax credit. The worst part is my widowed-mother lent us $8,000 & we promised to pay her back when we got our tax credit. UGH! I read that Rep. Engel of NY proposed a bill in 3/10 to remove this marriage penalty. Do you know anything about its status? If you research this topic, there are thousands of taxpaying married couples just like us who were duped by this ‘tax’ credit “bait & switch” trap. HELP!! Thanks!!
Tina you had to have bought before April 30 2010, to qualify for any of the home buyer credits. That is why you were rejected (I am surprised that the IRS did not state that in thier letter). You were 2 months late. Sorry, Andy.
Tina,
This is the same issue I have. My tax person said she contacted the IRS and I do not Qualify for the 6500. Because I lived in my house for over 5 years but my husband didn’t because we only been married 2 years. They state we would have had to li e in the house together for. 5 yr. This doesn’t seem right how they can penalize us for being married. I am waiting to file hoping for a change. Not very happy how they worded this credit. This effects a lot of people who anticipated a credit.
IRS told me that even though me and my husband have lived in the same house for over 5 years we DO NOT qualify because we WERE NOT
sorry, but anyway the IRS said we HAD TO BE MARRIED for those 5 years for us to qualify, which we were not. We have lived together for 5.5 years in a house i owned for 11 years but were only married for 4 years.
Rhonda – I just wrote this same email to Kathleen who is in our same boat – for now! I suggest you do what I did and join a free website called, “CONGRESS.ORG.” Through this website, I sent an email to Pres. Obama and the elected Senators and Congreesmen that represent us in the area of West Palm Beach, FL we now reside. I even sent an email to EVERY FOXNEWS TV show that I could an email address for about this issue….We all need a VOICE and if you also write to Pres. Obama and your elected representatives in your area by joining CONGRESS.ORG, possibly we can see a change for us married people!
Here’s the link to my letter to Pres. Obama:
http://www.congress.org/congressorg/bio/userletter/?id=3181&letter_id=5601849656
Hi Kathleen -
I did join a free website called, “CONGRESS.ORG,” and through this website I sent an email to PRes. Obama and the elected Senators and Congreesmen that represent us in the area of West Palm Beach, FL we now reside. Like I wrote Andy, I will not stop the emails, phone calls, letters, etc. until they amend the Internal Revenue Code to remove the marriage penalty. I even sent an email to EVERY FOXNEWS TV show that I could an email address for about this….We all need a VOICE and if you also write to PRes. OBama and your elected representatives in your area by joing CONGRESS.ORG, possibly we can see a change!
Here’s the link to my letter to Pres. Obama:
http://www.congress.org/congressorg/bio/userletter/?id=3181&letter_id=5601849656
It does not matter anyway. If you buy a house now only to think you will get the tax credit shortly your wrong. I have been waiting 8 months for my return and it was a very simple retrun all I had as a credit was the first time home buyers credit. They keep giving me the run around. I get a letter every 30 days telling me they need copies of the same paperwork I sent them in jan,march,june, and july. Every time they send a letter it puts it back another 6 to 8 weeks they said. They will not tell me why they are delaying it just that it is being reviewed. I need that money to do upgrades and repairs to the home.
Hello,
My husband owned a house before we got married. We bought a new one recently in February 2010. We did not qualify for the $8,000 since we were married and he had owned a house. We called the IRS and they confirmed that even though I didn’t own a house before, since we were married I couldn’t claim that credit.
We also can’t claim the $6500 since he had not lived in that house for 5 years, he only lived there for four years at the time we bought the house we are currently living in.
Is there any other tax credits available that I may not be aware of. I live in Missouri.
Thank you so much,
Eagle
The federal home buyer tax credits may have expired but you may be able to get a commission rebate from your real estate broker when buying a home as commissions are negotiable. Many home buyers are unaware of this. At least the private sector pays for these rebates as the federal tax rebates are paid by the tax payers.
David Gorman/Broker
Cashback Realty.com
My husband and I are on the process of buying our house and we just found the house like….2 or 3 weeks ago and are almost done with the process in 2 weeks! I know it applies to everyone that bought a house before April 30th but since they extended the date to september 30th, does that mean we would get it as well? That money would help so much right now!
Unfortunately you need to have signed the contract by Apr 30 to qualify. Sep 30 was just the closing date extension.
I am building a new home which will be at least basically done by Sept 30. It most likely will pass all building codes by then, but may possibly still need some walkways, landscaping, or touch-up painting. Would a statement by the bldg code folks,stating that it meets all code specs, be enough to qualify for the tax credit, or is a certificate of occupancy issued by Sept 30 absolutely necessary?
Anyone?
That’s tricky. Technically you need to show that you are able to move into the house for the loan to be approved so a certificate of occupancy is usually required. I suggest you call the IRS and get a written clarification on this so that when you claim the credit you don’t get rejected.
I am a first time home buyer…I signed the settlement contract in JUNE 2010 on the basis of the $8000 tax credit was still available, ” the lender STATED that the tax credit has been extended till Sept. 2010 ” and I would receive the $8000 TAX CREDIT after filing. Well I later found out after I had closed on the house that I did not meet the DEADLINE ” contract had to be signed on or before APRIL 30, 2010 .” Well I went back to the lender and she said that only the closing date had been extended not the contract signing…I explained to her that ” SHE HAD LEFT THAT PART OUT ” ..she said she was “SORRY” that it escaped her mind….I mean really what the F…!!! So now I am going F-ing Crazy..is there anything that can be done!!!! They will not let me out the contract.
All they keep saying is SORRY!!! SORRY!! SORRY!! … But that does not HELP ME!!! I need something to be done..It’s a deceptive way that lenders are TRAPPING helpless first time home buyers….F-ing FRAUDS!!!!!!!!!!!!!!!!
Thanks
The IRS hasn’t even paid out in full on the $8,000 credit for 2009 and they are commencing an extension(paying some of those first???)!
I have been waiting and fighting over 4 months for my $6,700.That is WHY I bought the home.
The IRS is trying hard to ELIMINATE as many LEGITIMATE claims for the first time home buyers rebate, under orders from the Federal Governemt employees at WHIM.
Caveat Emptor.Take NO LESS than you are entitled too, expose them to your congress people, online, media news, billboards.
IRS is treating legitimate tax filers for this advertised rebate FRAUDULENTLY.THIS is where the bulk of the fraud exists, at the IRS level,NOT the tax filers.
Fight them, it may take up to two years, but join class action suits, engage in a private suite against the IRS demanding rebate of legal fees and your interest.The IRS IS paying SOME(but NOT all)interest for the deliquency in paying them.
My son is now looking for a first time home and I would appreciate keeping me informed on any new tax credits he could get. Thank you. Janice Lagusker
Please email me so I know that you have received this request.
My client had a home where she rented the 2nd floor and claimed it as rental property.
If she claimes the tax credit on an ammended return does she also have to claim the gain on the portion of their investment property or does this go on 2010 return.
Thanks,
Richard Steben
If she claims income such as rental income on the property she will not get the tax credit.
I went under contract on April 12, 2010 with both seller and bank approved the short sale offer ($65k). The bank stated that we have to close by June 9th, otherwise, the approval will be voided. Unfortunately, we were not able to close on that date and because of this, the BPO needs to be redone and the bank has increased its price to $71k. I would like to continue with my purchase, however, since the price has changed, we have to file an amendment to the purchase agreement (basically amend the contract stating that the offer is now $71k). My realtor needs me to sign ASAP but I am hesitant to do so because I am thinking that this will void the original contract and I will not get the credit. Please advise me what to do and let me know if I will get the credit or not.
I got in on the tax credit but due to certain issues I am having to relocate, I know I will be required to pay the credit back, my question is will it be “taken” from my income tax refund next year or would I have to pay in full all at once?
I would love a answer to this question as well. ?
Hello I’m writing this email to ask you if you know if there is another first time homebuyer tax credit program in the talks? I’m closing on my home on the 16 of July but i went into contract in June. Have you heard any talks of any new extensions for new home buyers like myself? Thanks a Million.
No, only the closing date for the existing credit was extended. At this stage I do not think any more credits for home buyers will be made available.
Thanks,
Andy.
I built a home and had the contract in place by the necessary deadline, rushed to close on June 25, so that we would be eligible for the $6,500 existing home owners tax credit. I was told now that I do not qualify, because I purchased my existing home years ago before I was married and my husband has only lived in the home for the past 3 years and he would have had to live in the home for a consecutive 5 year period. Is this true? I know several people with this same circumstance. How can they penalize people for getting married, when they are allowing unmarried people to claim the first time home buyers credit. This just doesn’t seem correct. Everyone should get the credit that qualifies.
I purchased my home with the $7500 tax credit that must be repaid. I wish the government would go back and make this credit where you did not have to repay the credit. All of us that bought a home then have to pay back while everyone else that is buying a home is getting a much lower price and getting a $8000 tax credit that does not have to be repaid.
I know there are still lots of homes out there needing families to live in so my plea is for the President to also extend the date from April 30, 2010 in which you had to already have a signed contract in order to qualify for the tax credit. this would give others a chance to purchase some of the many empty homes that does the economy no good if they just set there with mortgage companies and banks losing. This would line up with the already in place extension until September to close on the home. thank you and your help is appreciated.
I was in contract for a house in April, there was a problem purchasing that particular home, so that first contract was voided and started over, we found another house to purchase but it was after April 30th, Will I still be eligible for the Home Buyer Credit, even though we did not purchase the first home!
Not based on what you have described. According to the IRS, you have to close on the contract for the same house you bought before Apr 30. I.e the paperwork needs to show the same house you closed on, is the same one you entered into a contract for before Apr 30.
I recently purchased a new home i am a first time homebuyer. However my contract went through may2nd, but i closed on june 15th. and i’m living in my nice new home.. can i still qualify for the tax credit?
Looks like you missed the deadline by about 3 days, which disqualifies you unfortunately.
Now i entered in a binding contract before april 30th but due to circumstances beyond my control i had to cancel the contract and quickly entered another one june 6th would i still be able to qualify?
Is there a possibility that the deadline for the binding contract will be extended somewhat similar to the extension passed for closing to Sept. 30, 2010? It would be nice if that date could be extended to July 31st to help home buyers.
Wow! The government is a bunch of idiots. This bill will help very little.. what about the people who are looking to buy NOW. We are all waiting around to see what is coming for us. I have put my search on hold until after September to see if they will extend the whole bill. Very few will actually benefit from extending the closing dates. Drags us down more why don’t ya..
I bought a home in 9/2009 and had never owned a home before. I was single and the home is in my name alone. I then got married in 10/2009. My Husband does own a home. The IRS is now telling me that I do not qualify for the first time home buyers credit. This is my home and was purchased before the marriage and with my funds alone. What can I do about this? Thank you.
I am not sure if the IRS disqualified you on other criteria (eg income etc). However you meet the eligiblity criteria, you should write a letter to the IRS or go through an accountant (for $6500, the accountant fee would be worth it). However, also remember if you have filed jointly then you would still only be eligible for 1/2 the credit.
Thank you for your reply. I more than meet the income requirements and the home was purchased be for the marriage. I have checked the IRS web site and found that this on their site. “Eligbilty for the first-time home buyer credit is determined on the date of purchase. If Taxpayer A, a first-time homebuyer, buys a house and then later that year marries Taxpayer B, not a first-time homebuyer, the credis is allowable to Taxpayer A. Taxpayer A may take the maximun credit.” According to this I should be elgible for this credit. But they tell me that because he owned a home with in the last three years I do not quilfy. I have sent them all of the documentation to prove all of this and I get no reply form them. Thank you for your help.
My husband and I are looking to purchase our first home and we just got preapproved. However, the tax credit expired at the end of April. They gave an extension to the people that are closing on their houses, but are they going to give one for the people that looking to to sign contracts?
Unfortunately no at this stage. The qualification deadline was not extended, only the closing date.
It is not fair to not extend the the ratification period. Those who get their binding contract after the april 30 because of conditions that there can not control and closing by June 30 have lost this credit. The lawmakers must do something about that.
Seems like fluff legislation. The amount of people it will help will be extremely minimal. Would have helped more if they extended the contract deadline not the closing deadline.
as for the comment on the devaluation of the dollar, That’s not a horrible thing at the moment considering the situation we’re in. (we need to export, get jobs back. strong dollar hurts this.) Also to that comment, if you’re a first time buyer you qualify for a 3.5% down load. Which is a decent deal if you’re not planning to live in the house forever.
I am a potential first time home buyer who was just starting to get his feet wet by seriously shopping for the first time. Have been at my current position for 5 years, recently received a $5000 raise, and feel as if I have pretty good job security. Just to be on the safe side I decided to be frugal and buy below my means, but any purchase is better than continuing to throw away $10,000 a year in rent.
However, my moral took a disastrous hit when I realized the $8,000 tax credit recently ended. Who wants to buy after missing a major incentive? Almost as bad as finding out my car was 1 mile per hour over the cutoff to qualify for Clash for Clunkers. I’m going to put my search on hold and hold my breathe awhile waiting to see if another incentive is introduced. If so, I am going to become extremely motivated to buy before I miss another opportunity.
I wanted to know if there is a though of the government to change the binding contract date. I got the contract signed by the seller on May 7th and I closed on June 15th. It is unfortunate that I lost the credit by 7 days.
I had a contract signed prior to the deadline of April 30th, but someone broke into the house 2 days after I signed the contract and the seller terminated the contract. I was willing to work with them to still purchase the home, they still terminated the contract. I then found a house and signed the contract just after april 30th and will be closing by July 7th per contract. Do I still not qualify for any credits?
I SEE THAT OTHER HAVE REC’D A REPLY FROM THERE STATEMENT EMAILED. I SEE THAT I HAVE NOT. THANK YOU FOR YOUR TIME
I hope people realize these stimulus comes at a cost. The more money the US prints the more devalued it’s goign to become.
People should demand these stimulus be stopped. No amount of money would prop up this ailing economy… If people are smart, they should let the housing market tank, the money saved is way more than $8k tax credit…or maybe it’s for people that can’t save if their life depended on it and need to use that for the down payment.
I’d like to see a statistic on how many used that $8k as the downpayment because many don’t even have the money for a 20% down payment.
I’ll just bide my time while all these suckers are buying up and not realizing they can’t afford it.
I believe that HR 5623 was passed before the Senate adjourned this evening at 10:25pm.
Extension granted. President needs to sign.
http://clerk.house.gov/floorsummary/floor.html
Thanks Shawne. I have updated the post to reflect the new approval.
is there any talk of extending, or reintroducing the tax credit 8,000.00 to homes , or buyers that have not locked into a contract prior to april 30, 2010. It would seem a good move, fore the home sales hagve almost ceased since 4/3/2010. As a home builder here in wisconsin, the faucet has turned off since 4/30/10. we bulit 13 homes for tax credit purchaser, now nothing……please fill me in, is there a chance for this to be reinstated, is anyone talking of such ?
No talk of that, only of extending the current credit’s closing date from June 30th to Sept 30th 2010. With the huge federal deficit, more government stimulus spending is getting very hard to justify.
I am soooo happy that this extention is being proposed. I am one of those that met the first criterior of getting a rattified contact prior to April 30 but my close date was moved out past June 30 due to extreme snow in my City and the builder was able to make the deadline. My city declared a State of emergency yet I was still penalized for weather beyone my control by not being able to claim the credit since my close would now be July 31/ The tax credit was my sole motivation for purchasing a home in this economy so If they pass this bill I would be ever so gracious and a burden would be lifed as the tax credit was orginally going to be used to recover my family after the purchase. Please pass this extention to Sept. 30th. We are Americans, tax paying citizens, we feel the burden of the economy same as the next man, please give us some relief with the credit. People like me need this keep our familys going. Congress if you read please, help us and vote to pass the extention. I wrote every senator, congressmen, my own legislators and even the President concerning this matter, God bless the person that got this bill on the floor, who thought about the little guy who just needed a little help to obtain the American dream of being a home owner. Dont penalize us for what is beyond our control.
did it really extend
Hi,
They are giving the extension..good better get bank of america & big banks that they close by sep 30th or they incur heavy penalties.
TMS reports that the House of Representatives is due to vote on the Homebuyers Assistance and Improvement Act of 2010 and the Restoration of Emergency Unemployment Compensation Act. (It appears as though these are two separate bills so that opposition to the unemployment extension would not keep the extension of the closing date of the first time home buyer tax credit from passing.
This would be great news for many of you who signed a purchase agreement prior to April 30th but are having difficulty closing before June 30th due to the slow short sale process and the backlog facing many lenders right now.
I am a 1st time homebuyer in CA who signed a binding purchase contract on Apr. 29th 2010. It was my goal to close escrow June 15th to receive the $8000 tax credit well before the June 30 deadline. I am well qualified to receive the tax credit but now I have had to extend the closing of escrow until July 15th. The circumstances for having to extend the closing and therefore missing the deadline are out of my control. The loan documentation process and the time involved in securing a loan have been the main reason for having to delay the closing. I was afraid I was going to lose it and suffer economic harm, but I just read about this possible extension by the Feds until Sept 30. This a plea to President Obama to extend the deadline for me and the many others who may have the same problem.
I heard tax extension thing is fail, it’s still june 30th. Is anyone has info. regardeing this matter?
The provision to extend is definitely in H.R. 4213, but this bill in it’s entirety still needs to be approved by the Senate (and is still under debate as of 6/29). 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.
At this stage it is unlikely that the home buyer credit (close) extension will be approved before June 30th 2010. Sad news for many home buyers. But the IRS is likely to allow a “grace” period for late submissions, because they are still taking 8 weeks or more to process past home buyer claims.
Thanks Andy,
One more question, you said it must close by July 1st. Isn’t it has to be done by June 30th?
Correct. June 30th is the last day. Thanks for clarifying. However looks closing date will now be extended to September 30th, 2010 per the house bill discussed in the post update.
Thanks Andy,
I’m waiting the loan doc. today which has to be done two days ago. It looks like without the extension I’m screwed T.T
this is my first time buyer i have to close hopfully next week would i be qualifies for the credit can you e-mail me please thank you.
i am real estate owner and broker. with the momentum of the stimulus ending in april 30, 2010, i could have told you (and I am an observer looking into the political world) that the real estate market was going to fall flat on it’s face without extending the stiumulas deadline. something has to be done quickly to help our economy. i am barely keeping my business above water and cannot cover expenses. HELP SMALL BUSINESSES SURVIVE PLEASE!!!!!
OF COUSE WE CLOSED ON A HOUSE AFTER THE DEAD LINE………
HOW DOES THIS WORK IF THEY REINSTATE THE TAX CREDIT AND WHO IF ANYBODY WILL CONTACT US
TO LET US KNOW
The Obama administration has approved five state-designed plans to help homeowners as part of a $1.5 billion effort to assist areas slammed by the housing bust. The Treasury Department said Wednesday that plans for Arizona, California, Florida, Michigan and Nevada had received approval.
The states estimate that the plans are projected to help up to 93,000 homeowners. That’s a small part of the administration’s main existing $75 billion mortgage assistance program, which is widely viewed as a disappointment.
President Barack Obama unveiled the state assistance effort in February. Since then, state agencies have designed their own approaches, largely focused on borrowers who owe more on their properties than their homes are worth or those who have lost their jobs.
Officials say the state efforts could be used to make changes to the administration’s broader mortgage assistance plan. The state agencies are planning to work with local housing groups to put the plans in place
Hello there my wife and i are about to start escrow next week. If this credit gets approved will we still have a chance to take advantage of the credit? I really hope so we are a young couple purchasing our first home and this will really help out alot financially our first year… Thanks hope to hear back for u soon…
Unfortunately no. The credit qualification date is still April 30th. The only change proposed is an extension of the closing till Sep 30th.
Question, in order to have qualified was credit of 620 or more required to have been eligible?
No. Credit score is not a factor in home buyer credit (thought it will definitely impact your ability in getting a loan).
I am a low income, disabled person who for the last 3 years has been sent in circles to obtain a loan which I am eligible for home owner ship. The federal programs would allow me to get a house or build out in the rural area but I would not be able to access public transportation or community inclusion. I finally got somewhere in the past couple years getting the right to use my $98,000 loan to build a 900 sq ft wheelchair accessible house in the city and close to stores and a wheelchair accessible park. I worked with the Rural development office for the past year jumping all the hoops, turned away several times and finally getting things in place, I have a right to stay in the community rather than to be warehoused in an institution. My income fits the guide lines for this loan and I am also eligible for a land trust program so the house will be built on land I rent. I have been working on this for the past 2 years and finally have the contract signed but due to the weather and the Rural Development dragging their feet, I will not be able to get the house finished to acquire the Stimulus payment. This $8000.00 loss means that I will not be able to afford a lift to access this house. $8000.00 means a lot when you only have 98,000 to work with. It would be a no brainer to allow those who have a contract in place to then have 6 months from that date to move in. Even a common construction contract allows 6 months for completion. How can the rules of this Stimulus program be fair to everyone when they set a dead line for contract and then only allow 30 days to turn key?? Dealing with the federal agencies for the loans, city and county inspectors, the weather and the contractors available that will build a small home and especially a non traditional house. This little house for me is “bare-bones” just allowing me to have a roof over my head so I don’t have to live in an institution costing taxpayers thousands of dollars a month to keep me over the period of a life time, I am saving the government and taxpayers millions. Yet in order to get the $8000.00 stimulus I am expected to build this house in 30 days. I the people at the front end of this stimulus program have just been luck to get it not just elligible.
The government should generate a log now of those individuals who do have a contract in place from April 30, 2010. And only those on the log are allowed the September 30 extension. This will prevent any backdating and fraud.
Quan – That may not work, because many people have not yet even claimed the credit via their tax return despite closing before Apr 30th. They are still awaiting final documentation – particularly if a short sale or new home. That’s why the extension is being proposed. About 186,000 home owners and sellers would benefit from the Sep 30 extension according to the NAR.
andys2i- I’m not about filing the credit on their taxes. If they decide to extend the closing deadline to those who have a signed contract by April 30th, how does anyone know how many people with already signed contracts to extend it to. If there were a database or even a simple list of all the eligible contracts, it could help prevent fraud on possible back-dating. The only document right now is a contract. Those who already have a contract by the April 30th deadline would be placed on a list to be eligible for the September extension. If their name is not on the list, then one could question if it were fraud.
I was under contract on my old house on 4/2/10 and closed it and the new home on 4/30/10. I’d personally much prefer an extention for filing federal income taxes for tax years 2010 through 2049 until 12/31/50, seeing as how I’m currently 65. BTW, the $6500 tax credit did not enter into our buying/selling decision one iota as we’ve been trying to get out of that old house and podunk town for over 2 years. Even though, I have benefitted by this giveaway, I was and am opposed to it as it’s an artificial measure to goose NAR and the homebuilders. The windfall will be spent however on fix-up and a few goodies.
You amaze me! You are opposed to this tax credit but still you take it. How typical of the two faced mindset in this country. You didn’t have to file for it you could have stood by your so called convictions. It seems the it doesn’t matter whether you are conservative or liberal you all talk out of both sides of your mouths!!!!!!!!!!!
David Rosenberg, chief economist at Gluskin Sheff + Associates, wrote this morning:
“We heard from Ivy Zelman (top-rated real estate research) on Friday that the bill that included an extension for the closing date of the homebuyer tax credit fell two votes short of passing in the Senate. This virtually assures that it will not become law prior to the June 30th deadline. Ivy says that while it is difficult to quantify the impact, the fact that as of yet there is no extension, which was widely expected in this bailout nation, it could trigger a jump in cancellations beginning in July if a sizeable number of sales are not closed in time.”
Rosenberg is referring to H.R.4213 the “American Jobs and Closing Tax Loopholes Act of 2010″.
The amendment (S.AMDT.4344) to extend the closing date for the tax credit passed last week on a vote of 60 to 37. The Senate is still debating the other tax extenders, and was unable to obtain cloture (this is what Zelman was referring to). This bill also includes the extension of the date (not duration) of unemployment benefits and other provisions. One of the sticking points is the extension of the COBRA benefit.
I just sign a contract on June 10 to buy a first house do I still qualify for the tax credit if I closed by august 5
considering if they pass the tax credit extension?
Looks like I’m too late to get this tax credit, which sucks! I was laid off for a year but now I’m about to buy a house. I voted for Obama but I will not vote for him again if I don’t get some of that money.
People are so stupid and yes I am talking to you. I understand you upset cause you may not get any of that money but what does voting for Obama have to do with anything? The man made the credit available to us and there was dead lines set. Yes I understand your situation cause I have been there and soon my be out of work again but its not Obamas fault you did not meet the deadline so what does you not getting that money have anything to do with voting for him again. People need to realize Obama is not God this man can do only so much and the reason he is having a hard time doing what he say he will do because Congress fights him on everything he tries to do. He will never get anything done based on the way things are no other president had this problem
Obama sucks. People are stupid and yes I’m talking to you.
Unbelievable!!!!!!!! You won’t vote for him if you don’t get some of this money? Your right, we should vote for the president that gives us the best bribes. My gosh that is what’s gotten us into the mess that we are in. Our Presidents, Congressmen and Representatives all taking bribes and I don’t mean just Obama, it’s been going on forever but the last 40 years have just gotten worse and worse. Look at all the relaxed rules for the banks and wall street. They have almost destroyed this country while our leaders on Capitol Hill were too busy lining their own pockets to do anything about it. How many of them lost their homes and life savings? And that’s on both sides of the isle and it started a long time before Obama was elected. I worked with people that thought they would be able to retire and now they don’t see an end in sight. Obama talked the talk but he couldn’t walk the walk and he knew it. Because they all do it and it is called campaign promises. They know that Congress won’t pass the things they promise so they say anything and everything to get elected and we’re fools enough to listen to them. So now we wait until 2012 to see who the best liar is then. Good Luck
My husband and I went under contract for a home in Jan 2010 never thinking we would be in June and still waiting to close escrow but since it’s a short sale we still have not. It’s already been 5 months it’s so frustrating to wait and wait. I hope they approve the closing date to September so we can qualify for the credit since we have been waiting soo long. We definately will not close by the 30th:-(
I think it should be fair for everyone. We looked at houses for over three month and unfortunately kept having investors with cash offers. Finally found a house in May and do not qualify. The credit should apply to everyone or it should have been left alone. I hope they will extended to everyone.
I have been buying my house contrct for deed since 2009. Every thing is still the the owners name even the realestate tax. My boyfriend (husband since 2006) moved in in Jan 2005. We are now buying a new modular home and placing it on our property and tearing down the old house. We financed the pay off from the Contract and the modular together and got a loan from the bank it is all in my name not his. My husband has never ownd a home and his name was never placed on the contract.
my question is what are we first time homeowners or returning buyers or do we even qualify?
You are still a first time homebuyer. My husband and I were buying our house on a land contract (rent to own) with no equity in the house until we either paid it in full or financed the purchase price. We lived in the house for 3 years, but we were considered renters so we still qualified. The money we paid to the landowner was used as a downpayment.
Thanks Patty, i have a couple more questions, did your contract require you to provice house/property inusrance and did you have to pay the realeastate tax even though they were still in the home owners name? We had to do both of these and when i filed taxes this year for 2009 i was able to claim 2009 realestate tax on my tax return (even though they were not in my name). I dont know if that will knock me out ? An accountant does my taxes and he does not know either. out contract also reqired us to pay interest which the owner claimed on her taxes.
I really don’t know where to start in response to the posts I have read on this discussion board. This article was written to share some hope to folks who are buying a home and lucky enough to take advantage of the first time buyer or move up buyer tax credit who are, unfortunately, stuck in piles of paperwork on the thousands of lenders’ desks across the United States. Lenders are understaffed, and it is too late to add new folks into the mix, since training them will take us past the June 30th cutoff date. No one is suggesting an extension of the credit to buyers who didn’t get their contracts in by the April 30th deadline; that ship has sailed. Instead, the government of YOUR elected officials is trying to make sure the tax credit you are looking forward to comes to fruition. As it stands, lenders will not be able to close a great number of loans on time, and this will cause some buyers to walk away from their home purchase, inevitably. Why? Simple. There are more homes on the market today then compared to April 30th, which means they can take more time to find that “perfect home”, not the home they felt rushed to buy just to take advantage of a tax credit. And they are more than likely priced less too. Home sellers affected by the loss of their transaction could be forced to take less of a sales price to move their properties faster, as they too may have contractual obligations to settle on the homes they are buying. What does that do for your property values then? That’s right…it lowers them even more. Does everyone see how this snowballs?
By extending the settlement cutoff date, homebuyers and Lenders will not be under the crunch of rushing to meet deadlines less than 15 days away. Lenders want to close loans – that’s how they make money. They have to follow new rules and regulations filtered down through Fannie Mae and Freddie Mac – over 600 new changes in the last two years! – Which explains why you may be getting asked for additional information over and over again throughout the process. If you are being asked for missing pages of a bank statement, or a W2 from 2008, well, the only one to blame is your Loan Officer – those items were needed at time of application and you have every right to be angry at the person that you (hopefully not the person your Realtor) chose. Lenders need docs that are within 30 days of your settlement date. If you made application in February, and haven’t provided any new documents since that time, consider this a heads up…go get them ready because you will need to submit them.
Finally, let’s not forget that the buying and selling of homes is the single biggest catalyst of moving our economy forward. Sales of homes in your neighborhood brings new children to your schools, new shoppers to your supermarkets and home improvement centers. New customers to your gas stations and convenience stores. Does this mean new jobs? Yes. Does this mean people putting some money away and saving for a rainy day? Sure does. And if your bank sees an increase in deposits though acquiring new customers, what does that do to the interest you earn on YOUR money?
And who knows? They could tell a friend about how great the neighborhood is that they just moved to, and maybe you can sell them your home…at a profit!
My problem with the housing tax credits is that I truly think tax credits will become the standard norm in the sale of real estate, ie: auto industry rebates. Automotive companies are now in a position where cars and trucks will not sale without the rebates.
I graduated from college in 1973 making $7,500 a year. In 1978, I was making $15,300 a year and purchased a 10 year old home (not a new one) for $48,800 and I paid $15,000 down that I had saved from 1973 to 1978.
We now have people who feel they are entitled to everything and they do not think they should have to make sacrifices in order to purchase a home. Minimum down payments should be 5% plus closing costs. We now have a glut of homes on the market due to an over built inventory because loans were made to people you did not have to document they could afford them nor make a down payment. We had and still do have homeowners who are actually renters with a deed because they were given 100% loans. Why do these people walk away from their contractual obligation? They have only paid monthly rent payments and really lose very little or nothing since a down payment was not made.
The problems with FNMA and FHLMC mortgage backed securities were not the securities themselves but the poorly underwritten and ridiculous loans that make up these securities. A well underwritten loan can go bad but a bad loan is always a bad loan!!!
We are on the path that Greece is in now and I do not see anyone in Washington who has a clue or either does not care about physical and financial responsibility!
So much for being a person who lived below my means and saved all my life. The people who have been responsible are getting screwed for doing the right thing all our life!
a deadline is a deadline, why the big rush in april when they knew the cut-off was coming. that 8000 sat there available for over a year, as it was it was extended already. my buyer bought my place last year, that whole year sat there for everyone else. meanwhile legitimate details are being bumped to the end of the line because of these late-comers, and in many cases this could be a deal buster.
We bought our first home in Sept 2005, and recently purchased another home (that will be used as our primary residence) April 2010. The first home purchased in 2005 will be used as a rental. If they extend the deadline to now September/October 2010, will we qualify for the “repeat buyer $6500 credit” since I will have five years invested in the first property?
Thanks in advance,
HP
I have been reading through a lot of these posts an i find that I myself am still confused on this whole situation. i recently purchased a house an we closed on April 12th. My tax accountant told me i could file an ammendment for my previous 2009 tax return an i could recieve my credit that way. is this true? i figured i wouldnt be able to do that…that i would just have to wait till my 2010 return an file then and get the credit. Any help would be great.
thanks
don
Yes, you can file an amendment to claim your credit (according to the IRS). You can also wait till 2010 if you feel more comfortable. As outlined in the post, “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″
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.
As expected, the tax credit artificially inflated the price of new or existing homes by the same $8,000 or $6,500. Now this proposed extension seems designed to protect people who agreed to buy at inflated prices and relied on the tax credit to offset their higher costs. An alternative is to let them out of their contracts so they can reconsider and buy a more reasonable home at readjusted prices.
Let’s get rid of ALL stimulus programs. Artificial stimulus (including tax credits, mortgage interest tax deductions, property tax deductions, federal loan guarantees, artificially low interest, zero percent or low down payments, net operating loss carry back, and construction loan guarantees) causes market failures in a free market society when they favor special interests over competitors and public interests. Who are the real beneficiaries? Aren’t these programs really to benefit big builders, realtors, lenders, Wall Street, and the politicians who get money from them?
From the WSJ:
Response times from loan officers and appraisers have doubled over the past month, says Kailee Rainey, who works for a Seattle-based real-estate brokerage.
Lee Barrett, president of Century 21 Barrett, a real-estate firm in Las Vegas, spent part of the week in Washington meeting with his congressional delegation about the need to extend the closing deadline. “The lenders are overwhelmed. The title companies are overwhelmed,” he says. “It’s just a mad surge of everybody trying to close deals.”
At Wells Fargo & Co., employees from other sales divisions are being brought in to handle mortgages, and staffs are working weekends and nights to process higher volumes. “It’s all hands on deck,” says Greg Gwizdz, an executive vice president at Wells Fargo Home Mortgage. He says the bank has prioritized “every customer who qualified for the tax credit.”
A spokeswoman for Bank of America Corp. says the lender is also placing “increased priority” on loan applications submitted before the April 30 deadline. Luke Hayden, president of PHH Mortgage, a lender based in Mount Laurel, N.J., says consumers can help speed the process along by being “very responsive to requests for documentation” from lenders.
[Update June 2010] Possible September 2010 Extension to Home Buyer Credit as Builders and Home Owners Struggle to Complete Home Transactions by June 30 2010 Tax Credit Deadline….[Read More Here]
me and my husband are in contract but they only used him on the actual loan would they just give him the the rebate even though were a married couple? IM ON EVERYTHING ELESE EXCEPT THE LOAN IM WAITING ON A DECISSION FROM DISABILITY DOES THAT MATTER. IM ALSO READING EVERYONE ELESE,S STORIES ITS SCARY TO THINK ABOUT THE WHOLE PROCESS SO WE,LL THINK ONCE ITS ALL OVER ABOUT HOW LONG AND HARD OUR JOURNEY WAS.HOW AND WHEN DO YOU RECIEVE YOUR MONEY?
We are first time home buyers. We went under contract before the April 30th deadline hoping to qualify for the tax credit. Due to the length of the loan process, we are not going to be able to close by the June 30 deadline. That really sucks.
My husband and I went under cotract before April 30th as well. We qualified for our loan but have been waiting (and waiting) on the seller’s lender (we’re buying a short sale). They “say” they’ll try to approve and close by June 30th, but there is never a guarantee. I really hope this credit is extended. If not, we will miss out on it just because of the lender’s delay. Not right.
My husband and I are in a similar situation…we had our contract in before April 30th, and we even have loan approval, but are still waiting for the underwriters to finish…We were told all along by our lender that we had plenty of time, we were on track to close on the 25th (“so we weren’t part of the rush closer to the 30th”), etc. Unfortunately, I think everything is just really backed up because of the number of buyers attempting to close right now. I understand that it’s not really the underwriter’s fault, I’m sure they’ve been working insane hours to try and get through this.
We didn’t try to buy a home before the extension to April 30, because we knew it would be tough on our finances. We had planned to buy in June or July, anyway, so we would have started looking in April. When the tax credit got extended to the current deadline, we rushed around to find a home (which we like, although we didn’t get a chance to look at all that many), and to get everything into the lenders ASAP. We’re grad students, and our schedules can be hard to manage, but we figured it was worth the $8,000 to mess up our schedules and get the stuff in very early…and now we sit and wait. If we don’t close in time, I’ll be upset at the amount of stress, lost sleep, late/odd hours in the lab, and rushing around town to get to escrow and the lender and the insurance, instead of doing those things at our leisure, because the only reason we did things as quickly as we did was so that we could get the tax credit. Getting the loan approved took longer than “normal”, so I guess we should have seen this latest delay coming… (but there’s still a tiny bit of hope for us. TINY)
my daughter is settling on 6/23 ,2010. they were under conract w/another property that fell thru but found this one & are settling on 23rd. Do they still qualify ?
I am buliding a new home. I am paying cash for my home as it is being built. I made sure I got the deal with my bulider by the April deadline and my contract says that the bulider will be done on June 30th. Now my bulider is saying that the home will not be finished until July 20th. I wanted to ask you, because I am paying cash for the home as it is being bulit and my bulider has promised that by June 30th the home will be mostly complete, do you think I would qualifiy for the 6,500 credit? I would appreciate your opinion.. Thanks Pat
Joe, I signed a contract to purchase a house in the beginning of June and hope to closed before
the end of June. Will I be able to received a tax credit if i closed before June 30, 2010. Why would
it make a difference when you sign a contract as long as you closed before June 30, 2010, What
will happen when contracts are signed in April and donot closed om June 30, 2010?
The credit actually expired on Apr 30 – that’s why contracts had to be signed up then. the 60 days to June 30th was a grace period to complete settement, inspections etc which can take place after signing the initial contract (contingencies). So you can try and file with the IRS for the credit, but will likely get rejected if you don’t meet the qualification dates or don’t have a good reason for delays.
I am looking to buy a new home but i want to wait to see if a new tax credit will be available…how soon will we have that info??
Your guess is as good as mine. But in my coverage of this credit and it’s various extension’s I don’t it will get extended unless the economy and housing market really tank. Your best bet is to negotiate with your sellers/builders to try for a discount equivalent to the credit, since some prices had been inflated to reflect the $8K credit.
Currently no active bills are in Congress to discuss an extension of the credit, with the focus on the jobs bill instead.
I heard rumors that there is another credit of some kind for 1st time home buyers other then the $8000.00 one… is it true??
Lots of rumors floating around and some places, like Washinton DC, do have seperate housing credit. But the federal $8,000 credit is expiring for civilians at the end of June 30th 2010, and no senate bills or updates from the IRS indicate that it will be further extended. With low interest rates and stabalizing housing market, it is hard to justify more government spending. However, as discussed here, the home buyer credit IS available to military families till June 30, 2011 (an extra year.
Im a home inspector…Everytime they offer this special, business returns to normal. Everytime it ends, its time to change what I do!!! I feel a one time credit of X amount to first time home buyers only. If they qualify should be given… But, to be fair to all… Anyone owning a home now and they have not been given any help or credit at all. Could still be given this same credit… A one time Government helping hand… Hey, we pay enough in taxes…why not… But… DO SOMETHING FAST…THINGS ARE VERY SLOW!!!
We went under contract May 15, 2019 (just missing April 30), and anticipate to close by the end of June. Do you know if we will still be eligible for credit since we are closing in June?
$8000.00 credit is no longer available.
I heard a rumor that there is further Extension of $8,000 credit or even more after April 30, 2010 but it would be available only next year.
Anyone has more information?
Hi, I did sign the contract with my builder in November of 2009. My builder verbally promised to finish it by June 30th but never comitted. Each month he was keep telling me that June 30th is the target. But When I started looking into loan 2 weeks back, I was told by builder that it is not possible (impossible) to finish the house by June 30th. He is telling me now that it is going to be end of July by when he can finish the house. Is there any way to claim the first time home owner credit (this is my first home that I am building)? What are my options?
Thanks,
I appreciate your response.
Sunil
Sunil, according to the IRS the criteria to claim the credit is:
- 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 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.
A Certificate of Occupancy is a document issued by a local government agency or building department certifying a building’s compliance with applicable building codes and other laws, and indicating it to be in a condition suitable for occupancy. Generally, such a certificate is necessary to be able to occupy the structure for everyday use, as well as to be able to sign a contract to sell the space and close on a mortgage for the space.
It complements a building permit—a document that must be filed by the applicant with the local authority before construction to indicate that the proposed construction will adhere to ordinances and codes and laws.
So you need to get the copy of the certificate of occupancy from your local country (your builder may need to provide some certification documents as well). Discuss this with your builder and research your local county/city rules. You may be able to get the certificate before actually moving in if the house is passed fit by the local authorities.
The other option is to just file for the credit and see the IRS response (they may accept slight delays as it is taking them about 8 weeks to process current home buyer credit applications). I would definetly push your builder to at least get the house up to code before June 30.
Andy,
Thanks for the response. I did talk with city official. Due to the special circumstances I am in, they are willing to work with me. They said, they will see my house by end of June and if there are no safety violations, they are ready to give temporary certificate of occupancy. My lender is not willing to close with just the temporary certificate of occupancy (they need house 100% complete). Do we have to close the deal or is it ok to just get the Certificate of Occupancy (temporary)?
I greatly appreciate your help.
Thanks,
Sunil
Sunil – I would double check this with the IRS. The Certificate of Occupancy (temporary) may be enough proof to claim the credit. If you can’t get a response from the IRS, I would go ahead and submit the documents you have and by the time and if they ask you for more proof of ownership, you should have your other doco. Don’t forget you can also claim this credit in your 2010 tax return filed next year. Also check out the IRS.gov site for their home buyer credit section – may have some specific answers in their 2009 tax publication.
Hi! My husband and I are in the same boat you are. I was wondering, did you ever find out if the Temporary Cert. of Occupancy is enough to claim the credit?
Any good program that works well for Americans alway disapears , Disable Vietnam Veteran home coming and homeowner dreams; disapeared. (?)
G49
Does the home owner tax credit apply if you have done a loan modificaton or for previous homeowner? I don’t understand the home owner tax credit.
Due to credit issues, we finally got approved for a loan for our first house. And, of course the credit for first time home buyers expired 3 weeks after we got our credit straight and fixed and found a home and signed a contract. The only great thing to come out of all this headache of not making the deadline is we will close on our house the middle of June 2010. Thank the Lord for all his blessings. Do you know or have you heard if they will be extending the first time home buyers tax credit?
Mike – Not as far as I know. Only the primary home qualifies for this credit.
Is there any type of tax credit for a 2nd home?
How long does it take to get the refund of already being a homeowner for the 6,500 tax credit
Normally 6 to 8 weeks.
Check with a professional before you try to buy using this federal tax relief help because if the only reason you are buying is to get his relief you will end up in trouble.
I would note when I will got my Check.
How funny, yeah housing is picking up huh? Data suggests… no kidding with that credit and all..well what happened after the credit stopped, nosedive again! What a suprise
my husband and I have been looking for affordable housing since katrina of 2005, we have finally found a house that is affordable, but the tax credit expired the end of april, is there anythin we can do to take advantage of the 6500 tax credit or can you direct us to someone who can answer this question. thanks
Unfortunately the credit has not been extended, but this could change after June 30 if the housing market tanks. Stay tuned for updates. For specific details check out the IRS.gov site or your local accountant.
I am being forced to relocate for a job, is there any exempton for renting or selling in this case?
These limitations on the tax credit don’t help the housing market at all.
I heard a rumor today that there is a next tax credit of $15,000. Is this true? Is it only for certain states, cities?
Hmmm…that’s interesting. I have not heard that rumor but it the housing market faces another downturn then another credit could be possible. Particularly because the housing credit was very effective.
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