Well, This is a First

pema · Post by **pema** » July 29, 2008 5:53 pm

FIRST-TIME HOMEBUYER TAX CREDIT

"The housing act gives first-time homebuyers nationwide a temporary refundable tax credit equal to 10 percent of the purchase price of a home, up to $7,500 ($3,750 for married individuals filing separately) The credit begins to phase out for taxpayers with adjusted gross income in excess of $75,000 ($150,000 in the case of a joint return). The credit is effective for homes purchased on or after April 9, 2008, and before July 1, 2009. Unlike other credits, however, the first-time homebuyer credit must be repaid in equal installments over 15 years, essentially making it an interest-free loan from the government for most qualifying homeowners.

The IRS is not giving the $7,500 credit as cash at closing. The individual must claim the credit on a 2008 or 2009 tax return. However, a first-time buyer who purchases a principal residence in 2009 after filing a 2008 return has the option of filing an amended 2008 return to claim the credit.

Under the new law, two or more unmarried individuals may purchase a residence and qualify for the credit. They must allocate the amount of the credit between them as the IRS prescribes. However, the total amount of the credit allowed to the individuals jointly may not exceed $7,500."

Could save folks approximately $4,000 in mortgage interest over 15 years? Will be interesting to see how lenders handle the no cash at closing part. Will that mean that everyone who wants to take advantage of this will wait until 2009 to buy a house? That won’t be good for the housing market right now.

keybdplyr · Post by **keybdplyr** » July 29, 2008 6:14 pm

I believe it has no effect at the time of closing. As with any typical sale, YOU have to come up with the entire purchase price, whether it be cash down or whether it's part of your loan. THEN you claim the credit against your tax income tax on your next return. There doesn't appear to be any incentive to wait until next year.

If the article is accurate, it's a small, interest free loan amertized over 15 years. Interesting.....

pema · Post by **pema** » July 29, 2008 6:23 pm

keybdplyr wrote:I believe it has no effect at the time of closing. As with any typical sale, YOU have to come up with the entire purchase price, whether it be cash down or whether it's part of your loan. THEN you claim the credit against your tax income tax on your next return. There doesn't appear to be any incentive to wait until next year.

If the article is accurate, it's a small, interest free loan amertized over 15 years. Interesting.....

However, a first-time buyer who purchases a principal residence in 2009 after filing a 2008 return has the option of filing an amended 2008 return to claim the credit.

phjrsaunt · Post by **phjrsaunt** » July 29, 2008 6:30 pm

Speaking as someone whose job is tied to the real estate market, I hope it will help to stimulate home sales. This is a very nervous time at Auntie's house!

ScarletB · Post by **ScarletB** » July 29, 2008 6:56 pm

They did something similar to this when I bought my first house in 1974 and we got a credit of some sort at the time.

I'm in the business too and I hope this helps. I imagine the folks who buy our loans will let us know how to deal with it.

pema · Post by **pema** » July 29, 2008 7:00 pm

ScarletB wrote:They did something similar to this when I bought my first house in 1974 and we got a credit of some sort at the time.

I'm in the business too and I hope this helps. I imagine the folks who buy our loans will let us know how to deal with it.

would not be the first tax credit for home buyers, but i think it will be the first one that is set up as an interest free loan.

ScarletB · Post by **ScarletB** » July 29, 2008 7:13 pm

pema wrote:
ScarletB wrote:They did something similar to this when I bought my first house in 1974 and we got a credit of some sort at the time.

I'm in the business too and I hope this helps. I imagine the folks who buy our loans will let us know how to deal with it.
would not be the first tax credit for home buyers, but i think it will be the first one that is set up as an interest free loan.

True enough - it will be interesting to see how this affects what I do I hadn't even seen this information yet.

V-town Fin Truck · Post by **V-town Fin Truck** » July 29, 2008 7:18 pm

I just want to know how they came up with April 9th..... What's wrong with April 1st? They must know I bought mine on the 1st....

phjrsaunt · Post by **phjrsaunt** » July 29, 2008 7:19 pm

V-town Fin Truck wrote:I just want to know how they came up with April 9th..... What's wrong with April 1st? They must know I bought mine on the 1st....

"they" clearly have no sense of humor....it would have been too fun to have be on April Fool's day!

pema · Post by **pema** » July 29, 2008 7:20 pm

V-town Fin Truck wrote:I just want to know how they came up with April 9th..... What's wrong with April 1st? They must know I bought mine on the 1st....

keybdplyr · Post by **keybdplyr** » July 30, 2008 1:01 pm

pema wrote:
keybdplyr wrote:I believe it has no effect at the time of closing. As with any typical sale, YOU have to come up with the entire purchase price, whether it be cash down or whether it's part of your loan. THEN you claim the credit against your tax income tax on your next return. There doesn't appear to be any incentive to wait until next year.

If the article is accurate, it's a small, interest free loan amortized over 15 years. Interesting.....

However, a first-time buyer who purchases a principal residence in 2009 after filing a 2008 return has the option of filing an amended 2008 return to claim the credit.

Maybe I’m missing your point. Next return or amended previous return is irrelevant. There’s no effect at the time of closing and there’s no incentive to wait until 2009.

TropicalTroubador · Post by **TropicalTroubador** » July 30, 2008 4:22 pm

Does nothing at all for those of us who can't afford to buy a new house because all the equity in our existing one has evaporated. All I can say is, "Thank Gods I don't have to move."

pema · Post by **pema** » July 31, 2008 12:27 am

keybdplyr wrote:
pema wrote:
keybdplyr wrote:I believe it has no effect at the time of closing. As with any typical sale, YOU have to come up with the entire purchase price, whether it be cash down or whether it's part of your loan. THEN you claim the credit against your tax income tax on your next return. There doesn't appear to be any incentive to wait until next year.

If the article is accurate, it's a small, interest free loan amortized over 15 years. Interesting.....

However, a first-time buyer who purchases a principal residence in 2009 after filing a 2008 return has the option of filing an amended 2008 return to claim the credit.
Maybe I’m missing your point. Next return or amended previous return is irrelevant. There’s no effect at the time of closing and there’s no incentive to wait until 2009.

Yes

If you buy a house now, you have to wait until January to get your W-2, etc. and file your 2008 return to get your refund. However if you wait till 2009 to buy a house, you go home and immediately file an amended 2008 return and get your refund fairly quickly.

keybdplyr · Post by **keybdplyr** » July 31, 2008 3:20 pm

I guess I DIDN’T miss your point.

I don’t think most homebuyers would consider a faster turnaround time a critical advantage, certainly not enough to postpone their search for a house. More would likely consider getting the money in their pocket at the earliest possible date to be the biggest advantage, in which case 2008 would work just as well, if not better, than 2009.

Whether “fastest” or “earliest” would ACTUALLY be more financially advantageous to an individual would be dependant on their specific situation and plans.

pema · Post by **pema** » July 31, 2008 4:01 pm

Oh yeah, I forgot. All homebuyers make sound financial decisions when it comes to their mortgages. That’s EXACTLY why we are having this mortgage crisis.

And your statement was that there was NO incentive. The less you make absolute statements like that, the less likely you are to look stupid later.

keybdplyr · Post by **keybdplyr** » July 31, 2008 7:44 pm

Personal attacks.......nice......

pema wrote:Will that mean that EVERYONE who wants to take advantage of this will wait until 2009 to buy a house?

No. There is no significant incentive to wait. Prove it different or let it go.

VanillaGrl · Post by **VanillaGrl** » July 31, 2008 9:09 pm

pema wrote:Oh yeah, I forgot. All homebuyers make sound financial decisions when it comes to their mortgages. That’s EXACTLY why we are having this mortgage crisis.

And your statement was that there was NO incentive. The less you make absolute statements like that, the less likely you are to look stupid later.

Interesting comment...geeeez.... I think we've all been a little guilty of that now and then.... lighten up.