As many of you may know the Federal Government just passed a stimulas bill. In that bill was a $8,000 dollar tax credit for first time home buyers. (First time is anyone who hasn’t owned a home in the last 5 years) What is great and different about this credit is that unlike the previous $7,500 dollar credit, you DO NOT have to pay this back. The basic rules are you have to buy the home from 1 Jan 2009 to 1 Dec 2009 and the home must be your primary residence.
Here are some questions I have had asked that may help some of you as well.
If I purchased in 2008 do I still have to pay back the $7,500 dollar tax credit? Yes, the tax credit was not made retroactive so you still have to pay back the credit if you purchased during 2008. Sorry
How do I add this to my taxes? Your tax adviser should have the necessary forms and most tax software also includes an easy way to get this credit.
Explain the Credit is it a true refund? I am going to give 3 examples on this credit to illustrate.
Couple #1 is about to recieve $2,500 dollars back with there taxes. They purchase a home and will now get a check from the IRS for $10,500
Couple #2 owes the IRS $1,500 dollars, they purchase a home and they will now receive a check for $6,500.
Couple #3 owes $10,000 to the IRS, they purchase a home and apply the credit. They now only owe $2,000.
Please feel free to call me and as always remember I am not an accountant so you need to verify what I say with an accountant.