Free IRS Money for Home Buyers

Great news for First Time Homebuyers!  The massive economic stimulus bill that was just signed into law has a great incentive in it for First Time Homebuyers.  If you buy your first home between Jan 1, 2009 and Nov 30, 2009 (and “First Time” means “Haven’t had any ownership in a home for the past 3 years”), you get an $8,000 IRS Tax Credit.  This “Tax Credit” is actually real money in your hand.  You buy the home – IRS gives you the money when you file your taxes.  If you would have received no refund, now you’d get a check back for $8,000!

AND, there is a provision in there that says if you stay in this home for 36 months, YOU DON’T HAVE TO REPAY THE CREDIT!  It is yours to keep, no payback, no penalty.  This is different from the previous $7,500 credit that DID have to be repaid.  If you bought your home in 2008 under the $7,500 rules – those rules still apply.  That credit still has to be repaid over the 15 year period.  Sorry.

Now, questions you have are something like this:

How soon do I get the credit?  If you buy in 2009, you can get the credit very quickly if you’d like (and why wouldn’t you want to get it right away?).  If you haven’t filed taxes yet this year, just include this credit with your filing (and it is my understanding that even if you don’t have to file a tax return – you should file anyway and claim the credit).  If you have already filed this year, you can simply file an amended return and claim the credit.  You do NOT have to wait until next year to claim this.

Are there income limits?  Yes.  If you are a single filer, you can make up to $75,000.  Married filing jointly can make up to $150,000.  If you make a little more than this, check with you tax attorney or the IRS guidelines for specifics on partial tax credits available.

What happens if I sell or move before the 36 months?  If you sell the home or move and rent it out in the next 36 months, you’ll have to repay the $8,000.  So, if you’re buying this year and claim the credit, try to buy something you want to stay in for at least 3 years.  Otherwise, say bye-bye to this big benefit.

If you are considering buying a home this year – or already have – make sure you get full details of this new law.  I am not a tax attorney and cannot give legal advice on such matters, but the basic provisions of “you have to buy in 2009 BEFORE Nov 30 to qualify”, “$8,000 is the agreed-to size of the credit”, “36 months is the amount of time you have to stay in the home”, and “this will only be for first time buyers” are pretty clear.  Rumors of different proposals for non-first time homebuyers or for larger credit amounts didn’t happen – this is what we got.

This is great news for new buyers – so let’s get out there and buy, buy, buy – and great news for sellers who have been waiting for new buyers to offer, offer, offer.  Interest rates continue to be awesome – we have plenty of money to lend – our closing times are still terrific – home prices are incredible – and I’m still willing to take on new clients (ain’t that nice of me?) – so what are you waiting for?

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