"New" First Time Home Buyers Credit

[taxtrio]

Ok Obama signed the new law yesterday... Now what...

The new housing credit is really a credit. For 2009 they don't have to pay it back. Good!

It's now 8,000.00 instead of 7,500.00... also good.

Question is, what about people that have already filed their returns for 2008 but bought in 2009 and claimed the 7500.00 old credit. Will the IRS send them more money (500.00 if they qualify?) Will they have to ammend their 2008 return to get the extra 500.00? Or will they have to wait till 2009 return to get that.

Will we be getting an updated form for 2008 return that show the new credit as well as the old one?

I had a potential new client call this a.m. asking if she could file for the credit this week even though she won't close on the purchase of the new home until March 5, 2009. ??

The more I think about this thing, the more questions I have!

Taxtrio

[TAXBILLY]

This is the "old law" from the IRS website. The "new law" has not been posted yet.

http://www.irs.gov/newsroom/article/0,,id=187935,00.html

Info on the "new law". Effective for Jan 1, 2009 - Nov 30, 2009 only and will not affect 2008 returns or buys.

http://tax.cchgroup.com/Legislation/House-...ry-Act-2009.pdf

taxbilly

[BulldogTom]

Just to clarify, the new credit is not available on 2008 returns?

I heard it was going to be available. Don't remember where, but I was under the impression that this credit would be available to claim on 2008 returns.

I have come to hate the word "stimulus".

Tom

Lodi, CA

[taxbrewster]

Agreed, I was holding returns until this was finalized. I thought, if purchased in 2009 you could claim it on 2008 return, that really defeats the purpose of a "stimulus", oh, wait for a year and you can have your $$$.

[jainen]

>>new credit is not available on 2008 returns? <<

For homes actually purchased in 2008, the credit is $7500 and recapture applies. For homes bought between 1/1/09 and 7/1/09, the credit is $8000 and recapture is generally waived even if the home is treated as being bought on 12/31/08.

[fredazcpa]

Janien:

do you have a souce for the information you talked about?

thanks

[Maribeth]

>>new credit is not available on 2008 returns? <<

For homes actually purchased in 2008, the credit is $7500 and recapture applies. For homes bought between 1/1/09 and 7/1/09, the credit is $8000 and recapture is generally waived even if the home is treated as being bought on 12/31/08.

I am a bit confused. The CCH tax briefing on the bill says that the $8000 credit is avalable for first-time homebuyers whose homes are purchased after December 31, 2008 and through November 30, 2009 (not 7/1/09). Therefore, the $8000 credit would apply only to 2009 returns. If you elect to treat a home purchase from 1/1/09 through 7/1/09 on the 2008 return, would not it fall under the "old" rules, $7500 and recapture?

Maribeth

[TAXBILLY]

http://www.federalhousingtaxcredit.com/2009/faq.php

taxbilly

[MDCPA]

I would agree with Jainen, with no recapture if taxpayer stays in home for at least 36 months - CCH cite is same as taxbilly's .

[jainen]

>>do you have a source for the information you talked about?<<

I do. Will you except the actual wording of the tax code? Section 36(g) now reads, "In the case of a purchase of a principal residence after December 31, 2008, and before December 1, 2009, a taxpayer may elect to treat such purchase as made on December 31, 2008, for purposes of this section (other than subsections (c ) and (f)(4)(D) ). "

Subsection (f)(4)(D) is the "Waiver of recapture for purchases in 2009." In other words, you can treat it as purchased on 12/31/08 except for the waiver of recapture, which continues to apply because the property was actually purchased in 2009. (It looks like I was wrong about July 1--you can put ANY purchase January through November 2009 on the 2008 return, taking a credit for the full $8000 as provided in current law and waiving recapture accordingly.)

[fredazcpa]

>>do you have a source for the information you talked about?<<

I do. Will you except the actual wording of the tax code? Section 36(g) now reads, "In the case of a purchase of a principal residence after December 31, 2008, and before December 1, 2009, a taxpayer may elect to treat such purchase as made on December 31, 2008, for purposes of this section (other than subsections (c ) and (f)(4)(D) ). "

Subsection (f)(4)(D) is the "Waiver of recapture for purchases in 2009." In other words, you can treat it as purchased on 12/31/08 except for the waiver of recapture, which continues to apply because the property was actually purchased in 2009. (It looks like I was wrong about July 1--you can put ANY purchase January through November 2009 on the 2008 return, taking a credit for the full $8000 as provided in current law and waiving recapture accordingly.)

Jainen;

I always like code and reg, it seems you always have that information at your finger tips, thanks for the infomattion, now just need to see how fast the IRS can get the form 5405 changed to agree with the law

[Maribeth]

>>do you have a source for the information you talked about?<<

I do. Will you except the actual wording of the tax code? Section 36(g) now reads, "In the case of a purchase of a principal residence after December 31, 2008, and before December 1, 2009, a taxpayer may elect to treat such purchase as made on December 31, 2008, for purposes of this section (other than subsections (c ) and (f)(4)(D) ). "

Subsection (f)(4)(D) is the "Waiver of recapture for purchases in 2009." In other words, you can treat it as purchased on 12/31/08 except for the waiver of recapture, which continues to apply because the property was actually purchased in 2009. (It looks like I was wrong about July 1--you can put ANY purchase January through November 2009 on the 2008 return, taking a credit for the full $8000 as provided in current law and waiving recapture accordingly.)

Okay, I think I have it: 2008 purchase, 7500, recapture; 2009 purchase, 8000, no capture; election to treat 2009 purchase as 12/31/08 without eliminating 8000 and no recapture.

Jainen, in your opinion, do you believe that the 2008 law will be revised to eliminate the 15 year payback?

Maribeth

[BulldogTom]

Sweet. So we are just waiting for an IRS announcement on how to make the claim and an update on our software? Or do you think it is wise to override the amount on the current form and let it fly?

Tom

Lodi, CA

[jainen]

>>do you believe that the 2008 law will be revised to eliminate the 15 year payback?<<

President Obama signed the revision on Tuesday. It says what it says. no more or less.

[taxtrio]

Thanks for all the comments! Nice to know I'm not the only one with questions.

Taxtrio

[kcjenkins]

An important new fact on this, folks. Per Notice 2009-12, IRB 2009-6 page 446, credit may be allocated between unmarried "owners" in any reasonable manner.

[Daune/CA]

An important new fact on this, folks. Per Notice 2009-12, IRB 2009-6 page 446, credit may be allocated between unmarried "owners" in any reasonable manner.

Question?

Can a married woman that files MFS, because husband has taxes due for a period in which they were separated, claim the credit on a property that she is the only owner listed? Purchase was in 2008.

[Hanover Jim]

IRS' website has a new version of 5405(First Time Home Buyers) . It includes the newly included amount of $8000 for home bought in 2009. ATX current version only includes the $7500 credit.

How is everyone handling this situation? Are you overiding figures on our current form or waiting until we get an updated 5405?

Jim

[jainen]

>>How is everyone handling this situation?<<

Are you kidding? I'm not handling it at all. I'll be dumfounded if anyone tells me they bought a house last year, let alone someone who could never manage it previously.

I put this law in the same category as the zero percent bracket for capital gains--political grandstanding. There ain't no capital gains, and there ain't no first time homebuyers.

[TAXBILLY]

IRS' website has a new version of 5405(First Time Home Buyers) . It includes the newly included amount of $8000 for home bought in 2009. ATX current version only includes the $7500 credit.

How is everyone handling this situation? Are you overiding figures on our current form or waiting until we get an updated 5405?

Jim

I think it's best to wait for the new form. I would think ATX would be able to program it rather quickly.

taxbilly

[Daune/CA]

Question?

Can a married woman that files MFS, because husband has taxes due for a period in which they were separated, claim the credit on a property that she is the only owner listed? Purchase was in 2008.

Can someone please respond to my question? Thank you!

[David1980]

Can someone please respond to my question? Thank you!

Appears to be a yes, but reduced by 50%.

http://www.irs.gov/pub/irs-pdf/f5405.pdf

Generally, the credit is the smaller of:

c $7,500 ($8,000 if you purchased your home in 2009), but only half of that amount if married

filing separately, or

c 10% of the pur chase price of the home.

So even though she's the only owner it still is maxxed out at $4,000 for 2009 or $3,750 for 2008.

[Catherine]

<snip> There ain't no capital gains, and there ain't no first time homebuyers.

Wrong on both counts -- I've had one new homebuyer, and several people with capital gains. Small gains -- but gains nevertheless.

They are out there. But there sure aren't very _many_ of them.

Catherine

[Janitor Bob]

I think it's best to wait for the new form. I would think ATX would be able to program it rather quickly.

taxbilly

Wow.....so my client that purchased their first home in 2008, will have their $7500 recaptured...but had they waited 5 months and purchaed in 2009, they would have received $8000 with no re-capture?!

That doesn't seem right at all

[OldJack]

>>That doesn't seem right at all<<

And it doesn't seem right that you are paying tax at a higher tax bracket than I am either. Nothing is fair with the government. They like to use the word "targeted" when they mean discriminate.