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Updates for Frederick Homebuyers on the $15,000 - Strike That - $8000 Tax Credit

As most of you probably have heard, the Senate passed the ammendment to the American Recovery and Reinvestment Act of 2009 (H.R. 1), a $15,000 tax credit for homebuyers, but we have a few days to go before we can count on a final rendition, while the stimulus bill is still in flux.  Here are some particulars, as they stand today:  (And Here are the updates on Feb. 13)

• The time frame will be for one year, starting on the day of enactment, not on the Jan. 1, as some of the media are saying.  (It will be in effect until Dec. 31, 2009.)
• The credit is for all homebuyers, not just first-time homebuyers, a change from the original Act.  (No, really, its just for first-time homebuyers.)
• The credit will be given on the following year's tax return.
• The credit does not have to be paid back, unlike the original $7500 credit. (The original $7500 has been increased to $8000 and doesn't have to be paid back.) 
• The amount equals 10% of the home's price, not to exceed $15,000.  ($8000)
• The taxpayer has a choice of splitting the credit accross 2 years.

The ammendment will be in effect when the stimulus package gets passed and is signed into law by the president.  The vote is slated for Tuesday.  (But They're warning us that they still might tinker with the amount.)

(Are you confused by the changing minds of our legislators?  Well, just wait a few days, I'll check back, and keep you posted.)

LATEST UPDATE:

First-time homebuyers can now claim a credit worth $8,000 - or 10% of the home's value, whichever is less - on their 2008 or 2009 taxes. (And they don't need to pay it back!) Tax filers will see a refund of the full $8,000 (or 10% of home's value) even if their total tax bill was less then that amount. For example:
Mr. & Mrs. Jones will qualify as first-time homebuyers, and they are currently set to get a small tax refund for 2008. Mr. & Mrs. Jones would get an additional $8,000  on top of their current refund. Likewise, if they had underpaid their 2008 taxes by $1,000, the first $1,000 of the tax credit pays their bill, and they would receive the remaining $7,000 as a refund.

To qualify for the credit, the purchase must be made between Jan. 1, 2009 and Nov. 30, 2009. Buyers may not have owned a home for the past 3 years to qualify as "first-time" buyers. They must also live in the house for at least 3 years, or they will be obligated to pay back the credit.
Additionally, there are income restrictions: To qualify, buyers must make less than $75,000 for singles or $150,000 for couples. (Higher-income buyers may receive  a partial credit).

Applying for the credit will be easy. Buyers need to claim it on their tax return. No other forms or papers have to be filed. Taxpayers who have already completed their returns can file amended returns for 2008 to claim the credit.

The IRS has amended form 5405, the “First Time Homebuyers” tax credit form to include the ability

to take the tax credit on their 2008 tax return and not have to wait a year to file with their 2009 return.

Here is the link to the form First Time Home Buyer Tax Credit for 2008 Form!!!! or just go to www.irs.gov and search for the 5405 form.

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Will it help the economy?  As of now, I'm thinking it will help some.  It won't be a cure-all of course.  People who cannot afford a house still won't buy.  It won't loosen up credit.  But it will probably get some people off the fence.  If you're thinking of buying in 2009, you should certainly add it to your list of pros.

Additionally,  Karen, nor I, are a CPA, a lawyer, or tax expert. If this credit is of interest to you and you are considering a home purchase, you should consult a tax professional prior to purchasing a home.

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