Are you claiming the home buyer tax credit with your 2009 income tax return? Read these new instructions. The credit has been extended and expanded to qualify for more people, including long-time homeowners. I’ve included some of the basic information below.
Because the IRS requires additional documentation, taxpayers who wish to claim the home buyer tax credit must filing federal tax returns on paper through the mail.
1. Download and complete the revised Form 5405. This form is available here. The form will guide you through the process, ensure you qualify for a credit, and determine the amount of your credit. Here are instructions for completing Form 5405.
2. Collect your required documentation. You will need the Form HUD-1 Settlement Statement or other settlement statement outlining the names and signatures of all parties to the sale, the property address, the price, and the date of purchase. If you do not have a settlement statement, as you might not if you purchase a newly-constructed home, attach your certificate of occupancy.
If you are under contract but have not taken occupancy of the house by the time you file your taxes — and you still qualify under the date restrictions above — included pages from your signed contract including the signatures and names of all parties, the property price, the address, and the contract date.
If you qualify as a long-time homeowner rather than a first-time home buyer, include Form 1098 (Mortgage Interest Statement), property tax records, or homeowners’ insurance records. The forms must cover a full consecutive five year period within the eight years ending on the date of the purchase.
3. Complete your Form 1040. Include your bottom line on Form 5405 on the appropriate line on your income tax return. On the 2009 Form 1040 return, this is line 67. You can’t claim this credit with Form 1040EZ.
4. Double-check your work. Check for the most common mistakes, such as not signing the return or using the wrong Social Security number. Review each form line-by-line and check your calculations. Any mistake will cause a delay.
5. Mail your forms and wait. When people began claiming the first-time home buyer tax credit last year along with an amended 2008 tax return, people were receiving the credit within six weeks. As more people began applying, receiving the credit took longer, particularly if documentation was missing.
Below is the original post explaining how to claim the $8,000 first-time home buyer tax credit when claiming 2008 income. This no longer applies unless you are revising your 2008 income tax return. If you are submitting your 2009 income tax return read this article.
Original article for claiming $8,000 tax credit for first-time home buyer on 2008 income tax returns
Thanks to the American Recovery and Reinvestment Act of 2009, formerly known as the “stimulus bill,” first-time home buyers are eligible for a refundable tax credit of up to $8,000 this year. Here is what you need to know in order to claim the credit.
Who qualifies as a first-time homebuyer? A “first-time homebuyer” is anyone who has not owned a house in the past three years. Furthermore, if you don’t live in the house purchased this year for the three years following the purchase, you will have to pay the credit back to the government. This credit is intended for people who live in their own houses, not house flippers or speculators.
What is a refundable tax credit? When tax professionals and the IRS talk about “refundable tax credits,” they do not mean that you have to pay the credit back to the government. A refundable tax credit means that if you owe less tax than the amount of the tax credit, you will receive a refund — even if you have no other tax liability for 2008. That’s not a bad deal. In other words, if you owe $200 to the government before claiming the credit, and you qualify for $8,000 for the first-time home buyer credit, rather than paying the government, you will receive a check for $7,800. Even if you had no income in 2008, owed no tax, and purchased a qualifying house in 2009, the government will send you a check for $8,000.
What if I bought the house last year? If you purchased a house in 2008 and were a first-time buyer, you qualify for the older refundable tax credit with a maximum of $7,500. This does require that you pay the $7,500 tax credit back over the course of fifteen years, starting two years after the date of the purchase. This is still a good deal. As time goes on, thanks to inflation, you are paying back this “loan” with money that has smaller purchasing power.
To qualify for the new credit with the maximum of $8,000, you must be a first-time home buyer and the sale must take place between January 1, 2009 and November 30, 2009.
Do I qualify for the full $8,000? The actual credit you will receive is 10% of the purchase price of the home or $8,000, whichever amount is lower. If your modified adjusted gross income (MAGI) as a single taxpayer is over $75,000 or if your income as a married couple is over $150,000, your credit will be phased out. The credit will be eliminated if your income is above $95,000 (single) or $170,000 (married).
How do I claim the home buyer tax credit? You can claim this credit when filing either your 2008 or your 2009 income tax return. For example, if you believe that your income level in 2009 will be too high to qualify for the credit but you already know that your 2008 income is low enough to qualify for the full amount of the credit, you can claim the credit on your 2008 income tax return.
Complete IRS Form 5405 to determine the credit amount. Here is the official revised copy of Form 5405 [pdf] that takes the new $8,000 home buyer tax credit into account. Take the bottom line amount on Form 5405 and enter the number on line 69 of your Form 1040. Not all online tax preparation software has been updated to include instructions for this new credit. I checked H&R Block Tax Cut, TaxACT, and TurboTax Online, and as of last night all three include only the rules for last year’s $7,500 credit. You may wish to wait for the software to catch up with the IRS before completing and filing your 2008 income tax return. Or, if you don’t want to wait, you can do your taxes by hand. See new updates at the bottom of this article for TaxACT and TurboTax.
If you have filed your taxes already, you will be required to file an amended income tax return if you want to receive the credit this year with your 2008 refund.
Please keep in mind that I am not a tax professional and none of what is written here or anywhere else on Consumerism Commentary should be considered tax advice. You are solely responsible for your own tax return, and any questions should always be directed to your tax accountant or the IRS.
2:00 pm update: TaxACT has contacted me to let me know that as of today, February 25, their software has been updated to correctly figure the $8,000 first-time home buyer credit. I’ve confirmed that the new calculation is now active.
February 27 update: A representative from Intuit has confirmed that TurboTax has now been updated to include the $8,000 home buyer tax credit and the change should be in effect today. I don’t see it as of 4:00 pm, but I will check again later tonight. Originally TurboTax planned on putting this update into effect as late as March 11.
Here is what a TurboTax representative said: “As with any tax changes, especially those that come very late in the season, we are reliant on the IRS to provide guidance so we can update the product accurately and completely. Once the IRS gave us the correct guidance and requirements, we immediately started working to update.”
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Where can i file an amended 2008 1040X form?
Luis N.,
You asked where you can “file” the form and the short answer is of course with the same IRS office you would normally send a standard 1040 form to but I suspect you may have been asking where you can FIND the form 1040X. Again, a fairly short answer. They are generally available from your local post office, your public library and from the IRS web site. I like to get my forms directly from http://www.IRS.gov because the odds of the form being the most recent edition are better if it comes directly from the IRS. Some folks have found forms from the post office that were outdated and since the tax laws seem to change almost monthly of late the IRS website is by far your best bet.
Would the purchase of a home by my mother put into my son’s name qualify him for the tax credit? He is a student in college with no income so to speak.
I am a mortgage broker and I have a question for my clients.
I have a daughter who can not qualify for a mortgage so the parents are going to co-sign so she can buy her primary residence for her and her husband. However, I am having difficulty convincing the underwriter that the parents are actually co-siging…they believe the parents are just using the daughter to purchase an investment property, which is crazy, but apparently HUD (FHA) is having a problem with this and is really cracking down on the underwriting of FHA loans.
So, my financing may have to change in that I will need put the mortgage into only the parents name, however still close title with all three borrowers on title.
This is from the IRS website:
S2. Taxpayer A is a single first-time home buyer. Taxpayer B (parent) cosigns for A and does not qualify. Both names are on the mortgage. Can Taxpayer A claim the credit and, if so, how much?
A. Yes. Taxpayer B is not a first-time homebuyer and cannot claim any portion of the credit, but A may claim the entire credit ($7,500 for purchase in 2008; $8,000 for purchase in 2009), if the home was purchased as Taxpayer A’s primary residence.
I did not see anything about the borrower (daughter) having to be on the mortgage – only “if the home was purchased as Taxpayer A’s primary residence”.
Do you think the daughter would still qualify?
John
The loan and the homeownership issue are not mutually exclusive; however, to illustrate why the daughter is still entitled to the entire tax credit, consider the situation if the parents simply paid cash for the home but still had the daughter placed on the deed. Many older couples employ this method when they have only 1 child living because it removes that asset from having to go through the Probate process. One cautionary word here though. Do NOT place the daughter’s husband on the deed if he has owned a home within the previous 3 years. In that case the credit would be lost. Also placing the child’s spouse on the deed means he would be entitled to his share of that home (or any proceeds from a sale) should they divorce. The husband could still claim marital interest in some states but that can become messy and expensive for all concerned.
My wife and I closed on our house 3/28/2009 we are first time home buyers but still we didn’t find $8000 how can we got . Thanks daniel
First of all…shame on your buyer’s real estate agent for not pointing out the tax credit you are entitled to. Any agent worth their salt would have used that point as an additional sales tool to encourage you to purchase. That agent failed to fulfil the fiduciary responsibility incumbent with obtaining a license to sell real estate. But take heart, all is not lost. Simply download form 5405 from the IRS website, complete it as instructed and submit along with your 2009 tax return and be sure to includ any supporting documentation such as the HUD-1 Form (the settlement sheet both you and the sellers had to sign at the closing which itemizes who paid for every item involved in the sales and/or financing transaction). You may wait and file this paperwork along with your 2009 tax return in 2010 or you can download an additional form from the IRS website known as a 1040X or Amended Tax Return for a previous year and claim the credit on your 2008 tax return. If you choose to file an amended 2008 return, expect it to take up to somewhere between Thanksgiving and Christmas before you receive your check. While you may claim this tax credit on your 2009 electronic tax return filing, the same is NOT true if you choose to go the Amended Tax Return route to claim this credit on your 2008 return. All 1040X (amended) returns must be filed via snail mail as the IRS won’t accept them in electronic filing format. This is because they must do at least some cursory investigation to be sure you really do qualify for the Tax Credit. Some people try to hide the fact they or their spouse has owned a residence within the prior 3 years or incorporate the Tax Credit into a purchase of investment property. The government will run a social security number search to see if you or your spouse has claimed any mortgage interest deductions on tax returns for 2005, 2006 and 2007.
Thanks alot Gary. You are very helpful. Im still unsure about something though. If i have already filed my taxes and recieve my tax return. do i still have time and am i able to still apply for the home buyers tax credit?
Luis,
The short answer to your question is yes. Because the Stimulus Act wasn’t signed until February it included a clause allowing anyone who qualified for the Tax Credit by purchasing a home between 01/01/09 (retroactively) and 12/01/09 to claim the credit on their 2008 return if they had not already filed their 2008 return or to file an amended 2008 return if their purchase occurred after April 15th and they’d already filed their 2008 return by using form 1040X. The unintended consequence of this Act allows those folks who have already filed their 2008 return, even if they received a refund to file an amended return and receive the credit via electronic funds transfer to their bank account or have a check mailed to them. This will hold true even for people who close on the new purchase right up to 12/01/09. The most important thing to remember though is to complete form 5405 and include some paperwork to prove you actually did close on a primary or secondary residence during the eligible time period and MAIL the paperwork (no efiles allowed on amended returns) to the same IRS office who normally handles your returns.
So we filed the amended tax forms for the 8,000.00 credit, but it has been over 6 weeks ago…has anyone actually received the money from the refund???
My wife and I filed an ammended return (via our tax attorney) in the first week of June. We sent a hard copy via certified mail. It is now August and we haven’t recieved any answer on the time frame. The blanket answer of “6-8 weeks” seems to be false. Additionally, our tax attorney states there is no way to track the payment/ refund like you can on your traditional tax forms. The best guesstimate I have been able to verify is that folks will be getting these incentive payments more toward the end of the year.
This is obviously a bummer, but with the way the IRS is processing these ammended forms there is simply no dependable way of setting time tables.
has anybody herd what the current time frame is ? I was told yesterday that it could take 16 weeks I shure hope not.
I am glad to find this website. Regarding the 2009 Federal’s $8,000 incentive, I’ve been told by my agent that it’s simply a cash check and I should check my mail box at my newly purchased property for required claim forms to be mailed to me by government. Now I finally understand, after reading your informaiton, the incentive is actually a refundable tax credit, and I should take initiatives instead of waiting.
I bought a property in June 2009 with all cash as my first own principal residence. So, should I just I follow your #178 answer on 7/7/2009 to file an amended 2008 1040X?
Another question is even sillier, but as I always filed my tax returns online, I have no idea but need to know where I can get the right paper forms for filing an amended 2008 tax return?
Thanks for help.
my husband and I purchased our first home in April and ammended our taxes on turbo tax. Does anyone know how long it will take to get our refund and will it be faster since we chose direct deposit?
You should have already received your refund; however, the tax credit portion may take longer as they are doing random testing in an effort to catch people trying to cash in on the credit who don’t actually qualify for it. There’s a toll free phone number for the IRS posted on their web site you may use to check the status of your refund. Expect several days to receive a response if requested by phone or mail but email responses are generally going out within a couple of days. Your refund will always be much faster if you used the eFile system available as a service for all Turbo Tax customers. Many people report getting their refunds deposited to their bank accounts within 3 weeks of filing as opposed to the traditional 12 weeks it takes to receive a check.
At the rate the IRS is proceeding now, look for your check somewhere between Thanksgiving and Christmas. If enough people will contact their Congressional Representatives and Senators you could probably see the IRS hire more temporary workers to get this stimulus money out to the people sooner. The recovery can’t begin until people have extra money to spend. Senators love to step in front of the cameras and announce things like, “My subcommitte has scheduled hearings on August 11th to have the Head of the IRS come in and explain to us (and the American People) why it’s taking so long to get this money out to the folks who are entitiled to it.” Pester your Senators and Reps with emails and phone calls. They’ll get the message.
If you tried to file your amended return by E-File it will be rejected. Amended returns must be filed the old fashioned way (snail mail). You may want to get ahead of this by submitting another amended return manually now because they will most likely throw out your emailed amended return.
For those asking how to file an amended income tax return I have assembled a step-by-step guide: http://bit.ly/vRTEj
Flexo,
Very nice job and anyone following your step by step process should have no problem getting their Tax Credit approved. I’m not a tax expert either but my CPA has advised me the IRS will credit your account electronically if you request it. They don’t want lost checks any more than the recipients do and they’re under a little heat right now to hire more agents and step it up with getting this money into the economy quicker than they’ve been doing so far.
CAN I FILE THE 5404 AND THE 1040X WRITTEN OUT BY HAND OR DOES IT HAVE TO BE TYPED?
That’s a 5405 form and while you certainly can complete the form by hand, don’t expect the IRS to take a lot of time trying to decipher your handwriting. As with anything be sure to write legibly or even better use block letters.
My husband has a house on land contract from before we got married, I think that he may have marked that he owned his house on his taxes in the past, however the deed is not in his name due to the land contract and he doesn’t technically own the house. I recently (June 2009) purchased a house in my name entirely, he is not on the mortgage/deed/etc. Do we still qualify?
Kara,
You may have a “catch 22″ situation here. Unfortunately there’s a marriage penalty tied to this particular Tax Credit. It doesn’t matter if you purchase the home on your own or not. The IRS will check to see if you filed a joint tax return with your husband and disallow the credit if they cross check his SS # and find that he claimed mortgage interest on the other house even though he didn’t technically own it. The sad fact is that had you not been married when you purchased your new house last month the situation of whether he owned a house or not would not matter. I don’t know how long he “owned” the other house but the only way I see for you to qualify for the credit would be if he went back and filed amended returns for every year in which he claimed the mortgage interest deduction and recalculated his tax liability. It might be worth it if he’s only had the house 2 or 3 years but likely not worth the hassle he’s been claiming mortgage interest paid for 5 years or longer.
My wife and I got married on 4/25/09, we then bought a house on 7/1/09. We filed separately for 2008 so how would we file an amended return for 2008 to get our tax credit? Joint/Single? Would it be easier just to wait until we file jointly for 2009?
The answer to this question depends on how much paperwork you want to get into and how long you are willing to wait for the tax credit. It’s only necessary for 1 of you to file an amended return and submit it via snail mail to the IRS with your 5405 form and proof of purchase attached; however, it’s taking up to 18 weeks now for people filing amended returns to expect their checks according to the IRS. In other words if you file the necessary paperwork by 08/05/09 you likely won’t receive your check until right around Christmas. If it were me I think I’d just wait now and file for the credit on the joint return you and your wife will be filing in early 2010. Then you can file electronically and get the benefit of the credit within only 2 or 3 weeks from the filing date with a lot less hassle.
I sent my 1040X and 5405 (filled out on turbo tax) in on May 21st. I called the IRS yesterday and the guy said it hasn’t even been put in the system yet… and that there “may” be additional information/paperwork needed. Is this something that is happening to a lot of people and if that happens it will delay the return. I was counting on having the money by the end of summer is that still a possibility? Or when can I possibly expect to see my money.
If it seems like the IRS is making up some of these rules as they go along it’s only because it’s true. This program is much like when Congress passes a law that requires government agencies to do something but fails to provide the funding to implement it. The IRS had this dropped on them with very little warning and no suggestions of how to handle the increased manual paperwork. I don’t think the Administration and Congress realized that form 1040X is one of the few forms that can NOT be filed electroncially so every one has to be handled manually. I think they’re probably doing the best they can under the circumstances. If you submitted your 1040X with only the 5405 form attached you can definitely expect to be asked to provide some kind of proof that you actually purchased a home. My suggestion is to include a copy of your legal size Settlement Closing Sheet unless it was a brand new home in which case a Certificate of Occupancy will do for homes located in municipalities who issue those forms.
Well, that presents a problem as I can’t just randomly send that in. I’m supposing they’ll send a request for it, and if this is want is necessary then it should have been placed on the insturctions. (not your fault, but the federal government is annoying!)
Hi,
I was married and my ex- and I owned a home and were on title and mortgage together. Now I am remarried. Can my new wife qualify for the credit, as she has never owned a home before. Also can we qualify together, because as a couple, “we” have never owned a home before?
Also…. does the house have be fully purchased by Dec 01, or, can it still be in escrow? What if it is in escrow, and closes on Dec 3rd?
thanks!
I’m afraid the news is not good with this answer. If you were on a title to a home, whether by yourself or with someone else, you do not qualify. Because you’ve remarried your new wife can not qualify either since as her husband you DID have an ownership interest in another home within the prior 3 years. Your new partner would qualify ONLY if she had not married you and could still qualify for a mortgage loan on her own. Yes it’s true. Had you simply moved in together and not gotten married until after SHE purchased a home she could have qualified. As to the escrow issue the answer again is no. The closing Settlement Statement can not be dated later than 12/01/09………unless Congress should decide to extend the offer. The economy will probably dictate whether this act is renewed or amended past 12/01/09.
I am trying to find a bank that will allow me to use the $8000 tax credit for a down payment. If anyone has info on this please email me at. james.liquid@gmail.com
subject: tax credit
I’ve found generally that a local real estate broker (not just an agent) can tell you if there are any lenders located in your area who will allow that. The people who are really in the know on that subject though are the Mortgage Loan Originators who work for Mortgage Brokers or Mortgage Bankers. They have access to sometimes as many as 20 different lenders and programs where most banks’ mortgage loan departments only use 1 or 2 secondary markets. I know of no banks anywhere who’ll make an in house loan (meaning they intend to keep and service the loan themselves) and allow the Tax Credit to be used as all or part of your down payment. The Feds have really tightened down on the banks as to how creative they’re allowed to be anymore. I have heard there are a few lenders sprinkled across the country who will allow the Tax Credit to be used in that manner but I think they charge interest on the $8,000 until you actually receive the check which could be several months. There simply isn’t a lot of creative lending going on now for obvious reasons.
I have a client who is purchasing a home from a trust that his grandprents were the trustees for. They never owned the property in their own name – it was purchased by the trust. Would the IRS consider this a family transfer?
Technically, they never owned the property since it was held in the Trust’s name; however, I’m not a tax attorney and this is probably a question better suited for an expert.
I have been reading through all the post and have not seen a clear conclusion, it may be that there is not a clear answer, but:
1. Can you file the amended tax return using Turbo Tax?
2. What is the ETA on refund arrival:
A. Direct deposit to an account
B. Certified mail
I think the questions have been addressed over a period of several weeks but not all at one time.
1. While you may prepare your amended tax return (1040X) on Turbo Tax you CAN NOT file an amended return electroncially. You’ll need to complete the amended return, include form 5405 (claiming the tax credit) along with a copy of your Settlement Sheet proving you actually did purchase a home and then mail the entire package to Uncle Sam.
2. ETA has been 16 weeks and counting. I am no longer advising folks to file the amended return because of the huge backlog the IRS is trying to slog through. My advice now is to simply wait and file the 5405 form and copy of your Settlement Sheet along with your 2009 return because you CAN file that one electronically. The difference is that when you file electronically you’ll tend to get you refund (and $8,000 Tax Credit in this case) quickly, like within 3 weeks of filing. That doesn’t mean they might not have more questions about your return later but at least you’ll have the money quickly and (A) Yes, they’ll deposit it into your designated bank account right along with your refund if any. (B) While many people advise to send tax returns certified with a return receipt requested I’ve still seen them lose the returns and require the filer to prepare another one. The good thing about Turbo Tax combined with Electronic Filing (remember, I’m advising to wait now until you file your 2009 return) is that it only takes about 5 minutes to create another copy if you need it.
Gary,
Thank for for that last response to someone, it made things much clearer… too bad I didn’t know this advise a couple months ago as I’ve already filed mine… But here is my problem when I sent in my amended return with the 1040x and the 5405 I did not see anywhere where I was asked to send in the settlement sheet. (I did this through turbo tax in May)… what will that mean for me? Will they contact me and tell me they need the additional documentation or should I attempt to contact them?
Thanks, Karen
> The best thing you can do at this point is just be patient and wait for them to contact you. It seems most people who are contacting the IRS themselves right now are getting different answers to the same questions, depending on which IRS employee they speak with. As frustrating as it is, take heart in the fact that you will eventually get your check. Who knows? Maybe it’ll be just in time for Christmas!! I agree this stimulus check could help jump start our economy sooner if we could just get our hands on the promised money earlier.
Just FYI to all of those who have already purchased and are filing for the $8,000 tax credit. If you send in your Form HUD-1, that you received when you closed on your house, with your 1040X and 5405 completed forms, your credit will arrive much quicker. If the IRS only receives the 1040x and 5405 forms, the purchase has to be verified manually before they can approve the refund, which definitely slows it down.
Hello,
I am planning to buy the house that I am renting from my landlord. Do I qualify for the 8000 credit?.
I was reading the form and it says “ou sell the home, or it ceases to be your main home, before the end of 2008.”
Is not my house but is my main residence, I wonder if I still qualify for the credit?
Thanks in advance for your reply.
Fansntt,
You are very observant; however, keep in mind this form was originally a 2008 edition and the IRS was in such a hurry to get this form updated that they finally decided to use a hybrid version. That’s why some of the info refers to homes purchased in 2008 but most of the form refers to homes purchased in 2009. The quote you refer to on page 1 was supposed to be removed from the form before it was released for print. The very latest editions do not refer to that “cease to occupy before the end of 2008″ nonsense. If you’ll scan on down to page 2, you’ll find this verbiage for those who purchased or intend to purchase in 2009 (current deadline to purchase is 12/01/09). It states “If you cease to own or otherwise sell this primary residence within 36 months of the date you acquire it you will be responsible to repay all the money you received as a Tax Credit”. Your form may read slightly different but I’m quoting from the latest revision to form 5405. Now, as to purchasing the home you reside in from your landlord the IRS draws no line against that as long as your landlord is not also an immediate family member. Even if you leased the house with an option to buy, the only date that matters is the closing date when the home becomes officially yours as the new owner. Don’t forget to attach the HUD-1 form, also referred to by many as the Settlement Sheet. It’s a legal size form and accounts for all the debits and credits involved with the transaction such as earnest money deposit, prepaid taxes and escrow amounts for future insurance premiums, etc. etc. etc. I hope this helps.
Thanks Gary!.. that was very helpful… Very confusing IRS forms tho.
I’ve read through the questions and realize mine is very similar to many already asked, so I apologize for asking it again, but I think it’s a tad different – here goes: I own a home, my fiance does not and qualifies as a fhb. If we marry and he (not me) buys a house (my name will not be on the deed), will he still qualify for the $8k tax credit? Thanks so much for responding!
I think I found my answer on the form 5405 – if we’re married and I’m not on the mortgage, he would only get half of the $8K… If this is incorrect, would someone reply? Thanks again!
Steph,
You did find the correct answer………technically. If you can figure out how to postpone your marriage until after he closes on a house, he can claim the entire $8,000. If you marry first and then he purchases a home, he gets only half. Kind of a marriage penalty. I’m not giving tax advice here but if your plans won’t allow you to change your wedding date some couples have chosen not to file joint returns for 2009 and instead wait until the year AFTER they get married to file jointly. Remember though if you should choose to continue fililng separate 1040 forms as single people you should also not claim each other as exemptions for 2009. A cross check would match up Social Security numbers and you’d risk losing even the $4,000.
Thanks Gary! It’s funny to think that we’re getting paid by the government to not get married…
Hi a quick question… maybe someone can suggest some alternatives for my brother and I…
We would like to buy a home and qualify for the $8K credit…However our credit/income situation is a little unique and banks obviously are not into “unique” anymore!!
I have a credit score of 802…However, I am an independent IT consultant and my income is not as ‘documentable’ as banks would like! (About 30K yr for the last 5 yrs)
My brother’s credit stinks… and in fact he does’nt have a credit score…due to some health related obligations he was unable to pay he is considering a bankruptcy filing to clear those debts so as to rebuild his credit in the future. What he does have though is a guaranteed monthly income from SSN/Disability and State Workman’s compensation of $3000 per month until he dies…I will also qualify for SSN in 4+ years for about $1600 a month…
What we want to do is buy a small house or condo as our primary residence… hopefully using/combining his guaranteed income…my somewhat documented (last 3 years IRS) income and my excellent credit rating…We both have zero outstanding debt (or in my brothers case will have shortly)…
We would put mortgage insurance on the house to pay it off in the event of either of us passing (either via the loan or life insurance policies)…with the intent that whomever stands last has somewhere paid for to live…
It seems that our plan is a little more difficult to put into place that we thought…Originally the plan was to buy FHA and go…but they wont use my superb credit combined with my brothers guaranteed income to generate financing! (He has no crdit score and since he will file bancruptcy shortly wont have one for awhile) Land contacts and lease options are an option , but we then lose the $8k stimulus funding…As usual these so called government help plans for the little guy have catch 22s all over the place…
As a pair we would represent excellent credit (mime) and no-risk income (his) now to pay a loan…In 4 years we would add my $1600 SSN to the guaranteed income stream…We want to buy now to take advantage of the low rates and $8K stimulus..is there any way you can suggest we might get financing to buy??
thx
gary
Please don’t be offended but where you see your good credit and your brother’s guaranteed income, a lender sees his bad credit and your “so so” documented irregular income. In today’s lending climate the rule of thumb is pretty much no bad credit accepted and 20% down payment is preferred. Actually, this is exactly what home lending used to look like 20 to 30 years ago. Regulators are jumping all over lenders who try to put together “creative” financing arrangements. Your brother is just pretty much out of the market unless as you say, you can find a seller willing to finance the sale individually or lease w/option to buy. You can probably qualify for a mortgage on your own although it may not be for as much money as your preferred house costs. As far as future income is concerned the lender will not even take that into consideration in the present environment. Documented history is the only thing they’ll consider. Good luck, it’s going to be tough to qualify for any Tax Credit on your proposed method of puchasing/financing.
Thanks for the response…I’ve pretty much come to the same conclusion…just wanted to bounce it off someone to make sure I wasnt overlooking anything! I have done a successfull land contract in the past…looks like another is required now!!
thx
gary
Definitely have an attorney draw up the paperwork on a land contract to be sure you comply with ALL the conditions. Many contracts do NOT cover all the bases mentioned on the IRS web site.
Gary,
Since you and your brother only want to buy a “small house or condo”, why not see how much loan YOU could qualify for alone – and then try everyway possible to put the rest as a down payment (current savings, you and bro saving every penny between now and closing, borrowing from relatives, etc….). I assume your brother is currently living with you in an apartment…if not, he should be and should be saving MOST of his 3,000/mo for his/your home purchase. For example, if YOU alone could qualify for a 50,000 loan and you+bro could scratch together 30,000 between now and Nov 30, you could buy a small condo for 80,000 (in many parts of the midwest/south anyway) and still get the 8,000 credit – all to you. You will also not have to pay the expensive Mortgage Insurance since you will have >20% down. To Gary’s point about lenders though, if you are looking to buy a 200,000 house/condo, you are out of luck, because you simply don’t qualify and shouldn’t be buying anyway.
FYI…found this Q&A on the IRS website…
Q. Can a taxpayer claim the first-time homebuyer credit if the purchase is pursuant to a seller financing arrangement (for example, a contract for deed, installment land sale contract, or long-term land contract), and the seller retains legal title to secure the taxpayer’s payment obligations?
A. If the taxpayer obtains the “benefits and burdens” of ownership of a residence in a seller financing arrangement, then the taxpayer can claim the credit even though the seller retains legal title. Factors that indicate that a taxpayer has the benefits and burdens of ownership include: 1. the right of possession, 2. the right to obtain legal title upon full payment of the purchase price, 3. the right to construct improvements, 4. the obligation to pay property taxes, 5. the risk of loss, 6. the responsibility to insure the property and 7. the duty to maintain the property. (New 7/2/09
Carolyn
So does this mean that LAND CONTRACTS/CONTRACTS to DEED and LEASE TO BUY …qctually do qualify?? Can this be sonfirmed Y/N??
thx
gary
I filed 2008’s taxes in March 2009.
My AGI was over $95,000.
I purchased a home May 1, 2009.
This year my AGI will be $75,000.
Do I file a 1040X with 5405 and ammend last years return, or do I wait until January/Feb 2010 and file at that point?
Will I get $0 if I do the ammendment? ($95K AGI rule)
Thanks,
Chris
Chris,
Yes…to filing next year for your 2009 taxes. You do not qualify if you file on your 2008 taxes (you made too much). You will get $0 if you file an amended 2008 return.
irs sent me a letter saying they need my settlement papers in order to mail my credit. i have waited 120 days(16 weeks) now i must wait longer. does anyone know how long the wait after you send irs settlement papers. i faxed this to speed up the process.l
I am having a real problem figuring this out (duh) – I am going to buy a house this month for $106,000 – do I get 10% of that, or $8000???? I earn less than 30,000 a year. HELP??
My husband & I have not owned a personal home for 3 1/2 years. But, we built & sold a house in 2007. We never lived in the house & there was no motgage in our name, just the builders loan was in our name. Do we still qualify for the $8000 credit?
My husband and I purchased a town home about 5 years ago for our son and took out a kiddie condo loan and his name is on the deed. We are totally responsible for the loan and claim everything on our tax return. He has never made any claims on his tax return for the mortgage interest or anything dealing with the property of any sort and is now interested in purchasing a home. Would he qualify for the $8,000.00.
I purchased a home this year in March and i still havent filed for the Home buyers Tax credit can i wait until i file for my taxes next year to claim it or do i have a deadline? and also i had a baby in March also and im currently not claiming her as a dependant can i eait until i file my taxes next year?
Is it correct that you don’t qualify for the 8,000.00, if you purchase a home from a relative. My parents are retired and moved, my fiancee and i are renting the home and would like to buy the home from my parents but some one told us we couldn’t qualify for the credit. Can you explain?
Joan,
Correct, YOU can NOT buy from your parents and still qualify…however, your FIANCE can – assuming he meets all the other qualifications of FTB, Income limits, etc… Just make sure that your “FIANCE” buys it and in his name only…if you get married before the purchase, then all bets are OFF as he will then be your husband and he will no longer qualify (weird but true). Hope this helps…you are in better shape than newlyweds!
Hi To qualify for the $8000 credit, do you have to close escrow by Nov. 30, 2009? Or do you just have to be in escrow and can you close after Nov. 30, 2009?
HI. i bought a house on 03 /10 /09 and i paid cash for it.. do i qualify for the $8000 …
Javier,
Paying cash doesn’t matter, so you WILL qualify given you meet the other criteria…income, not buying from a relative, occupancy date, etc… To be clear, the 8000 tax credit is for “Buying a home”, not for taking out a loan!
I recently purchased a house and filed the ammendment for my 2008 tax return so I could recieve the tax credit now as apposed to later. I filled it out with the closing date which at that time was in the future. The IRS sent it back saying we needed to be owners of the house before we could apply for the credit. I have since sent in a new form with the correct date and own the house. Should this cause much of a problem in recieving my tax credit?
If I recieved my tax return direct deposit, is the FTHB Credit going to be deposited electronically or mailed via paper check? Also, if it was mailed paper check, and on my amended return, i selected not to update address with IRS, will they then (if mailing paper) send it to the address that was listed on my original return, or automatically send it to the FTHB address that is listed? Thanks.
I have the same question as Antonio. I am closing on my house in two days and mailing in the 1040x and 5405 the same day. I originally got my tax return direct deposited to my bank account. However I recently closed that bank account. I am wondering if my FTHB credit will get direct deposited as well just because my initial tax refund was direct deposit? Or will it come by check?
Thanks
Okay, somebody help me PLEASE!
We purchased a new home in August of 2008. We did not claim the First Time Buyer Credit on our taxes for 2008. Now it is 2009 and we want the credit. Do I have to amend my 2008 taxes?? Or can I claim the credit on my 2009 taxes?? This is so stressful! Somebody just give me $7500 PLEASE! : )
update it took 16 weeks for irs to get my return to processing. then they needed closing papers 2 weeks later (18 weeks) they said they would get back to me. 2 weeks later (20 weeks) 2 weeks later(22 weeks) i get letter saying i will get my 8000 credit and interest . today oct 5 i finally get my check. total wait 5 months 20 days. i will pray for everyone else to get their credit soon.
My question is I bought a house in 2001. My wife was not working at that time and I was the only income used to secure the loan. I think my wife is on the Deed. We just bought another home a few months ago using my wife as the primary, I am on the loan also. Would my wife qualify for the tax credit?
I closed on my home a month ago and don’t know what steps to take to get my tax credit.
Trying to get everything filled out to amend my taxes.
Do I need to fill out anything in Part I of 1040x? Page 4 of the instructions say “If you are providing only additional information and not changing amounts you originally reported, skip lines 1 – 33 and complete Part II and, if applicable, Part III.”
Do I send only the 1040x and 5405 forms, or is there anything else I need to include?
Thanks.
I’ve filed for an amendment for the 2008 Fed tax return but I was wondering 2 things about state:
- Does Oregon offer additional tax credit for first-time homebuyer?
- Do we have to do an amendment to our state tax return as well as the fed’s?
Thanks for your help in advance
There must be a new law are something. I have heard people say that they efiled last month for the first time home buyers credit. They received some form of debit card in the mail and a week later they were issued there 8000.00 tax credit the debit card sent to them from IRS. Is this true? Where I work at many people have been using this so call IRS issued debit card for the tax credit. have you heard of this?
I bought my house in 2008 and did not even know about the $7500 loan amount. Is it possible for me to file for that on my 2009 taxes? I know I have to repay it over 15 years and it does seem unfair to me that those that purchased in 2009 don’t, but anything will help at this point.
If the deadline for the $8000 credit is November 31, when is the last day to file paperwork in order to qualify? Does the home have to close escrow before than or does it just have to be in process?
Amanda,
You can still amend your 2008 Tax Return any time and claim the $7500 loan amount,which however you need repay back.
The 7500 you will have to payback. If you bought the house in 2009, the 8000 is a US tax payers gift to you with no payback
what if your unemployed am I still Eligible for the 8,000?
we are building a beach house on the land we have owned for 16 yrs.it will be complete around the end of nov/beginning of december. our house was destroyed in ike, we have not bought a house in the past 3 years, live overseas, and would only use this new house approx. 2 months every year.. would we qualify for a credit?
we are building a beach house on the land we have owned for 16 yrs.it will be complete around the end of nov/beginning of december. our house was destroyed in ike, we have not bought a house in the past 3 years, live overseas, and would only use this new house approx. 2 months every year.. would we qualify for a credit?
i purchased a house on 5/29/09 (closed date). i filed for amended tax for the $8000 credit. they said they recieved it on 6/12/09. here it is 11/10/09 and still haven't recieved it. i s/w someone and they said they didn't know why i haven't recieved it yet. she said she would contact the processing center. what could be the problem? i was a day late last month, i hope that wasn't it.
If you only use it two months of each year, it is not your primary residence. You would need to live there most of the time for 3 years to qualify. I don't know what the cutoff is, but it would have to be more than half the time at least.
If I were to close on my own home Jan 2010, am I able to file an amended 2009 tax form to get the credit now (in 2010), oppose to waiting til 2011 to file?
TRYING TO BUY THE HOUSE WE HAVE RENTED FOR 8YRS BEFORE THE NOV. DEADLINE BUT IT WILL BE OWNER FINANCE. DO I QUALIFY AND WHAT ARE THE STEPS
Here is a questions i have asked the IRS, and cannot get a real answer. My boyfriend purchased a home in June 2009, he is a first time home buyer. He is the only person on the deed. We planned to get marriend next month December, but we are worried that he may not get the credit if we do get married. I have never been a homeowner, so i think we should be fine. My question is do you have to be married at the time of purchase the home to qulify? Or can you get married before the year ends, and file the taxes Married filing jointly and still quilify for the credit? We are confused and are not sure what to do. My boyfriend will have an income of close to 90k at the end of this year, if we get married our combined income will be less than 150k. Asked the IRS about this and they could not answer my questions. Did we have to be married at the time of the purchase?? any help will be greatly appreciated :)
if i buy a house, between 12-29-09 and 1-14-09 and i qualify for the 8000 tax credit can i claim it on my 2009 tax return?. they are the dates of settlement.
We are purchasing a home from my husbands parents. we were told that we would not be able to qualify for the tax credit because we purchased a house from a family member. Is this true?
we just closed on our first house the last week of nov.now how do i get my credit?anyone who can offer help? please thank you
The actual credit you will receive is 10% of the purchase price of the home or $8,000, whichever amount is lower, so we DON’T get the full $8000 as I was lead to believe by my realtor AND mortgage officer. DECEPTION at its finest…
I have a question: I am really trying to see If me and my husband are eligible.
I own a home with my parents.
But one of the rule is that you must not have not own a house in the past three years from your new purchased.
Well, I no longer lived in my parents home 2 years and 7 months from the purchased of my new home which took place in nov 2008. According to this sentence in the form 5405- I am not eligible. But does this mean that my spouse can qualify, since he has never own a home. But I do understand that by marrying me, the house became part his??? Gosh I am so confused.
I try claming it last year but I got too stressed in thinking the govt’ was not going to approved us due to all these confusion or they would come back for their money and charge us interest.
help!!! advise!!!
If You (and your spouse if married) did not own any other
main home during the 3-year period ending on the date of
purchase.
So when you do your 2009 taxes, do you have to claim the $8000 as “income”?
I am closing on the first week of January will i still be able to get the 8000 for this tax return if i hold off and file in February?
they say that you have to send in proof of buying the home for tax credit …….i have 1000 of paper vwork from purchase ….which one is proof
I still have not received my house tax credit from amending my 08 return. Could I just call the IRS and cancel the claim, so as to somehow claim it on my 09 instead? I didn’t think it would take so long to get it, but if I efile, I can get it the 1st-2nd week in February.
I bought a house March 2007 am I qulify for this credi first time buyer
QUESTION:
I PURCHASED MY FIRST HOME IN JUNE 09. I TRIED TO AMEND MY 08 TAXES TO GET MY TAX CREDIT BUT MY INCOME WAS OVER THE LIMIT. NOW THIS YEAR MY INCOME IS LOWER. CAN I FILE FOR THIS TAX CREDIT AGAIN ON THIS YEARS TAXES?
me and my husband closed on or first home sep. 30 2008, and we didn’t claim the house last year . which rebate would we get?
I purchased a home in Aug 2009. I have heard two different things in regards to filing form 5405.
1) If you purchased before Nov 2009, you can e-file and do not need to send in a copy of the settlement statement.
2) You must file a paper copy of your tax return with a copy of your settlement statement.
Does anyone know which is correct?
I have seen and heard on various websites that the definition for first time homebuyer “may” include “displaced homemaker” and or “single parent” if they owned the previously owned home (with-in the 3 year period), with a former spouse. IRS.GOV has no language what so ever for this “clause”. This language is specifically referenced as being included within the “first-time homebuyer” definition through HUD, in Chapter 3 “miscellaneous policies”. That is the only place I have found this exception to the “legal” definition. Can you shed some light on this mystery, as all of the sites I’ve visited thus far, have failed to clarify or provide any information for me to be able to substantiate that this “clause” even exists. Being HUD and IRS are both government entities, would they be obliged to share the same legal definitions??? THank you in advance for your anticipated reponse
My husband and I are first time home buyers and are told we cannot qualify for the tax credit because we purchased this from MY parents but through a living trust.
Is there not a provision for those of us who have purchased this way???……..I dont understand why we dont qualify………..we have lived in this house 10 yrs and finally decided to purchase it and feel left out and cheated. Is there something we need to do in order to take advantage of this program. We are retired military and moved around for 27 years and never bought before because of that……any loophole I should be looking for????
Is it possible to qualify for the $8000 tax credit if you find a home after the specified date of April 30,2010?
My understanding is that you must be in contract (Seller accepted your bid, and you’ve signed something.) prior to May 01, 2010. Hope this helps.
I want to file my taxes now, but have not yet found a home. I have been spoiled by H&R Block Online, and would prefer to do as I have in the past. I’ve filed electronically and have received my refund within weeks. Does anyone know if I’m able to claim the Home Credit after the fact for this year 2010? Meaning… I would like to mail in JUST for the Home Tax Credit once we’ve found a home, and do my taxes electronically now as I’ve done in the past.
You can e-file now, and file an amended return (through snail mail) later. There’s a deadline to qualify for the credit, though, unless Congress extends it again. Here’s the info for claiming the credit with your 2009 returns.
Awesome Flexo! So again, the fate of my returns will lie on your knowledge. I can do as I’ve always done (e-file with H&R Block online,) and then find my home, and send off the 5405? The expect payment electronically for my “regular” taxes, and then a check for the home tax credit? If so, and I hope it is…. YES!!!!!!!! I need some money now, and don’t want to wait to find a house to file. I appreciate your help and time.
You’ll have to do more than send off a 5405, you’ll have to file an amended 1040X. And I expect it could be a while before you receive your home buyer credit from the IRS. But otherwise, it sounds like you got it. If you have any questions, you should check with a tax professional.
Last question, promise. If I buy the home in 2010, can I still file for the credit on my 2009 taxes? Oh, and sorry for all the grammatical errors. I’ve had a few :)
If you buy your house in 2010, you can still claim the credit on your 2009 taxes, but your purchase needs to be before the credit expires.The details are here.
Hello! A few questions if I may….My husband and I purchased our first home on November 5th, 2009…The day before they changed the rules about efiling I have learned. I spent 8 hours doing our taxes yesterday, and right when I went to efile, TurboTax tells me, Sorry you cant…Oh the frustration! My question about paper-filing is, how long does this take??? If I mail it out and choose direct deposit could it still take 4 months???I read that somewhere. The next question relates to our method of purchase…We bought by a “land contract”, otherwise known as seller-financing..The IRS has confirmed that this is acceptable for the credit, but I can not find anywhere what I should include with my form 5405. I have a memo of the realestate contract(in recoradable short form), and I also have the actual 10 page contract…I have records showing we applied for and received the homestead exemption, and I also have something from the auditor with the sale information. When we filed our papers in the courthouse, we had to fill out a sales disclosure…That has all the good information on it. I wonder if I could get a copy of that…Any advice would be greatly appreciated!
(We chose the land contract becasue the seller gave us a great interest rate, and we can have the home paid off wihtin 10 years-just in case you were wondering:)
Oh! sorry, 1 more thing. Do I also need to include copies of the reciepts for the energy-efficient windows we purchased in December on the 5695 form???
My husband & I have not owned a personal home for 4 years. But, we built & sold a speck house in 2007. We never lived in the house & there was no motgage in our name, just the builders loan was in our name. We built our personal house & closed in January 2010. Do we still qualify for the $8000 credit?
My wife and i were just purchased a house in late October of 2009. Unfortunately due to lack of employment and unforseen circumstances, and in order to get a decent rate I had to get my father to get the loan for us.
We signed some documents that said we were on the mortgage. ( From what i undertand, that is different from the loan) Does that just meen we are financially responsible for the payments?
My wife and I are both on the Deed, and neither of us have ever owned a home before.
I have read mixed answers about whether or not we qualify for this $8000 tax credit.
My buddy works for the IRS, and he said he was pretty sure we would, since it was our first home.
Do we qualify or not?
Do we qualify?
My husband and I bought a home in May 2009. I have not owned a home for three years. My husband, however, is a different story. He was moved out of his house in April 2006 and then divorced in July 2006….his x-wife got the house.
Can we still claim the credit?
Hello quick question do i still qualify for the first time homebuyer credit for 2008 if i closed on my home in 02/2008 ?? I find it very confusing, first off it says: this applies only if you purchased your home 4/30/08, but in a different area it states if u purchased your home and have not lived in it for about three years?? does this even apply to me and my wife, hence the word ‘first time home buyer credit ?? can someone please clarify this for me ??
I built a house (my first home) starting in 2008 – I closed on the loan in Dec. of 2008 but did not move into the house until 2009. Do I qualify for the 8000.00 rebate?
Thanks, Skyler
My son is buying his first time home March 12 2010. He is getting 5000 back before the 8000 tax rebate. He wants to send his tax in now get the 5000 back (maybe by efile). Then he wants me to amend his tax in March after his purchase. He does already have a signed contract to purchase with dates the and price. I’m afraid this might cause problems and long delays. I prefer him to wait to March and file it all. Do for see any problems or long delays with his 8000 rebate by amending it in March?
My husband and I bought our first home in August of 2009, expecting to receive the first-time homebuyer credit. We purchased our home from his mother, who has retired and has moved. Is it true that because we purchased the home from a relative, we don’t qualify for the $8000 tax credit? Is there anyway to get around it?
Thanks!
I filed for the return with my 2008 taxes and purchased my house in July 2008. I am filing my 2009 taxes…. Do I need to report this as income, or something? Do I need to pay taxes on this?
I bought a home on 11/06/09 my income is over the limit to receive the 8k credit for a single person. I was married on 11/14/09 but my wife was not involved in the purchase of our home. If we file jointly, do we qualify for the 8k credit since our joint income does not exceed the limit?
I purchased & closed on my home of my own accord on 9/4/09. I qualify for the tax credit as I have never owned a home before. However, I got married on 10/10/09 to a man who has owned a house in the last 36 months. Does HIS past disqualify ME even though I purchased the home before we got married?
You can still amend you 2008 tax return for this credit. If you amend your taxes for that year you should be able to get the credit bc you weren’t married then.
Kerry,
I’ve ready several places that eligibility for the tax credit is determined at the time of purchase.
but I’m in sort of the same situation:
I do not qualify for the tax credit, in Oct 2009 my fiance and I bought a home together. she does qualify. in Nov 2009 we got married. i found this to show that she can in fact claim the full tax credit:
http://www.irs.gov/newsroom/article/0,,id=206294,00.html
what i haven’t been able to figure out is if i can file “married filing jointly” or not.
anybody know???
My salary is 120,000 dollars. However, if I do overtime which is probably the case, it can go up to 130,000. If I buy the house in april this year, Can i file for the 8000 dollars this year or I will have to wait for next year? And do they consider my base salary when determining my eligibility or they take into account my overtime?
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