If you will be able to claim the $8,000 first-time homebuyer tax credit this year or next, here’s some helpful information. A recently released revision to IRS Form 5405 will help you through the steps required to claim the credit. Here’s some more information that will help:
Can You Claim the $8,000 Homebuyer Tax Credit?
In most cases, you can claim the tax credit if you purchased a home in the U.S. that will be your primary residence and close on the home between April 8, 2008 and before December 1, 2009 (or occupy the home for the first time if you built it). To qualify, you or your spouse must not have owned any other home within three years before purchasing the qualifying home.
Who can’t claim the credit? You will not be eligible for the $8,000 first time homebuyer credit if your modified adjusted gross income is more than $95,000 (single) or $170,000 (married). You also cannot claim the credit if you received the home as a gift or through inheritance or you purchased it form a relative.
More About the $8,000 Homebuyer Tax Credit
If you purchased your home in 2008, the credit must be repaid through your taxes over the next 15 years. It’s essentially an interest-free loan. If you move within 15 years, you will owe the balance due on your taxes the year that you move.
If you purchased your home in 2009, you will not need to repay the tax credit if you reside in your home for at least three years from the purchase date. Again, if you move before the three years are up, you will have to repay the credit.
“But It’s Not Fair”
I have already received hundreds of comments about this tax credit on this blog, many of which complain that it’s not fair that some people will get $8,000 outright and others only get an interest-free $8,000 loan. It may not be fair, but remember what this tax credit is for: It’s to encourage people to buy a home for the first time in a recession and risky real estate market. It’s not to reward people who already purchased. It’s to encourage people to buy who might otherwise hold off several years. When offering a $7,500 interest free loan didn’t get the desired results, the government upped the ante by offering $8,000 outright.
I hate to use this analogy, but complaining that you got an interest free loan when others got a credit they don’t have to repay is a bit like you’re playing Deal or No Deal. Imagine you take an offer only to discover that your case is worth more. You didn’t know you had more in your case, and you risked not getting anything. At the end, you still got something you didn’t have before. So please, try to be happy with that!