It’s no longer the $8000 First Time Homebuyer Credit. It’s now the $8000 First Time Homebuyer Credit or $6500 if You Have Lived in Your Home for Five of The Last Eight Years and Buy a New Home Credit (if you qualify). The Senate voted last night and the House voted today (403-12) on H.R.3548 so the bill moves to President Obama for his signature; possibly tomorrow. Sections 11 and 12 of the bill specifically deal with The Credit.
The revised credit will take effect on December 1st and is not retroactive. Changes include raising the maximum income for qualified couples to $225,000. The $6500 credit is only valid for primary residences.
UPI.com has a good article here, Examiner.com here, and subprime blogger here regarding the passage of the revised credit and additional information.
On October 22, the Treasury Inspector General for Tax Administration released a report that includes:
As a result of the IRS’s inaction, TIGTA’s report found that 19,351 taxpayers claimed $139.4 million in credits for homes they had not yet purchased but would allegedly purchase in the future. In addition, 70,005 taxpayers claimed more than $479 million in credits, despite indications that they were not first-time homebuyers. TIGTA also identified 582 taxpayers under 18 years of age who claimed almost $4 million in First-Time Homebuyer Credits. The youngest taxpayers receiving the Credit were 4 years old. (emphasis added)
The new law makes provisions to go after those fraudulently claiming the credit.
I’m not sure how many people will qualify for the $6500 credit but one has to wonder whether it will impact closing dates for those scheduled to close in the next few weeks. In Oregon, the seller doesn’t have to allow the buyer to extend or delay closing just because they want to.
Is it the case that the amount of the credit is based on 10% of the purchase price of the home? So, a $200,000 purchase price would be a $2,000 credit? Also, I assume the sale must close before Dec 31st to take the credit on your 2009 taxes?
Here is a good chart, published by the National Association of Realtors (NAR), that outline the changes to the Buyer Tax Credit.
The changes go into effect as soon as the President signs the legislation so my comment about delaying closings will be moot. It is not retroactive but does start immediately.
IRS form 5405 is the best place to get a full understanding of how the credit works. The credit for 2009 is the lesser of $8000 or 10% of the purchase price. A $200,000 purchase would qualify for $8000 as 10% is $20,000.
I’ve been interested in taxes for lengthier then I care to admit, both on the private side (all my employed life-time!!) and from a legal stand since satisfying the bar and following tax law. I’ve put up a lot of advice and righted a lot of wrongs, and I must say that what you’ve put up makes utter sense. Please persist in the good work – the more people know the better they’ll be equipped to handle with the tax man, and that’s what it’s all about.