Home Buying in Cecil>Question Details

Joanne, Both Buyer and Seller in Cecil, WI

Why isn't this rebate retroactive to be fair to people who where in the process of buying a new house? We missed the closing date by three

Asked by Joanne, Cecil, WI Sun Jan 24, 2010

weeks. We closed on our house on October 14, 2009. We had been in the process since April 2009 and missed out on the first time buyer credit because we lived in mobile home on a rented lot. We were working with real estate agents, banks, mortgage companies and none of them told us about this pending credit. We both are on Social security and putting our last daughter through college. That credit would have meant a lot to us. We did not have the luxury of renting out our other home and receive that extra income. This credit is NOT fair to a LOT of people who also fell through the cracks with the first credit! We could have used that money to stimulate the economy even further as we need a car. Who was aware of this law pending and why didn't everyone know about it????? We could have waited another three weeks to close on our house for that amount of money! I sure hope something is done about this unfairness! So much for help for those who truly need it!

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Don Tepper’s answer
I understand your frustration. However, laws--like contracts--need deadlines. A beginning and an end. You happened to buy before the beginning. Whether you consider that unfair is your perception. But where would you extend that to? Someone buying a month before the law went into effect? Two months? Three months? Or maybe someone out there just wants one week.

It's the law. Accept it.

As for who knew the law was pending? Real estate agents. People who watch CNN. People who follow blogs on Trulia, ActiveRain, etc. People who read newspapers that cover news of pending legislation. Lenders. Builders. Lots of buyers and sellers. Your Senators and representative.

A couple of other points. You say you "missed out on the first time home buyer credit because we lived in a mobile home." What? Mobile homes are eligible for the tax credit. From the IRS web site [ http://bit.ly/HomeBuyerTaxCredit ]:
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Q. Is a taxpayer who purchases a mobile home and places the home on leased land eligible for the first-time homebuyer credit?

A. Yes. A mobile home may qualify as a principal residence and it is not necessary that the taxpayer own the land to qualify for the first-time homebuyer credit.
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Next, I'm assuming you're talking about the move-up credit for long-time buyers. If you owned your mobile home for 5 of the last 8 years, you may still qualify. Again, from the IRS web site:
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Q. Which home purchases qualify for the first-time homebuyer credit?

A. Any home purchased as your principal residence and located in the United States qualifies. You must buy the home after April 8, 2008, and before May 1, 2010 (with closing to take place before July 1), to qualify for the credit. For a home that you construct, the purchase date is considered to be the first date you occupy the home.

Normally, taxpayers (including spouse, if married) who owned a principal residence at any time during the three years prior to the date of purchase are not eligible for the credit. This means that you can qualify for the credit if you (and your spouse, if married) have not owned a home in the three years prior to a purchase. However, a long-time homeowner can also get the credit for a qualifying replacement home purchased after Nov. 6, 2009. To qualify, you must have owned and used the same home as your principal residence for at least five consecutive years of the eight-year period ending on the date you by your new principal residence.
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Finally, you have to understand the purpose of the tax credits. It was to encourage people to buy. (I'm not arguing whether that was a noble purpose or not--just explaining that that's the rationale for the credit.) Well, to encourage someone to buy, it helps if the buyer has that as motivation. The purpose wasn't just to reward people who had bought. So--as a practical matter--extending the credit retroactively to people who didn't even know or consider it at the time of purchase would defeat the purpose of a credit. It'd be like a car dealer offering a $2,000 rebate to sell cars at the end of the model year, and someone coming in who'd bought a car there a month earlier demanding to receive the rebate. No. That's not the purpose of the rebate.

And while that may seem unfair to you, that's the law and the rationale behind it.
1 vote Thank Flag Link Sun Jan 24, 2010
Don Tepper, Real Estate Pro in Fairfax, VA
MVP'08
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If you owned the mobile home and the Mobile home was not an "RV" (With a motor) than according to the IRS it is your primary residence and you do not qualify. The determination appears to be how "Mobile" your mobile home is. You do not need to own the land it is on. This is unfortunate but it appears the IRS has drawn the line.
0 votes Thank Flag Link Sun Jan 24, 2010
We did not qualify for the first time home buyer because we lived in a mobile home on a rented lot for 13 years and it was considered our primary residence. We therefore do not qualify for first time home buyers. Also the reason we started the buying process was because we believed we did qualify for the first time credit because we did not own a "home on land". We found out later that any primary residence that you lived in (could be a camper, cardboard box) that had a permanent address was considered your home and you did not qualify for the credit.
0 votes Thank Flag Link Sun Jan 24, 2010
Joanne,

If you closed on October 14th and you are indeed a first time home buyer than you MAY qualify for the tax credit! The First Time Home Buyer tax credit has been in effect for a long time! It is the EXISTING home owner tax credit that went into effect in November.

You should didscuss the tax credit with your TAX PROFESSIONAL. You may be able to claim it on your 2009 taxes! If you need additional information check out http://www.irs.gov.
0 votes Thank Flag Link Sun Jan 24, 2010
Our Congress at work. We all wonder why they do some things.
0 votes Thank Flag Link Sun Jan 24, 2010
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