Financing in Arlington>Question Details

Jennifer, Home Buyer in Arlington, TX

Can you use the $8, 000 tax credit towards down payment for a house?

Asked by Jennifer, Arlington, TX Mon Mar 23, 2009

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Danni DeWoody’s answer
Yes! It was just announced yesterday by HUD's Secretary Shaun Donovan. You will soon be able use your credit as your down payment or as part of your down payment enabling buyers to finance/repay less and giving them more buying power overall. What a wonderful idea. My website will link you to the article on my homepage. http://www.dannidewoody.com
Web Reference: http://www.dannidewoody.com
0 votes Thank Flag Link Wed May 13, 2009
That would be great for it would help many people.
Flag Fri Aug 15, 2014
Hello, Kindly send an executive summary of funding you need to email: collins_baldwin@yahoo . com for further processing
regards
Baldwin Collins
FHA certified lenders
0 votes Thank Flag Link Sat Aug 16, 2014
yes,very much so!I have been wanting for many years to have a house of my own and get out of the rent scene.
0 votes Thank Flag Link Fri Aug 15, 2014
Thank you everyone for your wonderful answers!!
0 votes Thank Flag Link Tue Mar 24, 2009
I wrote about this topic on my blog February 17, 2009, you may also review the entire tax credit provision at: http://thomas.loc.gov/home/h1/Recovery_Bill_Div_B.pdf
0 votes Thank Flag Link Tue Mar 24, 2009
Jennifer,

No, the incentive is a "tax credit." It is a benefit that is realized at the end of the year when you prepare your annual income tax to be filed with the IRS.
0 votes Thank Flag Link Tue Mar 24, 2009
As always, when asked to answer legal or tax questions, we Realtors are supposed to state that since that is not our area of expertise, please contact a professional in that field. Having said that, I am comfortable posting links for you to see and decide for yourself if it may apply in your situation. One concerns using the credit as a down payment, http://www.nbnnews.com/NBN/issues/2008-08-18/Front%2BPage/3.html and also mentions changing your with holding status to accelerate growth of a down payment and accumulate a nest egg for the same. Good Luck!

Michael Hammond
SellsRealty@gmail.com
0 votes Thank Flag Link Tue Mar 24, 2009
No. You have to buy the house first (and be a first-time homebuyer) before you can file your taxes to get the $8000 tax credit.

To learn more about the first-time homebuyer tax credit, go to the IRS website at http://www.irs.gov/newsroom/article/0,,id=204672,00.html
0 votes Thank Flag Link Tue Mar 24, 2009
Simple answer is no because of the way it is given to you. Here is more information for you on the program.

New $8,000 Tax Credit for First-time Home Buyers
Great news for first-time home buyers in 2009! The stimulus plan that President Obama signed into law contains a new $8,000 tax credit for qualified first-time home buyers. And, unlike the $7,500 tax credit from last year, this credit does NOT have to be repaid to the government, as long as you stay in the home for at least 36 months after the purchase date.

Remember, a tax credit is much more valuable than a tax deduction. A tax credit reduces dollar for dollar the amount of tax you owe. A deduction merely reduces the amount of your income that is taxable. This means the home buyer credit can be claimed even if the taxpayer has little or no federal income tax liability to offset.

Who?
First-time buyers or anyone who hasn't owned a home in the 3 years prior to a purchase of a primary residence may qualify for a tax credit of up to 10% of the purchase price or $8,000, whichever is less. To qualify for the full credit, the buyer's modified adjusted gross income must be less than $75,000 for single taxpayers and $150,000 for married taxpayers filing a joint return. Partial credit is proportionally reduced for incomes under $95,000 (single) or $170,000 (married). For married taxpayers, the homeownership history of both the home buyer and his/her spouse are taken into account. This means if you or your spouse has owned a principal residence in the last 3 years, neither you nor your spouse qualifies for the credit.

What?
According to the IRS, a primary residence is the one you live in most of the time. It can be a house, houseboat, housetrailer, cooperative apartment, condominium, or other type of residence. If you constructed your main home, you are treated as having purchased it on the date you first occupied it.

When?
The $8,000 tax credit is available for qualifying home purchases made from Jan. 1, 2009, until Dec. 1, 2009. This is not a typo. To receive the credit you must purchase a qualified home before December 1st, 2009 – not the end of the year.

How?
Unfortunately, you can NOT use the credit as a down payment. To receive the credit, you must purchase a qualified home first and then claim it on either your 2008 or 2009 taxes. If you make a qualified purchase after April 15, or after having already filed your 2008 taxes, you and your tax professional can submit an amendment to your return. To claim the credit, use form 5405.

Why?
The current combination of lower home prices and lower interest rates makes for an amazing opportunity to buy real estate. Add to that this $8,000 gift from the government, and renting a home just doesn't make much sense.

If you or someone you know is ready to stop paying the landlord's mortgage and start building equity in your own home, give us a call. We'll run the numbers and see what makes sense for your individual financial needs.
0 votes Thank Flag Link Mon Mar 23, 2009
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