Home Selling in 55038>Question Details

Itst, Home Seller in 55038

$7500 tax credit rerturn to fed rule.

Asked by Itst, 55038 Thu Jun 18, 2009

What are the rules behind the $7500 tax credit which was given for 2008 purchases. It was suppoesed to be returned in 10-15 years. What happens if you do a foreclosure or you sell for small or no profit? I could not find the answer aywhere.

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Thanks for the info, Don!!!
0 votes Thank Flag Link Thu Jun 18, 2009
From the original $7500 tax credit, the rule was that all eligible purchasers who claim the credit will be required to repay it over 15 years. The statute specifies that the repayment amount will
be 6.67% of the credit amount each year. Thus, a buyer who qualifies for the full $7500 credit will repay
$502.50 each year. There will be no interest charge on outstanding balances, so you truly don't have to repay it until you sell the home.

When the person who used the credit sells the home, any amount of tax credit that has not been repaid
will be due in the year of sale. For example, if an individual still “owed” $4000 in repayments and
realized $25,000 of proceeds from the sale, the $25,000 of seller proceeds would be reduced to $21,000
and $4000 will be remitted to the IRS.

If the gain on the sale is less than the amount that must be repaid, part of the liability is forgiven. For
example, if the individual still “owed” $4000 but the gain on the sale was only $3500, then the seller
would not be required to repay the IRS the $500 shortfall. If there was no gain or even a loss, then the
remaining $4000 would not be repaid.

I wrote a post on all the details awhile back here if you want some more info: http://donedam.com/your-750000-tax-rebate-hr-3221-the-%E2%80…

Let me know if you have any other questions.

Web Reference: http://donedam.com
0 votes Thank Flag Link Thu Jun 18, 2009
I would advise addressing this question to a tax accountant, they will be much better versed in income tax laws and be able to talk with you about your repayment requirements (if any) and your options. Steve
Web Reference: http://TheHoemTem.com
0 votes Thank Flag Link Thu Jun 18, 2009
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