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$8,000 Credit for Home Buyer in New Stimulus Plan

Recent news reports that the initial review of the new stimulus plan has indeed cut out the proposed $15,000 tax credit for home buyers. But, apparently, there is a new proposal in the new stimulus plan for an $8,000 tax credit.

There aren't a lot of details as of yet, but this tax credit would be for first-time home buyers only (not any home buyer, as was with the $15K plan) and it would be an actual tax credit. In others words, it will not have to be repaid.

At this time, it's unclear exactly when the tax credit would take effect. It could be at the signing (and President Obama wants to sign by Monday at the latest), or as it's been rumored, it would count toward anything bought as of Jan. 1st, 2009. The tax credit would run until either July 31st or Aug 31st (again, details vary here). You'd have to purchase a home by that time in order to qualify.

There has been no word at this time whether or not this new credit, if passed, will cancel the previous $7,500 1st time home buyer tax incentive. The current $7,500 plan must be repaid over a period of years.

2/21/09 UPDATE: Here's a link to my newest post on the subject: $8,000 Home Buyer's Tax Credit: Things to Know

__________________________________________

Roger Johnson is a Realtor with CENTURY 21 American Homes in Hickory, NC.

I service the Catawba and surrounding counties, and the Hickory, Newton, Conover, Taylorsville, Claremont, Statesville and Charlotte, NC real estate markets.

Visit us on the web at: www.HickoryNCHomes.com

You can contact me via Email or give me a call at 828-381-9245 or 828-568-2121 ext 310

Posted by Roger Johnson, Realtor - Hickory NC Real Estate on 02/12/2009 12:48 PM

Comments (27)

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15000 home buying tax credit, 8000 home buying tax credit, first time home buyers, first time home buyer tax credit, stimulus bill

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27 Comments on $8,000 Credit for Home Buyer in New Stimulus Plan

FEB

2009

Does anyone know if the proposed $8000. credit would be able to be applied to tax returns filed for 2008, if the home was purchased, for example, in June-July of this year. Is it something that would make it worthwhile to file taxes late?, or will it have to be used when we file for 2009?

Marnee, if it follows the same as the current credit, you can apply it to your tax return as long as it was purchased BEFORE your filing. So if you were planning on buying in June, if you waited to file, you could include it. NOTE: That's what my CPA told me. You need to consult with your tax professional to be sure (that's the legal disclaimer, part!)

Thanks Roger,

I understand that everything is still anybody's guess at this point. My son is looking at buying his first home (Washington State) and it would probably make a difference in the amount he puts down, if he knows he'll build his savings back up right away. He has no problem filing for an extension, so that may end up being the plan. Thanks again

Wouldn't $15k have been wonderful. Almost overnight the market would have accelerated.

We will see what really happens?

Hi,

Yes $15,000 would have been awesome...and the economy would have soared so are they really wanting to spur the economy or not?

tinker

FEB

2009

Things are still in the works for the stimulus plan. As I stated in an earlier post on the subject, all these things are being reported as added, deleted, adjusted from what I consider solid news sources, but none of the details are coming directly from Washington (which is a whole other post in and of itself, which Jim Crawford has already done quite nicely, read it HERE). Things may, and likely will, change. That said, it's very unlikely the the tax credit will be added back IN. History shows that that rarely happens.

Personally, I think the tax credit may have helped sales a bit, especially the fact that it was for ALL buyers (exception: investors) vs. 1st time, but I'm not sure if it was going to have the impact that many were hoping for. I think that efforts to force down the interest rate AND restructure the foreclosure/loan modification systems that are currently in place would do more, faster than a tax credit.

Thanks for the comments, Michael and Tinker

The conference report is now available on www.cspan.org

The conference agreement extends the existing homebuyer credit for qualifying home purchases before Dec 1,2009. The maximum credit is increased to $8000 and waives the repayment of the credit for qualifying home purchases Jan 1, 2009-Nov 30, 2009. A 2009 purchase may be treated as occurring on Dec 31, 2008. If home is disposed of and ceases to be the principal residence within 36 months of purchase the present rules for repayment apply. The effective date: the provision applies to residences purchased after 31, 2008.

Yes the $15,000 would have been nice, but from my understanding it would have only wiped away our tax liability and no actual refund would have been involved.

With the $8,000 it sounds like there will actually be a refund check sent directly from the IRS which I would almost rather have anyway.

My wife and I are about to buy our very first home, and I'm sure not going to complain about an additional $8,000 to do so!

Does this tax credit only apply to existing homes?? How does this apply to new construction?? I'm looking to start in a couple months but this is not my first home.

FEB

2009

Do you think this $8000.00 or any other TAX CREDIT will be available for a new home owner to purchase a home in 2010? This would be more realistic for people who are still trying to save for a new 1st time home, to be able to use the credit when filing in 2010 would be great for some!

Mike, I have the same question.

I am building a house that will be completed in July 2009. I had purchased one home prior (7 years ago) but was renting it for the last 3 years.

How is this treated? It is not my first home but I've heard rumor that if you haven't owned a home for the past 3 years, this can be treated as your first new home. Anyone know if this is the case?

Also, my wife has never purchased a home, would she be able to get the credit now that we're married?

Thanks for the update, 1st Time,

Adam, the $15K credit was proposed to be an actual CREDIT, which would have been a check for $15K minus any taxes owed. They chose to reduce this credit to $8K and only to 1st time home buyers in an attempt to reduce the cost of the stimulus package. And yes, the $8K is still a real credit, that does NOT have to be repaid now, as long as you stay there 3 years. Good luck on your new purchase. Let me know if I can be of any help.

Mike, as I understand it, the tax would apply to any home purchased by a 1st time homebuyer. You can check with your tax professional, but I believe that in order to qualify as a "1st time homebuyer" you can not have owned a home for at least 2 years.

Martinez, this tax credit runs only until the end of Nov. 2009. Hard to tell what the future will be from there.

Future, the best advice that I can give you is to contact your tax professional about it. It may be possible for you to qualify if you haven't actually owned the home for the last 2 or 3 years (unclear as to which it is). Good luck

I just purchased my 1st home less than 6 months ago. So I guess I'm not getting anything. Could I possibly even get a credit on my Tax Return this year(for 2008)?

John, you'll have to talk with your tax pro in order to be sure, but it depends on when you purchased. If you qualified for the original $7500 tax incentive, then this new tax credit trumps that one (in other words, you'll get the new credit, not the original one).

FEB

2009

My son, a first time homebuyer, and I, purchased a home and closed by mail. The HUD statement dates to 12/30/2008, but the documents were actually signed on the 31st, and the Deed was recorded on the 1/2/2009. Does he qualify for the $8,000 credit?

As always, Mindy, you should consult with your tax professional just to be sure. Is it's written, you qualify if you've bought a property anytime in 2009. Legally, the property did not become your son's until 1/2/2009 (when the deed was recorded/changed), so he should qualify for it.

FEB

2009

This will have almost no effect in the San Francisco Bay Area or metropoltian areas of California. If you are eligible for the tax credit based on the income level caps, you don't make enough to afford a house.

That's true, Doug, which is just one of the complaints of this tax credit.

FEB

2009

Hmm... so, if two people (unmarried, neither having owned before) want to go in together and buy a property, would each be eligible for the amount? If it can only be one of them, how would they pick which one received the credit? Or would each expect to receive 4k? Or would it depend on the purchase price of the property, perhaps (if total price of property is 160k then each could receive 8k back)? I would appreciate your input if you understand how it may work in that case.

Arty,

I'm not sure whether the eligibility will be the same for the $8,000 as the previous tax credit of $7,500, but if you go to http://www.irs.gov/pub/irs-drop/n-09-12.pdf, you'll be able to read what examples for non-married persons who co-own a house and want to take the $7,500 credit. The examples spelled out in this document are very throrough on different situations, one of which may apply to you,,,and then hope it is the same for the $8,000.

FEB

2009

Arty The $8K credit is up to $8K or 10% of the purchase price of the home. There are income limits to qualify and anything above those income limits will begin to phase out of the credit. Two unmarried, first time home buyers buying ONE house will not each get $8K credit. Not exactly sure how they would determine who gets the credit (a question for your tax pro and/or your loan officer), but my guess would be whichever is better qualified to receive it.

As Mindy stated, the $7,500 and $8K are different, but reading about the $7,500 may help you. Here is the link that Mindy gave N-09-12.pdf Just click and go. Thanks Mindy.

i have a home well be be ale to get a tax cut to do were we had to fill chapter 13 due to were the bank was try to forclose on our house

Connie, this tax credit is only for first time home buyers. In your situation, I'd try to talk with your attorney and or tax professional to see what help is there for you. Good luck.

FEB

2009

I've been reading some of these, and im not sure I fully understand what is going on. Are you saying that if i went out next month and bought a house (my first house) and for example it coast $40,000 (which is probably the average around my small town) I would really only be buying it for $32,000??!!?? Would i just do the loan for the full amount of 40K and then i'd recieve a check for $8,000 ?!?

FEB

2009

Jimmy, the credit is 10% of the purchase price up to $8K. So, if you purchased a $40K home, you'd qualify for a $4K tax credit. You apply for the credit when you fill out your tax return, and you'll get your $4K (assuming you owe no taxes) like you would get your normal tax refund check. You can also check out my latest post on the subject for more information: $8,000 Home Buyer's Tax Credit: Things to Know

JUL

2009

So, when if ever are we going to have to pay back this 8k?

V/R

William G.

William,

Currently, this is a true credit, meaning that as long as you meet the requirements, there is no repayment. You can click on the link on the update post above to learn about the specifics. The only requirements AFTER you buy is the you live in the home for at least 3 years.

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