House Version of Stimulus Bill Proposes to Forgive $7,500 Loan

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

$7,500 Homebuyer Tax Credit May Become $15,000 Tax Credit

In a report just released by FoxNews.com, the GOP has added a provision to the current economic stimulus plan that would possibly increase the homebuyer tax credit up to $15,000. The proposal would also extend the provision to non-first time home buyers, according to the article. If they amend the previous limit in this manner, then it is likely that they will also extend qualifying time period beyond July 1, 2009.

At this point, however, this is only a possibility. We will know in a few days whether or not it passes and they amend the current provision by raising the limit to $15,000.

One of the big questions to be answered is whether or not those who have already purchased a home and received the $7,500 tax credit will be able to amend their returns and receive the additional $7,500 credit that is now being proposed. If not, then I think of lot of people are going to be fairly upset. There is much to watch here. Check back for updates and please leave any questions as a comment.

For more information about the tax credit click here to see my other posts on this developing topic.

Joseph Griffin

Buy a Home Now and Get the $7,500 Tax Credit Now!

Today, I was re-reading the applicable parts of HR 3221, which is the Housing and Economic Recovery Act of 2008, and I saw a section that should really be emphasized, which is as follows:

‘‘(g) ELECTION TO TREAT PURCHASE IN PRIOR YEAR.—In the
case of a purchase of a principal residence after December 31,
2008, and before July 1, 2009, a taxpayer may elect to treat such
purchase as made on December 31, 2008, for purposes of this
section (other than subsection (c).”

This section is stating that if you make a qualifying purchase between January 1, 2009 and July 1, 2009, then the IRS will consider that you purchased the home on December 31, 2008. This means that if you purchase a home between the 2009 dates above, you can go back amend your 2008 tax return and receive the tax credit. You do not have to wait until time to file your 2009 tax return. I hope that this helps.

Joseph Griffin

My other related posts are:

Way’s to Use $7,500 Tax Credit as a Downpayment

How the Tax Credit Applies to New Construction

Quick Faxts about the $7,500 Homebuyer Tax Credit

IRS Form for Claiming the $7,500 Homebuyer Tax Credit

IRS Form for Claiming the $7,500 Homebuyer Tax Credit

A few months ago, I did a post on the $7,500 homebuyer tax credit, which is part of the Housing & Economic Recovery Act of 2008 or H.R. 3221.  You can see those posts here:

 Way’s to Use $7,500 Tax Credit as a Downpayment

How the Tax Credit Applies to New Construction
 
Quick Faxts about the $7,500 Homebuyer Tax Credit

Now that it is tax time, I’ve received a few questions regarding how to file for the tax credit.  So attached to this post is the appropriate IRS Form and instructions for filing for the tax credit.  It is IRS Form 5405 Homebuyer Tax Credit.  The form includes instructions for how to complete it for those of you who file your taxes yourself. 

Even if you have already filed your taxes, you can go back and amend your tax return if you were eligible for the credit, but did not file for it.  I’ve had a couple of people e-mail me who asked about this and were able to amend their return without any problem. 

I’ve also received a question about someone who is eligible for the return, but their spouse has an IRS lien.  If the lien is against one spouse, then you may be able to file separately.  But if you are able to do this, you will only qualify for $3,750 of half of the tax credit.  This was done to make certain that spouses filing separately wouldn’t receive $15,000 by filing for the full $7,500 rebate.  If you have other specific questions, please look at my previous posts first.  If what you are looking for isn’t there, please post a comment, and I’ll be sure to answer it.

Joseph Griffin

Ways to Use $7,500 Tax Credit as a Downpayment

Today, I read an excellent article which will benefit those of you who are thinking of taking advantage of the $7,500 tax credit (interest-free loan), but want to use the tax credit as a down payment. Up until now, I had not discovered a way to make this work, but the National Association of Homebuilder’s Tax Analyst has found a way.

Below is a sample from the article:

First-time home buyers (defined as those who have not owned a principal residence for three years) should be aware of several mechanisms that can narrow or close the gap between the time they purchase their home and the time they take the deduction on their income tax return, said Dietz.

NAHB successfully pushed for a rule that allows qualified home buyers making a home purchase in 2009 before the July 1 cut-off date to claim the $7,500 credit on their 2008 tax return — in effect, one year early. Also, home buyers who purchase a home after filing their 2008 tax return with the IRS in 2009 may file an amended tax return that includes the credit.

As a result, the qualifying home buyer can significantly reduce the time it takes to receive the cash benefit of the tax credit.

More fundamentally, strategic home buyers have a more effective option in their hands. Prospective home buyers, who are certain they qualify for the credit based on the income limits and the first-time buyer test, can adjust their income tax withholding today through their employer.

IRS Form W-4, which is typically submitted by most workers when beginning a new job, allows taxpayers to adjust the amount of automatic income tax withholding in anticipation of certain tax credits. The form states, “You can take projected tax credits into account in figuring your allowable number of withholding allowances.”

Home buyers who expect to claim the tax credit can reduce their withholding, thereby increasing their take-home pay (net of income tax) and allowing them to begin to claim the expected tax credit for use as a downpayment.

You can see the full article here.

Please see my previous articles on this topic here:

$7,500 Tax Credit

How the Tax Credit Applies to New Construction

Quick Facts about the $7,500 Homebuyer Tax Credit

If I can help you in any way, please let me know.

Joseph

$7,500 Homebuyer Tax Credit

Last week, President Bush signed the The Housing Stimulus Bill (H.R. 3221), which has a key provision for qualifying homebuyers: a $7,500 tax credit.  The $7,500 tax credit that would be would be available for any qualified purchase between April 9, 2008 and June 30, 2009. The credit is repayable over 15 years (making it, in effect, an interest free loan).

The National Association of Realtors has put together two good documents summarizing what this might mean for you:

Questions and Answers

Tax Credit Chart

Other Relevant Posts:

The Tax Credit as Down Payment

How the Tax Credit Applies to New Construction

Quick Facts about the $7,500 Tax Credit

The bill also contained information regarding FHA Reform, FHA foreclosures rescue, downpayment assistance, and VA loans. You can see a full list along with explanations here.

If you have any specific questions regarding this document or how this may apply to your situation, please feel free to contact me.  You may call me at 828.302.8530, e-mail me at jgriffin@bengriffin.com, or leave a comment.

Joseph