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Homebuyer Tax Credit – Some Homeowners To Begin Repayment

By
Mortgage and Lending with Strategic Mortgage NMLS#160440

The homebuyer tax credit is now come and gone, but in the time it was here it went through multiple changes to the terms of the actual credit and because of that, some homeowners will need to soon begin repayment of the credit. Almost half of all homeowners who claimed the first-time homebuyer tax credit on their 2009 tax returns will have to repay the government.

A recent report from the Inspector General for Tax Administration, estimates that about 950,000 of the nearly 1.8 million homeowners who claimed the tax credit on their 2009 tax returns will have to begin to repay the credit on their 2010 tax returns.

The difference comes because homebuyers were eligible for two different credits, depending on when their homes were purchased.

Those who bought properties during 2008 were to deduct, dollar for dollar, up to 10% of the home's purchase price or $7,500, whichever was less. However, this was really an interest free loan that had to repaid with annual taxes over the next 15 years.

However, homeowners who bought in 2009 and 2010 and took advantage of the credit, instead received a $8,000 tax credit that did not have to be repaid.

The recently released report however states that 73,000 claims, more than 4% of the 1.8 million homebuyers who received the credit, had incorrect purchase dates recorded by the IRS.

While over 1,300 claims that came in were from supposed buyers who were already deceased based on the social security numbers.

This means there is stll some sorting out to do on the IRS side for credits, but as we approach the end of the year and tax season, it is important to know whether you will or will not have to begin to repay your home buyer tax credit. If you purchased in 2008, expect to have the first $500 deducted from your tax refund or added to your tax liability. If you purchased in 2009 or 2010 then you will not have to pay anything back.

For more information on current programs for existing and potential homeowners, please contact Bill Kamboukos of Strategic Mortgage at (480) 219-3682 or by emailing: info@strategicmtgaz.com or online at www.strategicmtgaz.com

Comments (1)

Jo Olson
HOMEFRONT Realty - Kettle Falls, WA
Retired - HOMEFRONT Realty @ LAKE Roosevelt

I still can't believe that when the new tax credit was approved it didn't address the first tax credit and become retroactive to replace the payback credit.  It is no wonder that buyers are leery in this current day market. 

Sep 23, 2010 05:25 AM