Hey gang, a couple of weeks ago I posted an item about the $7,500 tax credit that the government was offering to first time home buyer’s.
Seattle First Time Home Buyer Federal Tax Credit up to $7,500
At the time of the post the tax credit needed to be repaid over 15 years at 0% interest. Not a bad deal. How often do you get an interest free loan from the government.
Well I am happy to announce that the government is considering it an actual credit that no longer needs to be repaid. It may became an actual tax credit. Not a tax write off and not an interest free loan, but an actual credit.
The government is considering such a proposal and many are convinced that the soon to be anounced stimulus package will contain language that eliminates the need to repay the credit.
So for example if you would have owed Uncle Sam $7,500 in taxes for 2008 but purchased your first home in 2008, you do not have any taxes to pay and nothing to pay back ever.
Pretty great stuff.
Side Note: Technically anyone who has not owned a home in the past three years is eligible for the credit so even if you owned a home before but have rented for at least the last three years and purchase a home, you can get the credit.
Give me a call if you need help.
Rob Graham, Accredited Buyer’s Representative
Windermere Real Estate
206-321-6349
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Hi Rob. We are first time home buyers and are currently in escrow. Our closing date is on Feb. 6, 2009. We are planning on filing are taxes soon to help cover our moving costs, etc. We were wondering if we would be able to claim the $7,500 tax credit before our closing date? Or would we have to wait til after we close? Any info is greatly appreciated.
Thanks,
Ron and Christine
Hello, and congratulations on the purchase. Let me first say that I am not an accountant and you should really ask them this question. Now that I have that formality out of the way let me give you my thoughts. My understanding is that because the close is taking place in 2009, you would not be able to claim the credit until you do your taxes next year. You would also need to wait to claim the closing costs, moving expenses etc. associated with the move. In addition, next year you will be able to claim the interest and a host of other items. Unfortunately that doesn’t help you this year, but next year you will have a whole boat load of deductions to claim. I always tell my clients that if they have never used an accountant before, the year they purchase a home is the year to do so. There are a myriad of deductions to claim and you don’t’ want to miss any.
I hope that helps but again I would double check with an accountant.
Hi Rob,
Where are you hearing that this is for sure a true credit? Everything I’ve read says that’s just one possibility the government is considering, but currently it still does need to be paid back.
Adam,
My appologies. I took it on good advice from someone that I trusted that in fact the need to repay the credit was ammended. As it turns out, while many people believe the language for that law will be changed in the upcoming stimulus package, it is not law yet. I applogize for the oversight and I have ammended the post to reflect the current situation.
Rob
Ron and Christine,
I am a big enough man to admit when I am wrong. I didn’t think there was a way for you to collect the tax credit on your 2008 taxes if the close was in 2009. It appears I was wrong. Please follow the following link for more answers to your questions.
http://www.federalhousingtaxcredit.com/faq.php#19
One other option is to inform yor employers that you have purchased your home and you can reduce your withholding for 2009.
Either way that works for you.
Rob
Hi Rob. We just filed our taxes the other day. We asked them about it needing to be paid off and as far as they know, it still needs to be paid off. They also said we wouldnt be able to claim it until next year anyway. Which is fine, we didn’t need the money right away afterall. Our refund should cover our expenses. Hope it’s still available for us next year. Thanks for all your help. Take care!
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