First-time home buyers and their $8000 credit

We bought late last year and went back and forth about claiming the $7,500 'credit' which we will need to repay. We finally decided to claim it and put it directly into our Roth IRAs.

Now the big question...how to allocate the money. We've got 20+ years left until retirement, so I'm inclined to buy an S&P index fund.

Sorry, Jim, but your investment question is beyond what I know. Anyone else want to give fund advice?

A lot of good this credit does around Boston. If you actually have the income to justify a Boston-area purchase at today's still-high prices, then your income will exclude you from receiving the credit. It's pointless. (Which is fine with me - I'm sick and tired of ever more of my tax dollars going to the industry which is already the most subsidized in the US.)

My wife and I were planning on buying this summer anyway. Assuming, we can get a decent mortgage with 5% down. We'll have closer to 10% saved, but know that we'll need to fix up any house we buy as we can't afford $600K! If not, we'll just save longer.

The 8k is just a bonus and probably will be used to re-stock the rainy day fund.

Eight thousand dollars is enough to make a difference to many people.More welfare for low income people.
There is a low end market out there that is thriving ,and this will help fuel the fire. This will help to move some foreclosures that need mechanical repairs in order to be habitable.
Biff and Muffy will just have to wait for their 550K house a little longer.

Rona is correct. The $8,000 tax credit alone will not bring thousands of first-time buyers racing back into the marketplace for our higher-priced communities on the East Coast. My grandparents contributed the 20% downpayment for my first home in 1983 when I was 32 years old. They gifted the money to my parents, who I then reimbursed over time. You need to be careful today in using this approach, as the rules are tighter in terms of documenting where a downpayment came from, and whether it needs to be repaid.

Even though the rest of the country is showing price reductions around 20 percent year-over-year ( S&P/Case-Shiller U.S. National Home Price Index,) prices here in metro Boston are not sinking fast enough to help out large numbers of would-be buyers who are still waiting for the prices to get within strking distance.
The report notes that “Denver, Dallas, Cleveland and Boston faired the best in terms of annual declines down 4.0%, 4.3%, 6.1% and 7.0%, respectively.”
7 percent is just not enough to turn the tide, for most people. Those who were close enough, congratulations!

Has no value in Boston. I think the limit is 75K MAGI;over that and the 8K starts to decrease. Where can someone that make 75k find a decent place for 264k, that does not need 100k worth of renovations to make it livable? Commuting cost are also high and property taxes will go up. If this is condo, they need to account for high condo fees and condo/multi-families now need 25% down or you pay an additional point at closing.

Great analysis Rona.

As I mentioned in an earlier post RE Maven, 550k in the Boston area often IS a fixer upper. At least if it is family housing.

My husband and I are planning to buy a condo here in Portland, Oregon. We're both teachers and excited about this because we'll probably end up using our summer income as a down payment that we originally intended to use to pay off our credit card debt (much owing to our wedding!) Now we'll still be able to pay that debt off with the rebate when we get it. I also read that it's possible to file an amendment to your 2008 taxes to get the rebate sooner; or to alter your withholding in order to free up cash in the short term and any tax liability will be deducted from the rebate at tax time 2009. I think it's a great deal. Naturally, we'll be leaving the really amazing Northwest neighborhood we rent in now and living in a more reasonable neighborhood on the other side of town, but it's still the difference between buying and renting for us.

Of what I have researched in relation to this 2009, $8000 tax break for first time homebuyers, it seems to me that not everyone gets full $8000. I fall under the category of a first time home buyer and am looking to buy a home in the very near future. I will be buying a home in the lower 200k and am just wondering if I buy a house at that price, will I only recieve %10 of my purchase price or the whole $8000? I could use the full tax break of $8000 to fix up the lower priced house I would like to buy, so can anyone give me a definite answer on how much i will recieve?

I am still not clear who is first time home buyer and who will get eight thousand $. We bought our first home in January 2008. Are we going to get the tax credit?

Your purchase price would have to be less than 80K not to get the 8K. 10% of 200K is 20K. Higher than the max of 8K.

Aaron, you will receive $8K.

10% of $200K is $20K.

Aaron, if you're looking at a home in the $200k range, you would get the full $8000 barring any income restrictions. Your question about 10% of the purchase price doesn't make sense given the home purchase price you're talking about. 10% of $200k is $20k. and $20k > $8k.

10% of 200k is 20,000 so you qualify for full 8k...as long as you have a federal refund coming to you, you will get full amount.

Too bad there's nothing available to those of us who bought in 08.

I purchased a home in August 2008 and I re-financed the home a few months later because of the interest rates fell. I'm I still consider a first-time home buyer, if so can I still claim the $7,500.00? I had already filed my taxes for this year and I didn't find out until last of January .

Why is it only available to first time home buyers?!?!?! And totally agree that in places like Boston, $150k for a couple does not make you rich.

Aaron, You do realize that 10% of 200K is $20,000? So you should ge tthe max $8000. Maybe I'm missing something with your question. I'm not an expert but the only way I see yours reduced is if you make more than the MAGI.

Does anyuone know if a mobile home would qualify for the $8000 credit?

Why is it that the people who fell under the $7500 tax credit have to pay their "loan" back and the people that fall under the $8000 don't? I bought my house a month earlier and got the $7500 but just don't think it is fair that I have to pay mine back and they don't!!!!!!!

I see where Rona is coming from for buyers looking in the higher price range, and in areas where cost of living is higher. However, my fiance and I have held off on buying a house because we will not have the money to buy furniture, appliances, etc. AFTER the down payment and closing costs. We're from Michigan, and looking in the $100,000 price range. This $8000 will help us tremendously in affording the accessories that go along with a house. We will be able to buy that stuff without having to put it on credit cards. This $8000 tax break gives us our chance in finally being homeowners.

To Aaron, 10% of $200K is $20,000. As long as the home price is over $80K, then you would get the maximum of $8,000.

This credit is 8k or 10%, which ever is less; ex: a sale of $75,000. on a fixer-upper will = a 7.5k credit (10%), where a sale of $150,000. will = an 8k credit (max).

so this is only for first time buyers and we who are purchasing our 2nd get nothing???

NOT FAIR!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! My husband and I bought late last year, and have missed the "golden date" by only 50-odd days. I am FURIOUS, frustrated, and really upset that we bought thisclose to the stupid plan and are getting left out in the cold. Again. This is ******

Rona,

i don't understand "The funds are not available as part of your down payment or closing costs"...

I haven't filed my 08 taxes yet. Why cant I take the credit upon filing and use that 8k to replinsh my reserves/downpayment? The only stipulation is that i need to purchase before the end of the year or risk paying penalties.
Thanks

mary
i owned my land will i get money to purchase a double wide to go on my land being trying for fifteen years to get a home on my land my sister died and mothers in the street you can say i am in johnston county,nc and i hope he will help the nursing home they need to be redone. My mother died of a bed sores, i never would believe a persons can died of a bed sores. i know god sent the president to hep people.
mygod be with him.

Danno

This $8000 tax credit applies *only* to property purchases made in 2009. That will reflect on your 2009 tax filing not 2008. You only get the credit *after* you have bought a property.

Wow! The questions! Here’s some answers:
A first-time homebuyer is someone who has not owned a home in three years. Yes, only three years of renting and you are "re-virginized" as a homeowner, according to the Federal government.
The $7,500 loan is in place for people who bought between April 9, 2008 and December 31, 2008. The $8000 credit counts for any purchase in 2009. No exceptions. And yes, lots of people are mad.
Mobile homes? They count if you are buying them as your primary residence. Same with modular, prebuilt homes.
If you bought early in 2009, you can take the credit on your 2008 taxes.
Danno asked about taking the credit on 2008 taxes before actually buying anything in 2009. It may get you just a penalty. Or the IRS may have a special ring of hell for you. Don’t play fast and loose with IRS rules without checking with an accountant. Danno, if your accountant says, “why not? It will be fine,” please let us know. It is an out-of-the-envelope idea and I like the way you think.

purchase price has nothing to do with the 8k tax credit - it has to do with your modifiec gorss income

I don't think the purchase price of the home or the type of home matters?
As far as I know, It has to do with your adjusted gross income.

Amber - a 100,000 home does not exist in Mass.

Thank you all who are answering questions as they come up.

Sally and I are in dispute. I have been told by an accountant that the $8000 tax credit can be applied to 2008 tax return if the house was purchased in 2009 before filing of the 2008 return. Sally quotes the phrase "Reduces (or can eliminate) income tax liability for the year of purchase. Any unused amount of tax credit refunded to purchaser. **For the year of purchase." ** Are there any accountants out there who know the right answer?

Hi Rona

The IRS web site confirms that your information is indeed correct:

"This year, qualifying taxpayers who buy a home before Dec. 1, 2009, can claim the credit on either their **2008 or 2009 tax returns**. They do not have to repay the credit, provided the home remains their main home for 36 months after the purchase date. They can claim 10 percent of the purchase price up to $8,000, or $4,000 for married individuals filing separately."

My fiance and I are planning on buying a home together and taking advantage of the credit. We will not be filing jointly in 2009. Can the $8000 credit be allocated 50/50 or does one person take the whole credit on their tax return? Any help is greatly appreciated!

$8000 credit, not paying back. Renter's rules! Homeowners got the shaft.

Ok so I just need some clarification on the credit:
I am buying a home and close in April 2009 with all contracts put into place as of now. Which of the following can be done?
1. File my 2008 taxes now and take the credit knowing that I am indeed going to be in the home in April 2009.
2. File for an extension and include after I am actually in the home.
3. Must be filed in 2009 taxes

The question is really can I include on my 2008 taxes now or do I have to wait.

Where on the IRS website did you find the information on this credit?

Start here, the IRS has a number of pages with questions. If your question isn't there, here are some more posted references to this credit.

Beyond that, it's the job of a tax accountant.

Ted,
I make it a high priority to keep myself off the IRS wrongdoers list. Once you are on it, life is never the same. Therefore, if I were you, I would file an extension and close. Then you can file for your credit without concern. An accountant may tell you that you can file ahead of closing, but I wouldn't do it unless I really trusted the accountant.
Congratulations on your purchase.

So what is the maximum AGI to get a tax rebate? Is it the same as previously i.e., over $90K and no rebate at all? Or does it decrease after, say $75K down to nothing at a certain point?

Erin - You both should take it. It is called the Madoff - Stanford exemption.
If the IRS `has an issue with it ,just tell them that you made a mistake.

Adjusted gross income of no more than $75,000 ($150,000 on a joint return) the previous limits are phased out for the 2009 program.

Let's see - After my divorce, I owned a mobile on a rented lot for 5 yrs which, mind you, did not allow me to borrow against it because I did not own the land it was on and banks don't consider it a "permanent home", yet I just bought a townhome and do not qualify for the tax credit because said mobile home is now considered a primary residence. Something doesn't seem right here. Seems to me if a person is moving from a unit on a rented lot and is helping to stimulate the economy by buying a home as the President wants us to do, this situation should make one eligible for the credit. Oh well.

Does anyone know why if you are buying a home as a first time buyer from a relative and you have to fiance, pay taxes and have the property appraised prior to close of escrow ,why wouldn't this qualify as a first time home buyercredit? This seems biased and I may need to go to a attorney to see if I can file a class action law suit against the goverment. If you know why this is a part of this stimulas please let me know.
Thanks,
Ron aka:(getting screwed again by our goverment)

so my wife and I bought our first house and we qualify under the current rules of this credit - HOWEVER- we bought it with the help of my father who is not a first time home buyer. are we going to run into problems when claiming this credit?

Rubicon, according to what I read at NAHB's site regarding the credit, anyone one of the buyers can claim the credit as long as one of them hasn't owned, and isn't married to someone who has owned, in the last three years. So you should be fine if you meet income & timeline requirements. Double check with a tax advisor to be sure.

thanks steve. im on hold with the IRS right now. thought i might as well go to the source.

i never owned a home however my husband aquired this place by taxes we he never had to pay a mortage note he paid $400.00 (four hundred dollars) for the place are he we first time home buyers. this was about about 45 years ago.

So how does this stimulus deal help out Veterans. There are many state a Federal programs out there to help out, but will a Veteran also be able to take advantage of the $8,000 tax credit?

Im a first time home buyer and i purchase my house last oct 2007.can i still get a portion of the grant? I need your reply asap.thanks

Windy,
If you bought last October, which was 2008, you can get a $7500 tax credit this year, but that is not a real credit. You pay it back through paying extra taxes for until you pay it off. here are the details

i bought my house in 2007.
is there any portion available to me even if i have to repay it, i dont mind, but we could really use the interest free loan to pay off our credit cards.
i think the government should retro active first time purchase for the last 5 years..
we all need help
and it ticks me off that friends of mine who would have never bought before, are buying and getting this credit, and will have thousands dollars to shop and do whatever.
the credit is called a first time home buyer credit, i am a first time home buyer,
what other entitlements or credits could i get with my purchase in 2007
even a grant would be nice..

Jojo, we're in the same boat. My fiance bought the home we live in now in July of 2007 although we considered it a vacation home until we both moved here full-time 6 months ago. I was reading that if your house was under construction that you would consider your move-in date the actual purchase date.
Does anyone know if we would qualify for the credit and/or refund under these conditions? Neither of us have bought a "home" in the last three years. I was renting and he lived with his father so technically this is our first home and our move-in date is within the guidelines.

I just bought a home in Feb. 2009, I sold a mobile home for what I owed that was on rented land in a trailer park, do I qualify for the First Time Homebuyers Credit? My mobile home was not considered real estate nor a mortgage, more like an installment loan. Everyone told me I should be able to claim it now Im not to sure... I really hope I can. I have never owned a "real" home before that actually sits on dirt that is mine and can't be sold out from under me.

How long do you wait after filing before you recieve the 8 grand?

The writer of this story doesn't realize that if you purchase before 4/15 of this year you can amend your taxes and get the money THIS year. It has definitely motivated me!

I read somewhere that you have to have a least a 5% down payment to qualify for the $8000 credit.. Is this true?

What is the reasoning , that you can not buy from a relative? My son and his wife safed for 4 years and now bought a home we own ( not the one we live in). Why can't they get the $8000 credit?

Can you pay cash for your home and still get the credit or do you need to take a mortgage to get the credit?

Candy,
You can still get the credit, no matter what your down payment is. However, the issue has been about getting the credit to use toward your down payment; can't do that. Also, low down-payment loans have gotten harder to come by in the past year or two.

Joan,
The no relatives rule is there to avoid fraud. It would be too simple for someone to transfer a deed within a family in order to collect the credit without really changing ownership. Think about newly married couples, or people with young adult children who share an extended family home or summer house.

Ru,
You can buy a house for cash or with a mortgage. As long as you close in 2009 before December 1st, the tax credit is yours to file for.

ok, please clarify, someone. i've read quite a bit, but keep hearing "conflicting" wording. "first time home buyer"...it must be more than three years since you purchased a home/secured a mortgage? or it must be more than three years since you owned a home? my husband and i bought a home 4 years ago, and are now going thru a divorce. i am purchasing a home on my own now. do i qualify?

Christine,
The wording is pretty clear:
"Purchaser (and purchaser’s spouse) may not have owned a principal residence in 3 years previous to purchase."
It has nothing to do with mortgage. If you owned a house, and your name was on the deed with him, you are not a first-time homebuyer. If he owned the house, and your name was not on the deed, then you are a first-time homeowner after the divorce is final.,

Good Afternoon, I am wondering if the $8000.00 tax credit will still remain in effect in 2010?

56. Tammy did anyone answer this? I have the same situation

As of this post, in June 2009, the credit ends December 2009.

56., 66. I have the same situation? Does anyone know the answer?

I don't understand how the goverment can say your not a home owner if you rent , but your a home owner if you brought a mobile home, yet you are still paying lot rent for that mobile home to set on, which is making you the person in that mobile home a rental of the lot.. seems to me then the person in a apt should be a home owner as well ! I own a mobile home but pay lot rent and wanted to buy my first real home, I had found a home that I could afford under my pre approval loan amount but needed the credit back on my tax refund to fix it up, oh well ! lol and I voted for obama, I won't in 2012

Accordig to IRS it doesn't matter if you lease or own the land the mobile home sits on...the mobile home is your home and therefore you do not qualify for the credit.

Penalize the homeowners - reward the renters.
Penalize those who make too much money, reward those who make less.
What a shame to have discrimination in this country. Neither should be rewarded or penalized. Ironically - it's probably the homeowners and those in the higher tax brackets that are paying the majority of the taxes that are funding this grant/bill.

Don't make too many plans on how you will spend it unless your plans are far off into the future because the length of time it takes for the IRS to send the $8000, as far as I can tell is about 16 weeks...a 3rd of a year in most cases

i am looking to buy a home for the first time my credit is 480 is there a way i can buy a home