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First Time Home Buyers: Avoid Tax Fraud When Collecting $8,000 Stimulus Credit

Earlier this year, the Economic Stimulus Plan, that included a $8,000 tax credit for first-time home buyers, was approved.

Below is what Central Florida first-time home buyers who are considering purchasing a home need to know about the 2009 Tax Credit:

The approved amount is $8,000, or 10% of the purchase price, up to a maximum of the $8,000
It is available for home purchases made between January 1, 2009 thru November 30, 2009
There is NO repayment requirement
There is a 3-year recapture if the home is sold within that time period, unless exempt according to the rules
The money is available for principal residences only (owner occupied)
To qualify, the Buyer must be a first-time home buyer, which is defined as a purchaser (and purchaser's spouse) who has not owned a principal residence in the three years previous to purchase. Owning a second home(s) or an investment property(s) does not disqualify a person as long as the principal residence rule is intact
There are income limits. To receive full credit, the maximum AGI (adjusted gross income) for individuals is $75,000 and for joint returns, it's $150,000
The property is not the qualifier, the Buyer is. Simply put, the Buyer can purchase a new home, a resale, a short sale, a foreclosure, a condo, a townhome or a luxury estate in any neighborhood, city or state and still get the credit.
It is an actual tax CREDIT~ NOT a tax DEDUCTION! As such, this is a dollar-for-dollar tax REDUCTION, which means that if the Buyer owes no taxes, they could actually get a refund check in the mail for the full $8,000
The property must be purchased BEFORE the tax credit is taken. While it may be tempting to file for the credit before actually closing on the house, beware, doing so is considered tax fraud.
Should the Buyer purchase a home after filing their taxes, they can simply amend their tax return once they close on the property.

If you are a first-time home buyer, stop thinking about purchasing a home and start acting!! Not only is inventory at an all time high, but interest rates are low, sellers are motivated and the government is GIVING YOU $8,000!!

As a full-time Real Estate agent in Seminole & Orange County, I have guided many first-time home buyers through the purchase process. If you have questions about the tax credit, getting qualified for a loan or how to find the right property for you and your budget call or text me at (321) 377-0157 or visit my website here.

LaShawn Norden, PA, REALTOR, RE/MAX Central Realty, (321) 377-0157, LaShawn@LaShawnNorden.com, www.LaShawnNorden.com

Posted by LaShawn Norden, REALTOR, (321) 377-0157 Your Real Estate Advocate in Florida on 02/27/2009 05:56 PM

Comments (8)

Tax Credit for 1st Time Homebuyers in the Home Buying Channel

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8 Comments on First Time Home Buyers: Avoid Tax Fraud When Collecting $8,000 Stimulus Credit

FEB

I've written a post about this before. Your information is right on. Great post.

Very nice summmary of the $8000 Tax Credit. I really hadn't considered that someone would file before purchasing, but I'm sure that some will try.

FEB

this a another great explanation of the tax credit! I am so happy to see everyone blogging about it in their areas!

MAR

Simon~Thanks for stopping by and commenting!

Erik~Thank you for the compliment...and yes, I've know of three cases where the Buyer filed for the credit and put TBD in the address line...and to make matters worse, they got the check!! Yikes!

Leesa~I agree...we all need to be promoting this great opportunity to Buyers. Hope you are doing well!

MAR

LaShawn:

One important clarification to your summary: 2009 first time buyers can claim the credit on their 2008 tax return (original or amended). They do not have to wait to claim the credit on their 2009 return.

MAR

Lashawn;

I am told that upon the finalization of a divorce, both parties would be considered 1st time home buyers. I was told this in regards to some local down-payment asistance programs, do you know if this rule will apply to the $8K tax credit?

Jackie,

I do not know the answer to that question. I'd be happy to ask Doug, who is a Certified Financial Planner (commented above you!) that I refer those questions to...I'll ask him to respond to this post so that others who might have the same question will get the answer! Thanks for asking!

MAR

Jackie:

Internal Revenue Code Section 36 (c) (1) defines a first-time home buyer as follows:

A "first-time homebuyer" is any individual (and spouse if married) who had no present ownership interest in a qualifying principal residence during the 3-year period ending on the date of purchase of the principal residence for which a first-time homebuyer credit is being claimed.

There is no special provision for divorced spouses. The key is "owership interest". It is possible for a divorced individual who's former spouse owned a home to claim the credit if that individual had no ownership interest in the home (ie their name was not on the deed).

There certainly has been a lot of mis-information regarding this tax credit. I would encourage anyone who is considering using this credit to contact a qualified tax professional for assistance.

Doug, CFP

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