The Tax Credit Might Be A Loan, Or Not

By
Real Estate Agent with http://www.CapeGroup.com & http://www.REindex.com 9023635

The tax incentive for buying real estate has made it out to the public.  It is a credit or a loan.  It has to be paid back, or not.  It can used in 2008, 2009, or both.  Simply put, it may or may not, you can or can not, you do or you do not, maybe.

If you didn't own a house for three years prior to the closing date of your new property, you get to claim either the credit or the loan, but not both.  You get the loan if you took ownership in 2008.  You get the credit if you took possession in 2009 before some date in November, but if you sell this property before that last day of the next thirty-six months, the government comes after you.

Possession means living in, even if you haven't closed yet.  So anyone who started in 2008 on a lease option, or renters who were already living in the property and then bought from a landlord, or buyers who got to move in, in 2008 but didn't close until 2009, are all in the 2008 category.  That would be the loan version.  Apparently.

Those who close and move in, in 2009 before November sometime, and who have not owned another property they called their primary home in the previous 3 years, get the credit.  Unless they sell the property they claim the credit for in the next 36 months.  Then Uncle Obama will knock on the door with his hand out.

But wait, there are income restrictions.  If your adjusted gross income (one of the lines on an IRS form) is above specific levels, you can't claim either the whole loan or the whole credit.  And, if you are above another level of income you get squat. Inherited property, property transferred between family members, non-citizens' purchases are also not eligible for either the loan or the credit.  

But, if you can claim the credit because you took possession in 2009 before November something, you do get to claim the credit on your 2008 taxes.  For some that would mean amending your 2008 taxes.  However, if your income went down in 2009, claiming it on the 2008 return might not maximize the dollars you can get.

See, it's simple!

Happy listing and selling!

 

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Rainmaker
329,945
Dinah Lee Griffey
Windermere Peninsula Properties - Allyn, WA
Managing Broker Windermere Peninsula Properties

I love any help my buyers or seller's buyers can get. It is all good!

Mar 21, 2009 08:48 AM #1
Rainmaker
329,945
Dinah Lee Griffey
Windermere Peninsula Properties - Allyn, WA
Managing Broker Windermere Peninsula Properties

Okay, Dumb question. but why di dmy comment's font show up so big. What did I hit last time?-Dinah Lee

Mar 21, 2009 08:50 AM #2
Rainer
5,639
Melinda Hoff
Bradley & Brown Realty - Copperopolis, CA
Keeping the Real in Realtor!

I agree Heath! It is so simple that if you ask three co-workers in your office you get three different answers. Call a few tax advisors and you will not get the same answer twice, consult  2 attorney's and you get two different answers. If you are in California there is a new home credit...more confusion! It is simple to make your clients understand why we are so confused you just have to tell them the GOVERMENT did it!

Mar 21, 2009 09:00 AM #3
Rainmaker
292,304
Home Loan Search.Online
Home Loan Search Online - Newnan, GA

Also if you claim the credit for 2009, you must live in the home as your primary residence for three years or the entire credit has to be repaid.

Mar 24, 2009 03:34 AM #4
Rainmaker
595,080
Associate Broker Falmouth MA Cape Cod Heath Coker
http://www.CapeGroup.com & http://www.REindex.com - Falmouth, MA
Heath Coker Robert Paul Properties Falmouth MA

Thanx for the comments.  I guess my attempt at humorizing this didn't work too well.  Your comments are all more serious than I intended my post to be.

Mar 24, 2009 03:53 AM #5
Rainmaker
2,518,097
Myrl Jeffcoat
GreatWest Realty - Sacramento, CA
Greater Sacramento Real Estate Agent

Heath - Very important clarification on this timely event.  In any case, it's a wonderful opportunity for some home buyers.

Mar 24, 2009 09:42 AM #6
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Rainmaker
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Associate Broker Falmouth MA Cape Cod Heath Coker

Heath Coker Robert Paul Properties Falmouth MA
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