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How to Claim the $8,000 Home Buyer Tax Credit of 2009

This article was written by in Taxes. 349 comments.


Claim the tax credit with Intuit TurboTax or H&R Block At Home.

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.

TurboTax is Easy, Free Edition, Fast Refund

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.

TurboTax is Easy, Free Edition, Fast Refund

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.”

Updated March 21, 2011 and originally published February 25, 2009. If you enjoyed this article, subscribe to the RSS feed or receive daily emails. Follow @ConsumerismComm on Twitter and visit our Facebook page for more updates.

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About the author

Luke Landes, also known as Flexo, is the founder of Consumerism Commentary. He has been blogging and writing for the internet since 1995 and has been building online communities since 1991. Find out more about him and follow Luke Landes on Twitter. View all articles by .

{ 349 comments… read them below or add one }

avatar jaymeee

I purchaced my home december 31, 2008 is there any way possible i can be qualify for the 8,000 tax credit?

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avatar Michelle

Our situation is that my husband and I lived in my Grandfather’s coop that we didn’t buy but had to be in my name only in order that we could live there by the cooperative’s standards. We knew when we moved we’d have to sell the coop and give the money to my Grandfather. We vacated the premises August 2006, still paying only maintenance. Sold in June 2008. We paid only maintenance while living there and until it was sold. When it was sold, I gave proceeds of sale back to Grandfather’s estate, since we never really owned it or bought it. My husband wants to buy a house and was not the coop share stock or any of the records. He is getting the mortgage on his own and will be only one on titile. He will close by the end of April 2010. Can he claim the $8000 or even half of it, even though he’s married to me and my name was on the coop even though I didn’t own it, only in writing? Thanks for any advice to this sticky situation.

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avatar Jessica

My question is I purchased my home in September of 2006 but refinance my mortgage in November 2009. I had an adjustable rate and now have a fixed rate. Do I qualify for the credit?

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avatar Kathy Burghart

My husband and I have filed for a divorce, I am buying a new home of my own and qualify for the $8000. If I file my 2009 tax return with him will I loose the credit because he owns a house? The house is in his name only and was his before we married. If I file alone, I take a big hit because I’m filing Married filing separate. I do not want to loose my $8000 but I don’t want to pay in either! Help!

Kathy

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avatar Alex

I bought land in another state, Missouri in 2006 – 2007 as an investment. I was sent a 1098 Form from the seller as I only had a “Contract for deed” in 2007 and did my taxes using turbotax. the land was vacant and undeveloped, there was never a home on it. When I bought my first home in 2009 in California I applied for the first time home buyer’s credit. But I found out I was denied because of the Form 1098 in 2007 taxes. I have since lost the land to theft, but I never declared this my primary address. how can I prove to the IRS this is just a misunderstanding?

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avatar Desiree

Can I apply for my own first time buyer tax credit? Or must I have H&R block do it?

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avatar wilder boar

Visit all the complaint sites online. Thousands who legally and legitimatly became first time homebuyers in 2009, are still fighting long months, somew ill figh the IRS for a full year or two, to get the refund promised by the FED.The FED doesn’t have the money. Caveat emptor. Beware, with the more open license the FED gave the IRS this Spring the IRS can deny any rebate for any reason or construct that reason from interpretation of their own internal rules not known to the public.

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avatar mikki

I have a question regarding the first time homebuyers credit and would appreciate any help I can get. My husband and I bought/closed on a home on December 17, 2009. Because of bad credit, my father-in-law co-signed the loan for us. The warranty deed along with tax appraisal district show us as 100% ownership, with my father-in-law not being even listed. However, the HUD-1 statement does list him because he co-signed for the loan. My father-in-law does not qualify for the first time home buyers credit. When I sent in the 5405, I provided copies of the HUD-1 as required along with the warranty deed. I was just informed that the return has been placed in review and I am panicking, could the co-signer knock us out of the credit? Thanks in advanced for any help.

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avatar Stacey

Could someone please help me? I am filing my 1040x and the amount on line 20 is equalling $7,833 ($167.00) less than the 8,000…however $167 is on my line 8 and 9 of the revised 1040x I am not sure what I am doing wrong…I think I have calculated wrong but I just dont know…I would appreciate any help…I am using my 2009 tax returns I filed 1040….Any help would be great..

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avatar Kathy Burghart

I thought I qualified for the $8000 credit, but now I’m not sure. I was married to a man who owned a house before we married. Our divorce was final 06/24/2010 and I bought my own home. I filed a extension on my 2009 taxes so I could include the $8000. But I read that if you file “married filing seperate, you wouldn’t qualify. Should I wait and file the credit on my 2010 taxes or does it make a difference? Do I qualify?

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avatar jerry

Flexo
What if a person has a criminal history??
Can they claim the $8000 tax credit???
There are 2 simple assault charges.

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avatar isabel

i have a question, me and my husband is a new home buyer home, we bought a house lastyear july 13, 2010 and we heard that they extendent the 8000 credit, and my husband also is a us army, are we qualify for the 8000 credit?? thnx…

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avatar trey

Bought a home in Oct 2009. Qualified for 8K tax credit. However, we will be having our third child in October of this year and need to upsize. Will we have to pay the 8K back immediately or over the next 15 years?

Thanks for any advice you can provide!

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avatar Gary

Trey,
Figure out some way to stay in that house long enough to satisfy the 3 year rule. If you sell the home, you must repay the entire $8,000 in the year you sell it. While it may cramp your style for a while, selling the house within the 36 months following the purchase carries too much of a penalty not to stick it out. I know a couple who had a similar situation and they went ahead and purchased another home. They rented out the house they received the $8,000 credit on and thought they’d slid by but when the husband applied for a student loan last month he was denied. The IRS figured out what he’d done by simply matching up social security numbers on the 1098 (mortgage interest paid) forms. He is now facing fraud charges plus being ineligible for any student loans from the government for at least the next 5 years or until he repays the $8,000, whichever occurs first. It’s just not worth it to try an end run around the rules. Your reference to paying it back over the next 15 years dates back to an earlier program where the maximum credit was $7,500 and it had to be paid back at $500 per year regardless of the circumstances. In other words that program was a loan and not a tax credit. I hope this helps.

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avatar Kelli

Gary,
Your post in response to Trey’s question provided a lot of useful information for me, however, I did want to ask you something, regarding my particular case.
I purchased my home July 2009, in my name. I now am engaged and seeking to relocate to another state to be with my soon-to-be husband, therefor I am looking to rent out my home. I do know that I will be, when doing so, entitled to repay the IRS for the $8,000.00 credit… My question is, do they allow you to make payments? I am terrified to put myself in a position where I am slapped with a bill of $8,000.00 due immediately, because I simply do not have this kind of money. I am a single mother, looking to be with the one I love… kind of tough situation for me right now…

Please provide any helpful information.
Thank you,
Kelli

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avatar marsha

What did you find out about having to pay back the 8000? How long do you have to live there before you don’t owe?

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avatar Chenney

I co -signed for a friend to buy an house in october, 2009. Will i be able to get my share from the $8,000 that he personaly claimed in his refund?

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avatar Ssells

When you file the amended return, it allows you to make any changes, i.e. you can now claim head of household instead of “married filing separate”.

The definition of a 1st time homebuyer does include divorce.

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avatar debbie

Kathy did you get an answer to your question? My tax lady did my taxes wrong so and I was kind of in this situation like you.. I feel she should have known better. Wondering if I have a leg to stand on and sue her for the $8K!! deb

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avatar mimi

I don ‘t think that you qualify, 1st timehomebuyers who have not owned a home within the last three years.

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