A report recently released by CNN Money states that the stimulus bill that passed the House of Representative contained a provision which seeks to amend the terms of “Housing and Recovery Act of 2008″ by, in essence, forgiving the $7,500 tax credit. The tax credit is actually an interest free loan, which is to be paid back over a 15 year period, but if the proposed provision passes the Senate, as well, then the tax credit would no longer be an interest free loan, but an actual tax credit. This would be great news to those who were able to take advantage of the provision.
One big question that I have is how this proposed provision will be affected by the new proposed provision, which will possibly increase the $7,500 limit to $15,000. If the new legislation offers $15,000 that does not need to be paid back, then I see a pretty strong incentive to purchase a home.
As the story continues to develop, I will be sure to update the blog. Be sure to check my previous entries on this topic by clicking on the Home Buyer Tax Credit Category on the side panel of the blog.
Joseph Griffin
February 8, 2009 at 12:14 pm |
My fiance and I are looking to purchase a home in the next couple of months. We would like to claim the credit on our taxes now, but the form requires an address and date of closing. I am wondering if we can file with an address of a potential house and date, and then amend the return later, and if there are any penalties for doing this. We need the money for the downpayment, so filing after the purchase would be pointless. Thanks!
February 9, 2009 at 10:49 am |
Alicia,
No, I am afraid that you cannot do this. You must first acquire the home before you can qualify. If you fill out the form as you suggest, I am fairly certain you would be violating the law. I understand the need for the down payment, but I am afraid that the credit could not be used in this manner. Joe
February 9, 2009 at 2:18 pm |
Can you explain the “sunset” provision in the bill that replaces the $7500 for $15000. No one really seems to know what this means…
February 9, 2009 at 2:35 pm |
The term refers to the fact that the enactment of the new bill will terminate the $7,500 home buyer tax credit. This means that those people who purchase a home from Jan 1, 2009 to June 30, 2009 the applicable credit will not be the 7,500, but will be the 15,000 tax credit. However, those who purchased a home in 2008 and qualified for the 7,500 tax credit, who have yet to file their taxes, will still be eligible to receive the $7,500 tax credit. Where I am uncertain about, however, is how those people who purchase a home in 2009 and received the 7,500 on their 2008 taxes will be handled. Will they then be eligible to amend their tax return and receive the additional 7,500 tax credit, or will that option not be available. This is my understanding, but I am not an attorney, so I am sure that an attorney’s answer will be nuanced than mine. Joe
February 10, 2009 at 2:25 am |
So if they forgive the 7500 credit, what will be the time frame….Is it houses bought between april 2008 to july 2009 or Jan 1, 2009 to dec 31, 2009?
February 18, 2009 at 12:22 am |
Harry,
Please read my article that I will post on Wednesday morning of this week about the new bill and how it deals with the $7,500 tax credit. Joe
February 11, 2009 at 11:18 am |
Hi Joe,
Sort of relating to Alicia’s comment, my fiance and I are scheduled to close in 3 weeks (March 4th). We can’t apply for the credit until we ACTUALLY close on the house? We want to use the money for some updates, but then are worried that if we ammend our (already filed) 2008 retun to get the $7,500 we will lose out on the remaining $7,500. Should we just wait to see if they pass the $15,000 or try to ammend the ammended for the other $7,500? Thanks for your advice!
February 18, 2009 at 12:21 am |
Lindsey,
You cannot apply for the credit until you close on the home, otherwise you will not have the necessary information to file the form. As I am sure you know, only $8,000 is going to be available for qualifying home buyers. Joe
February 11, 2009 at 3:57 pm |
Will those that purchased a home in December 2008 that got the $7500 have to still pay back the $7500 over the next 15 years or are they going to forgive the repayment?
February 18, 2009 at 12:08 am |
Mark,
As soon as I know the answer, I will post an article. Joe
February 12, 2009 at 2:52 pm |
Will those that purchased a home in December 2008 that got the $7500 have to still pay back the $7500 over the next 15 years or are they going to forgive the repayment? Thanks!!
February 18, 2009 at 12:07 am |
Mark,
I am currently reading the stimulus bill, as soon as I know whether or not they will be forgiving the $7,500, I will post an article. Joe
February 13, 2009 at 12:55 pm |
So if you bought a house on December 31st, 2008 and this 15,000 thing passes would you only be eligible for the 7500? Also, would that 7500 now be forgiven?
Thanks!
February 18, 2009 at 12:06 am |
Tom,
Unfortunately, you will not qualify for the $8,000 tax credit, but for the $7,500 tax credit. I’m currently reading the stimulus bill to see whether or not they are forgiving the $7,500. Joe
February 13, 2009 at 5:51 pm |
I purchased a home and closed in July of 08 and want to take advantage of the tax credit. A big issue I have is that if I do take the credit and the revision doesn’t pass, I will have to pay the credit back. If I don’t take advantage and the revision does pass, I’m up the creek without a paddle. I am holding off on doing my taxes until I know for sure what I want to do, any suggestion?
Thanks!
February 18, 2009 at 12:05 am |
Greg,
If you purchased the home in July of 2008, then you can only qualify for the $7,500 tax credit. I am reading the bill now to see whether or not you will have to pay it back. Check back for a post in the next day or so. Joe
February 15, 2009 at 7:59 pm |
My question is for those who purchased their homes in April 2008 – Dec 2008 will they qualify for the $15000 Tax Credit since the law then says that between April 2008- July 1 2009 the tax credit will be $7500 now we hear another version saying from Jan 2009-Dec 2009 is $8000 please can you clearify
February 18, 2009 at 12:04 am |
Olu,
You probably know by now, but the bill included an $8,000 tax credit, not the $15,000 that was first introduced. It only applies to homes purchased in 2009, not those purchased in 2008. Those who purchased homes in 2008 could still qualify for the original $7,500 tax credit. Joe
February 16, 2009 at 5:08 pm |
I purchased my first home in June, 2008. My accountant said I might be eligible to claim the $7,500 credit, although I’m reading different accounts as to whether a home purchased in 2008 will qualify for the credit or only the loan. Can you clear that up?
February 18, 2009 at 12:02 am |
Kate,
The $7,500 tax credit that was passed in 2008 was called a tax credit, but it was really an interest free loan. The new $8,000 tax credit is an actual tax credit that does not need to be repaid. In an early version of the stimulus bill there was a provision to forgive the $7,500 interest free loan and make it an actual tax credit. I do not know if this has actually made it into the final bill, as I have not finished reading it. As soon as I know, I will post about it so keep checking back. If yoour accountant said you qualify for the $7,500 tax credit, then you probably do, but I don’t know whether it is still an interest free loan or a true tax credit. Joe
February 18, 2009 at 12:07 am |
If I buy a home in 2009, can I claim the new $8000 credit on my 2008 taxes still?