Reg. $8K federal tax credit

Asked by Gixxersixxer, 94582 Mon Jan 4, 2010

Hi ,
I bought a home earlier in Apr 2006 & sold it in Aug 2006 (just after 4 months of buying).
I did buy another one 2-nd week of June 2009. The price was good enough to pass up at that point and wait for 2 more months. In fact, when I look back i did the right thing.
So am I eligible for the first time home buyer credit of $8K or part of it ?
Thanks for your time.

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11
John Juarez, Agent, Fremont, CA
Mon Jan 4, 2010
Gixxersixxer,

If you read all of the responses, you can see that you have received conflicting advice here. That is the problem with asking questions in a forum such as this. While the question is real estate related, the correct answer can only come from a tax professional. If you want the correct answer, not opinions of real estate professionals, ask an expert – your tax professional.
1 vote
Barbara Van…, , Folsom, CA
Mon Jan 4, 2010
Hey Keane ~

I respectfully have to correct you about a homeowner not being eligable for the full tax credit based on taxes owed. The Q&A below comes directly from the IRS.gov website:

QUESTION
"I don’t owe taxes and/or my income is exempt from tax and I do not have a filing requirement. Do I qualify for the credit" ?

ANSWER
"The credit is fully refundable and, if you qualify as a first-time homebuyer, having tax-exempt income will not preclude eligibility. Although there are maximum income limits for qualifying first-time homebuyers, there are no minimum income criteria. Thus, someone with no taxable income who qualifies as a first-time homebuyer may file for the sole purpose of claiming the credit for a refund".

CONCLUSION
The amount of the refund is based on 10% of the purchase price and the homeowner meeting the income requirement. Not how much tax liability they have incurred.


Barbara
1 vote
Sudhir Matth…, , Fremont, CA
Mon Jan 4, 2010
Hi Fixer Sixer,
I am sending you a link from NAR - National Association of Realtors.

http://www.realtor.org/government_affairs/gapublic/homebuyer…

Hope this helps.
Good Luck
Matthew
0 votes
Keane Ng, Mortgage Broker Or Lender, Renton, WA
Mon Jan 4, 2010
Debbie and Barbara,

Thank you for the insight! I did have that one wrong. I do read and study guidelines pretty closely but missed it on this one. Wasn't my first mistake on this earth and definitely won't be my last. Thank you! I'm pretty excited to update my clients who bought and future buyers.

Here it is from the horse's mouth:

General Information
Homebuyers who purchased a home in 2008, 2009 or 2010 may be able to take advantage of the first-time homebuyer credit. The credit:

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.
The credit is claimed using Form 5405, which you file with your original or amended tax return.

Link to the IRS website citing this:

http://www.irs.gov/newsroom/article/0,,id=204671,00.html
0 votes
Debra (Debbi…, Agent, Livingston, NJ
Mon Jan 4, 2010
Keane

With all due respect, your answer is completely incorrect, and misleading. I suggest you delete it, as it might be confusing to a consumer who reads it. I think you need to read up on the credit before giving out any more advice.

As Barbara just pointed out, the credit has NOTHING to do with one's tax liablilty.

As long as they meet the income and other requirements, they qualify, whether they owe taxes or not.
The amount of the credit is 10% of the sales price of the home - capped at $8000.

If no taxes are owed, the consumer will receive a check from the government for the credit amount they earned, not to exceed $8000.
0 votes
Al Akerman, Mortgage Broker Or Lender, Lakewood, NJ
Mon Jan 4, 2010
Gixx, good for you!

I always preach about the credit only being a bonus. I hate watching people rushing into a home and paying dearly for their 8k.
0 votes
Gixxersixxer, , 94582
Mon Jan 4, 2010
Thanks for your responses.
Keane, To be precise, yeah I wrote the contract by end of Feb '09 & closed in Jun '09. I did see an increase of 6% of price within 4 months which is close to 5X $8K, which would have gone from pocket as a part 20% down, if I had waited for couple of more months. And btw some resales (3 year old) of the identical one went up by 9% after 8 months.
0 votes
Keane Ng, Mortgage Broker Or Lender, Renton, WA
Mon Jan 4, 2010
As I understand the rules of this credit, you do not qualify. Sorry! I'm glad it was worth it though. Very few would see it that way even if it were true.
0 votes
John Juarez, Agent, Fremont, CA
Mon Jan 4, 2010
I do not believe that you are eligible for the First Time Buyer Tax Credit because you are not a first time buyer as defined by the statute the authorizes the credit. Of course, check with a professional tax advisor. You may find that a professional tax advisor has a different answer.
0 votes
Anna M Brocco, Agent, Williston Park, NY
Mon Jan 4, 2010
Probably not-- technically you did not live there for the specified amount of time needed in order to qualify --however, why not consult with your tax professional for an accurate answer regarding the IRS Code. The expanded tax credit is as follows--Legislation extends the First-Time Home Buyer Tax Credit of up to $8,000 to first-time home buyers until April 30, 2010; contracts must be executed before May 1, 2010 and must close before the end of June 2010. Annual income limits raised from $75,000 to $125,000 for singles and from $150,000 to $225,000 for married couples; must be for a primary residence—check IRS Code for qualifying conditions. Credit is expanded to grant up to $6,500 to current home owners purchasing a new or existing home between November 7, 2009 and April 30, 2010; must be the next primary residence and current owners must have lived in the house for 5 consecutive years during the past 8 years. You will need an executed contract before May 1, 2010 and must close the deal before the end of June 2010. Income limits are the same as first time buyers. Credit can only be claimed for a primary residence bought for less than $800,000 and buyer must live in the house for 3 or more years after purchase or credit will need to be paid back—check IRS Code for qualifying conditions.

Anna


Anna
0 votes
Al Akerman, Mortgage Broker Or Lender, Lakewood, NJ
Mon Jan 4, 2010
Gixx, unfortunately, you don't qualify for any credit.

Please double check with your tax pro, but in order to qualify for the $8,000 first-time hombuyer's credit you couldn't have owned a home for three years prior to your purchase, which would have been June of 06.

In order to get the long-time resident $6,500 credit you would have had to own and occupy your original home for five consecutive years out of the last eight.
0 votes
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