Saturday, March 21, 2009
First Time Home Buyer Tax Credit
So, get this... The Gov'ment had originally passed a bill that let first time home buyers claim a $7500 tax credit if they wanted. It turns out through that this is not really a tax credit but is in fact a 15 years interest free loan to be paid back by the government taking $500 a year out of your tax return. Also, if you moved before the loan was paid back, you would have to pay back the remainder of the loan immediately. Because of this, we decided that we did not want the the money if we were to buy a house this year.
When they just passed this new stimulas bill, the rules changed. Now you can get $8000 instead of $7500 and you don't have to pay it back. Click below to check it out!
How is this home buyer tax credit different from the tax credit that Congress enacted in July of 2008?
The most significant difference is that this tax credit does not have to be repaid. Because it had to be repaid, the previous "credit" was essentially an interest-free loan. This tax incentive is a true tax credit. However, home buyers must use the residence as a principal residence for at least three years or face recapture of the tax credit amount. Certain exceptions apply.
With the new rules, I think we will be asking for the credit if this house goes through. Because we have already filed, we will submit a 1040x and 5405 to the IRS and claim the credit this year instead of waiting till we file our 2009 taxes.