Thursday, February 17, 2011

Remember the first time homebuyers tax credit?

I saw on Yahoo News that the folks who took the first time home buyers credit in 2008 now have to pay it back over the next 15 years. I am pretty sure that part wasn't disclosed. I think my daughter and son in law may have taken this credit. It just seems wrong for the government to dangle that in front of people and then a couple of years later tell them they have to pay it back. Did any of you take it and if so did you know you would have to pay it back later?


Homeowner Tax Breaks

Are you eligible to claim the home-buyer tax credit on your 2010 return? You won’t be able to e-file. The IRS wants you to snail-mail information with your return.

The credit is worth up to $8,000 for first-time home buyers and $6,500 for long-time homeowners who lived in their home for more than five years. Read the rules for the first-time home buyer tax credit on IRS.gov.

If you claimed the credit in 2008, you are among the unfortunate group that must pay the credit back over the next 15 years — and 2010 is the year your first bill comes due.

Also, if you claimed the home-buyer credit in 2008 or 2009 and then moved out of the house, you may have to pay back the credit. Check out Form 5405 for the details. (Did you know that doing a Google search of “Form 5405” — plug in any IRS form number — will get you the IRS page you need?)

If you’ve had a problem with so-called “corrosive drywall” in your home, the IRS may let you treat that as a casualty loss. See this IRS page for more.

But, bad news for homeowners who didn’t jump on the tax credit for energy-efficient home improvements, such as new doors and windows: That tax break got trimmed for 2011. Still you can take it for 2010 if you made the eligible energy-efficient upgrades by the end of the year.

Edited to add:
I emailed my son in law about this and he said they had bought their house later in 2009 so it didn't affect them. The lady at H&R Block said today that she had been sure that the gov. would go and change it for the ones who bought in 2008 and early 2009 but they didn't. It doesn't seem fair.


For 2009 Home Purchases
The American Recovery and Reinvestment Act of 2009 expanded the first-time home buyer credit by increasing the credit amount to $8,000 for purchases made in 2009 before Dec. 1. The Worker, Home ownership and Business Assistance Act of 2009 extended the deadline — taxpayers who had a binding contract to purchase a home before May 1, 2010, became eligible for the credit. Buyers must have closed on the home before July 1, 2010. That closing deadline was extended to Sept. 30, 2010 by the Home buyer Assistance and Improvement Act of 2010, enacted July 2, 2010. See news release 2010-80 for details.

For home purchased in 2009, the credit does not have to be paid back unless the home ceases to be the taxpayer's main residence within a three-year period following the purchase.

First-time home buyers who purchased a home in 2009 can claim the credit on either a 2008 tax return or a 2009 tax return. The credit may not be claimed before the closing date. News release 2009-27 has more information on these options.

4 comments:

Jodi said...

Jeff claimed it on his 2009 tax return and we received a letter in the mail a few months ago that said we have to live in the house for three years or pay back the money. That must have been in the fine print...

debbieo said...

Jodi,
I emailed my son in law and he said he had purchased their home a little later so it doesnt affect them. That is a relief.
I hope you can stay there long enough to not have to pay it back.

alaskadreamin said...

Debbie, we purchased our home in '08 & originally the $ was just an interest free loan we had to pay back starting with '10 tax year. We just received a letter stating we dont have to pay it back as long as we live in the house at least 3yrs. Yeah for us!! What a relief and huge blessing. Have a great day. Still waiting for your big news and new adventure. I love your blog.

debbieo said...

alaskadreamin,
I am so happy for you. Such a blessing.
We are getting much closer to being able to reveal our big news. We were hoping this week but its Thrusday already so the hope for this week is beginning to dim.
Maybe next week?
We know the Lord has a reason for this slowness, we must be patient.