Real Estate October 13, 2009

$8000 Home Buyer Tax Credit

In searching and trying to find what the topic “du jour” is today it has become glaringly obvious that it is the home buyer tax credit.  There are a couple things that I think about the credit and believe me everything I write here is strictly opinion and nothing else.

  1. I don’t know if the tax credit is going to help us, is it a band-aid for a solution that is much bigger then we can wrap our heads around?  With that said I am leaving it open for further evaluation.
  2. I have only had 2 clients that have used the credit and it was something they were thankful for.
  3. I think we are going to have a heck of a lot of pissed off clients if they extend and add to that credit.

I see all these drawn out blogs explaining the tax credit until they must be raw at the fingertips when really it is quite simple:

  • Applies to purchases that close after April 8, 2008, and before Dec. 1, 2009.j0316868
  • Applies only to homes used as a taxpayer’s principal residence.
  • Reduces a taxpayer’s tax bill or increases his or her refund, dollar for dollar.
  • Is fully refundable, meaning the credit will be paid out to eligible taxpayers, even if they owe no tax or the credit is more than the tax owed.

To apply for the credit fill out form 5405 .  A couple other things to be aware of taken directly from the irs website:

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

First-time homebuyers who purchase a home in 2009 can claim the credit on either a 2008 tax return, due April 15, 2009, or a 2009 tax return, due April 15, 2010. The credit may not be claimed before the closing date. But, if the closing occurs after April 15, 2009, a taxpayer can still claim it on a 2008 tax return by requesting an extension of time to file or by filing an amended return.

So don’t forget when you’re filing your taxes for the next year to apply for the credit if you have the chance.