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Evan
11-29-2009, 01:53 PM
SUMMARY: If you qualify, you are entitled to receive a credit for up to 10% of the purchase of a new home. There is a limit on the dollar amount of the credit, and you may be entitled to the full credit, a reduced amount of the credit, or no credit, depending on your adjusted gross income. The credit can be claimed on either your 2009 or 2010 return. (Or 2008, if you had made the purchase this year.)

FIRST TIME HOME BUYER: The first-time homebuyer credit was extended 5 months to April 30, 2010. As long as a contract is entered into by that date (and closed by June 30), you will be eligible for this $8,000 refundable credit.

To qualify, you must not have owned a primary residence for the three years prior to the date of purchase.

"SECOND TIME" HOME BUYERS: There is now a provision that allows for a "long-time resident" credit up to $6,500 if you aren't a first-time homebuyer. For this, you must have owned your principal place of residence for at least five consecutive years of the past year period ending on the date of the purchase. This is NOT for second homes, and this purchase must become your primary residence.

Qualifications for Both Credits
BEFORE NOVEMBER 7, 2009:
This credit is available only if your modified adjusted gross income is $75,000, or $150,000 if filing jointly. There is reduced if your income is between $75K-$95K or $150K-$170K if filing jointly.

AFTER NOVEMBER 7, 2009:
Your modified adjusted gross income cannot exceed $125,000 or $225,000 if filing a joint return to receive the full credit. It is proportionally reduced if you earn between $125K-$145K, or if filing jointly $225K-$245K. If your income is higher than this, you will not be eligible for the credit.

Further, after November 7th, individuals who can be claimed as a dependent are not eligible for this credit. If the home purchase price is over $800,000, no credit can be claimed. Further, a purchaser must be at least 18 years old as of the date of purchase.

FINALLY, you MUST attach a copy of the settlement sheet to your 1040 in order to claim the credit. You will also be INELIGIBLE for e-filing if you claim this credit.

In the military?
If you are in the armed forced, the qualifications are the same except it is extended one year (contract by April 30, 2011, and settlement by June 30, 2011).

huggytree
11-29-2009, 05:54 PM
i keep hearing about how Obama is going to take away the $1,500 energy credit to pay for 35,000 troops in Afganistan...I keep hearing it and assume its a rumor to get people to jump on energy efficiency this year instead of waiting until spring 2010.

im getting a new patio door and the rumor was enough to get me to pay for it early and claim it for 2009...i take no chances...

i just had my first customer who actually qualified for one of the home buyer rebates... i dont know anyone in my personal life who bought a new house because of it....its a sweetener, but not a decision maker....finally there arent many houses for sale anymore in my area.....they used to be everywhere...supply has definately shrunk

vangogh
11-29-2009, 10:19 PM
Evan when I bought my condo I qualified for a $7500 interest free loan. The $8000 tax credit kicked in a couple months later. Any idea if my loan will end up becoming a credit? If not oh well. It certainly wasn't why I bought my place and it's not all that difficult to pay back. Still a credit would be nicer.

Evan
11-29-2009, 11:19 PM
I haven't heard that of that rumor, huggytree, but I find it hard to believe that Obama would eliminate an energy credit due to it's importance during his campaign.

Regarding the credit, most of the people I have filed a return claiming this credit certainly saw it as a great incentive to buy. Rhode Island has the second highest unemployment rate, behind Michigan, and we have a lot of homes available. For many, it provided a nice chunk of change to make improvements. For others, it provided them a nice little cushion to make payments with.

Evan
11-29-2009, 11:36 PM
Evan when I bought my condo I qualified for a $7500 interest free loan. The $8000 tax credit kicked in a couple months later. Any idea if my loan will end up becoming a credit? If not oh well. It certainly wasn't why I bought my place and it's not all that difficult to pay back. Still a credit would be nicer.

I haven't heard anything about it, but I am skeptical they would change it.

The problem with the 15 year interest-free loan is that most people will probably pay it back sooner than later. Inevitably, a lot of young couples may have taken advantage of it under their current budget. Problem is, they may decide to raise a family and the home may no longer meet their needs. If you have a gain, any profits need to first pay off the loan. If you sell it for a loss, they will forgive your loan. But loan forgiveness is considered income to you and needs to be reported on your 1040.

Other complications (if married)? You or your spouse dies. You get divorced (whether it is transferred to one partner or another). Decide to use another home as your primary residence.

Can also be murky if you are unmarried, but buy property jointly (e.g. same-sex partner), and the above also happens. It also depends on who claimed the credit to begin with.

My only advice is if you did get the $7,500 credit is to make sure you're having that $500 due annually withheld from your paycheck, or include that in your estimated tax payment.

KristineS
11-30-2009, 09:56 AM
Thanks for the advice Evan. I did the same thing as Vangogh. Dang, if I'd only waited a year, I could have gotten the credit and not had to pay it back.

Oh well.

Evan
11-30-2009, 11:34 PM
Thanks for the advice Evan. I did the same thing as Vangogh. Dang, if I'd only waited a year, I could have gotten the credit and not had to pay it back.

Oh well.

I'm sure most of the $7,500 HBC people are kicking themselves for it. The reason it was made a true credit, and not a loan, was because telling people they had to repay it wasn't enough to stimulate any buying. Then they increased it, and eliminated that provision.

Good news is your $500 payments begin only in 2010.

This year, I was looking for a new (to me) car. Brand new (first owner), and I could have taken the sales tax as part of the standard deduction. But I'm not the first owner (drats!). My parents, on the other hand, did buy a brand new car.

Then again, at my "young age", car insurance would have been through the roof. I don't want to lose my good student discount! :)

vangogh
12-02-2009, 10:53 AM
Evan I did take the loan. I didn't my place because of any potential credit. I bought it because I was ready to buy and knew the timing was good for buyers (lower price and lower interest rate). The first I realized the loan existed was when filling out my taxes last year. I was annoyed that for the difference in about 2 months the loan would have been a credit, but realistically it made sense to take what was an interest free loan.

It also looked to me like you may not have to pay the entire thing back based on if and when you resell. Don't hold me to that though.

I'm hoping they do change the loan to a credit, but I'm not expecting it. $500 a year isn't a lot to pay back for what was an interest free loan.

KristineS
12-02-2009, 04:23 PM
I have to agree. I was probably going to buy anyway, because the price and time was right. The homebuyers credit did factor into my decision a little, but not a lot. It certainly wasn't what tipped me over the edge when it came to deciding to buy.

An interest free loan was helpful this year, so I can't complain. It would be nice if the loan were changed to a credit, but I can live with it either way.

huggytree
12-02-2009, 04:50 PM
Evan,

The cash for clunkers was supposed to go on for a long time too...wasnt it a year? and it was done in a month....

the rumor says there is similar language in the house bill...something about when $ runs out....

vangogh
12-02-2009, 06:13 PM
The cash for clunkers had a monetary limit. I think originally they expected it to last 3 months, but so many people took advantage of it right away that it was done after a month.

Evan
12-02-2009, 07:48 PM
Cash for clunkers DID have a monetary limit, and they didn't think it'd be as popular as it was. It certainly did get a lot of people to buy!

You can also couple that benefit with the sales tax write-off if you bought a new car.

I am actually excited for the upcoming tax season. A lot of people that did participate in these programs will have nice refunds.

vangogh
12-02-2009, 11:04 PM
I would have liked to. My truck qualified. I'm about a year or so away from buying something new. I'm hoping they decide to do cash for clunkers again next year, but I'm not counting on it.

Evan
12-03-2009, 12:49 AM
I would have liked to. My truck qualified. I'm about a year or so away from buying something new. I'm hoping they decide to do cash for clunkers again next year, but I'm not counting on it.

I doubt it. Suddenly things aren't declining AS MUCH, and people think we are fully recovered. I think some of these programs moved us in that direction.

I'd like to see a bit more tax incentives for higher education and retirement accounts. At this point, encouraging people to continue with school is important, in addition to saving for retirement.

vangogh
12-03-2009, 11:31 AM
Yeah, I'm not expecting to see the program again. Just hoping since I'll likely buy a new truck or car before too long. Wishful thinking on my part.