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$8,000 First Time Homebuyer’s Credit

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Are you sitting down? Do you have a pen and paper handy? Looks like the $15,000 tax credit to buy a new home has been scrapped, saving $35 billion from the stimulus package, and replaced with an extension to the $7,500 and an increase of that credit to $8,000. The $7,500 first time homebuyer tax credit was set to expire July 1st, this $8,000 provision would extend that. CNNMoney is reporting that the credit is available for those who buy a home between Jan. 1, 2009 and Dec. 1, 2009 (source).

The cost of the extension and modest increase is pegged at around $2-3 billion. Another key provision? The repayment requirement will be nixed. That means the $7,500 15-year loan at 0% interest will now become $8,000 cash money in your pocket. I believe existing borrowers would have that loan forgiven.

Home buyers who hoped for a $15,000 tax credit to buy a new home, as promised by the Senate, will be disappointed. A proposed $35 billion credit to support home sales was jettisoned in favor of a more modest $2 billion to $3 billion provision.

The proposal would eliminate the repayment requirement in an existing tax credit for first-time home buyers, and raise the credit to $8,000 from $7,500. Congressional aides cautioned Wednesday that the credit’s size was still subject to negotiation.

Congress Strikes $789 Billion Stimulus Deal [Wall Street Journal]

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164 Responses to “$8,000 First Time Homebuyer’s Credit”

  1. Suzy says:

    The cost of the extension and modest increase is pegged at around $2-3 billion. Another key provision? The repayment requirement will be nixed. That means the $7,500 15-year loan at 0% interest will now become $8,000 cash money in your pocket. I believe existing borrowers would have that loan forgiven.

    IN THIS POST, IT SAYS THAT REPAYMENT REQUIREMENT WILL BE NIXED. IT SAYS THAT EXISTING BORROWERS WOULD HAVE THAT LOAN FORGIVEN.

    I bought my home July 08, does this mean that I will be getting the credit and not have to pay for it back???

  2. Nick Randazzo says:

    If I already completed my taxes for 2009 and purchase a house within the deadline, is there anyway to refile my taxes to receive the tax credit in 2009 as opposed to 2010?

  3. Kelly says:

    I have a odd question, that has yet to be answered. If I close on a new home on March 5th, 2009 can I ammend my taxes that I alredy filed for 2008 tax year and claim the $8000.00 to receive it this year?

  4. Mike says:

    Does anyone know the answer to this: If I have purchased a home when I was single and then got married, do we qualify if the house is in my wife’s name (who has never purchased a house before)?

    We do qualify under the income criteria.

  5. Dawn says:

    Yes Kelly and Nick, you can file an amendment on your 2008 tax return!

  6. Erin says:

    It’s a real slap in the face to those who took the leap in 2008 and bought a house for the first time. 2008 was not much better than 2009. The difference of having to pay back the $7500. over receiving the $8000. for free – is absolute nonsense. I am fine with the repayment program and I not fine with others receiving “free money”. Nothing is ever for “free”. The rest of us not benefiting from this new program will be sure to pay for this.

    • Jim says:

      You’re still getting a $7500 loan for nothing, which is better than getting $0. I find it surprising that you were happy to receive the $7500 loan and didn’t find it to be nonsense, but now that others can get $8k it suddenly becomes absolute nonsense? Seems hypocritical.

      • michele says:

        I dont believe it is hypocritical at all. Taking a loan (interest free or not) you are still liable to pay it back. Free money is free money. Those that purchased a home during 2008 are blessed yes, to get an “interest free loan” but in any case we still have to pay it back. Homebuyers during 09′ do not. That isnt easy to sink your teeth into. No it’s not fair, no it’s not something to easily accept, but how many of the IRS rules give you warm fuzzy feelings?

    • saladdin says:

      “Slap in the face.” That’s overly dramatic don’t you think?

      saladdin

    • Ronnie says:

      Well you should’nt have a bought a home then. Since when did the goverment tell you you had to buy a home in 2008? How about receiving nothing instead? If you don’t like the loan then don’t take it. It’s a simple choice YOU could make. Just like the choice you made to purchase a home in 2008……Right..Stop whining!

    • joe says:

      Hmmm, so you are upset that you have to pay back 7500 and pay for those who are getting 8000? Don’t you think renters and those who couldn’t buy a house last year or now feel the same way about you? Pretty sad that you feel that way and may I add, hypocritical. Tell you what, I will start a foudation and ask people around the globe to donate to help you pay back that 7500, ok?

      • David says:

        I qualify, but I’m not so sure I’m going take it. Just because it’s 0% doesn’t mean it’s a good deal. Debt is always bad, but especially when it’s from the IRS.

      • rachel says:

        They aren’t paying for ours, we have to pay it back…that was the point, everyone will pay for the new 8000 because it is not being paid back by the recipients, those that got 7500 are paying it back entirely themselves…i’d rather have help from millions of tax payers to pay back 8000 than to have to pay back 7500 by myself…but still, it does suck and it doesn’t seem fair, but oh well…my friend who bought a house in 07 got nothing, she isnt any more happy about our 7500 or the new 8000 than anyone else is…and next year if they increase it again plenty of the people who got 8000 will be bitching…its tough luck and theres nothing we can do about it but try to be happy with what we got if we were lucky enough to get anything

  7. TAX GUY says:

    OK, everyone go to the Library of Congress and look this bill up. To have a clear understanding of where you stand in this new bill VS. the old $7500 credit. Remember if you bought under the old bill before Jan 1 2009 you have to repay it. Thats the way it is, so deal with a interest free loan over 15 years. Some of you sound so pathetic. The goverment did’nt hold you by gunpoint and tell you to buy a home, nor did they stipulate the interest rate you qualified for or what you did to get your credit score. Stop whining! Do something about your situation. It takes true effort to survive and make it through tuff times, just don’t sit back and complain about why the GOVERMENT put you in a situation that you created. All these people who want bailouts on there homes where they signed and agreed upon terms should be let go as well as the banks. If you can get a $7500 interest free loan then take it and put it away. The same goes for the $8000. Just stop WHINING.

  8. Lint says:

    OK, I am closing on a house (I hope) end of February 2009. I waited. I saved. I am buying a nice, 100 year old house and it needs to be: painted, basement repointed, and re-roofed. So that $8,000 is going to the wages of the painters, mason: the roof I’m going to have to finance on my own. It’s gonna put a few people to work, help renew a sound but aging structure, so I think its a good plan.
    Count your blessings: Got a job? Got a house? That’s pretty nice. I waited an extra 6 years to buy because the prices were absurd. They say this is the housing crisis. I think the housing crisis happened when home prices went up 75% in three years. My wage didn’t go up 75%!

  9. deb says:

    My husband and I purchased our first home in Oct 2008, We were more than happy to take the 7500. It would be nice not to have to pay it back but if we have to we will. Our income has been cut in half, he works in the oilfields and with the gas prices falling his company has laid off a couple of hundred workers. I am an independant contractor that was making 90% of my income through a state funded program and we all know how thats going. We are going to use our tax refund to keep us going until this all passes over, and it will pass. I thank the Lord that we were not in the bunch that were recentley laid off. All in all we still count ourselves as blessed. Our finances did not make us who we were or are today. We have our kids and our Faith and each other. The goverment is going to do what ever it wants but the president it not the final say in our lives. I was trying to follow the stimulas news but its kind of a waste of energy at this point. I am happy for those who get the 8000, that was there blessing. I can’t change it so why waste my time being upset. Mine will come and so will yours. I am just trying to stay focused and enjoy what I still have today. My parents lost it all during the Regan thing and they ended up divorcing over the stress. I refuse to end up like that.

    • joe says:

      It’s so nice to see a person hold accountability, not like a lot of people here who feel they are owed something. In the end, you are right, the Lord has and will bless us. He giveth and he taketh away. Those who feel cheated or to some extent feel like they were slapped in the face i can only say one thing… thank the good Lord you are alive and have a roof over you head and food in your fridge. Many, especially now, are not so lucky.

  10. Jay says:

    Did no one read this?
    “I believe existing borrowers would have that loan forgiven.”

    This to me means the people who borrowed the $7500 no longer have to pay it back.
    I’ve read this on more than one website so I’m not sure why previous borrows are freaking out.

    • Cindy says:

      Jay – Actually that is not correct. Only those 1st time buyers who buy Jan 1, 09 – Dec. 31, 09 will receive the $8,000 and not have to pay it back. Those who bought April 9,08 – Dec 31, 08 will receive the $7,500 and have to pay it back in $500 increments. That’s how the law stands now – the new changes are only retroactive to January 1, 2009.

  11. Jman says:

    I am scheduled to close on my home on April 15, 2009. How do I claim the credit on my 2008 return?

  12. dianne says:

    sooooo…..if you bought in jan or march you are out of luck completely? i am confused and agree how do they come up with these dates.

  13. Sara says:

    I am getting married May 23, 2009. My soon to be husband has owned a home in the past three years. I have not and everything for the house would be in my name. If we don’t close before we get married does that mean I don’t get the $8000? I called the IRS but then duh its a holiday. I will call tomorrow.
    ANYONE HAVE ANY GOOD ANSWERS??

    • Aaron says:

      You need to file single…

      • Sara says:

        Can I do that even if we get married? Also if I amended it to my 08 returns I was single then. Even if I get married as long as we close before nov 30 2009 and i amend to my 08 I still get the credit because it was on my 08 not my 09. correct?

  14. dave says:

    Geez, 8 friggin days! i closed dec 22nd. Son of a….i guess im on the hook to pay back. I was happy to get my 7500 loan but would be happier if it turned into an actual credit. So i guess my question is do i get another 500 bucks?

    • Anonymous says:

      Dave, it appears you’re “stuck” with the $7,500 loan – with the annual payment of $500 starting in 2010 – better than a sharp stick in the eye – as my Mother used to say!

      • Bob says:

        ….. which all but wipes out the $400/yr ‘tax break’ that we’re going to get. I think a lot of people are saying “Well crap, I would have waited!” because NOW buyers are getting a)lower interest rates, b)MORE tax credits that don’t have to be paid back, and c)an actual tax break.

        Yeah, I would have waited 6 more months too. *sigh* Oh well.

  15. Brent says:

    Here is my situation. I bought my house on January 28, 2009. I already took the old $7500 credit on my 2008 taxes.

    Here is my question – even though I bought my house in 2009 and filed the credit on my 2008 taxes am I eligible for $500 more bucks and do I not have to repay now since the new law went into effect?

    If someone could give me an answer on this that would be great!

  16. Stephy says:

    Ok people. You should read more carefully. The $7500 credit that WAS required to be repaid has been changed to an actual credit. IF you bought your house in ’09 you can get $8000 instead of $7500. So yes, we (me included, I closed on Dec. 19, 08) get $500 less, but we ARE included in the non-repayment….get it?

    • Mike says:

      That is not true; This comes directly from the code.
      f) Recapture of credit.

      (1) In general.
      Except as otherwise provided in this subsection , if a credit under subsection (a) is allowed to a taxpayer, the tax imposed by this chapter shall be increased by 62/3 percent of the amount of such credit for each taxable year in the recapture period.

      (4) Exceptions.

      9(D) Waiver of recapture for purchases in 2009. In the case of any credit allowed with respect to the purchase of a principal residence after December 31, 2008, and before December 1, 2009—

      (i) paragraph (1) shall not apply, and

  17. Mike says:

    It looks to me, after reading the actual code sections, that the credit for everyone becomes $8,000 regardless if you bought between April 9, 2008-December 31, 2008 or in 2009. HOWEVER people who bought in 08 must recapture the amount borrowed starting with your 2010 tax return for the next 15 years; where the people who purchased in 09 don’t have to recapture as long as they don’t sell within 3 years

    • Stacy says:

      No, I just did research on this and the ’08 buyers do still need to repay the $7500 tax credit where as ’09 buyers get the $8000 and do not have to repay.

      • Mike says:

        That is exactly what I said; the only difference is that I believe that people who bought in 08 get to “borrow” $8000 not 7500

  18. Rod says:

    Im not sure if i qualify for the credit. I am a first time home buyer but there is a co owner that is not a first time buyer. i closed in dec 08. Do i qualify?

  19. rob says:

    if your due to get a refund say 1000.00
    and you qualify for the 8000.00 credit will you get a check for 9000.00 or is 8000.00 a cap

  20. John says:

    Lucky me. We were supposed to close on our house on Dec 29. It was posposed until Jan 2, 2009. We were upset over that, but I guess it worked out in our favor!

    I’ve already filed our ’08 taxes and have received the $7500 prior to the bill being passed. Do I need to file an amendment now, or is it just too early to say?

    • rachel says:

      Thats how we felt last year…we were set to close april 3rd, and it was postponed until april 9th…so we almost didn’t get anything…trying to remember that when we get frustrated about the new credit not having to be paid back…

  21. Rob S. says:

    I purchased my home in December of last year. I could have waited, but the house I wanted might not have. When you buy, these are the things you have to weigh and decide on. I don’t feel too bad about the INTEREST FREE loan. I feel that EVERYONE should have to pay it back. The fact that buyers won’t have to pay it back won’t stimulate the economy any more than people that will have to pay it back. People would still apply the money the same way. The government would save itself a ton of money! Who among you would not take the credit if you had to pay it back???……….Thought so. Why are we giving this money away??? I rather the money be applied in a more useful manner. STOP COMPLAINING ABOUT PAYING IT BACK! COMPLAIN ABOUT WHY ANYONE WOULDN’T HAVE TO!

    • Amy says:

      THANK you! What on earth is the point of handing anyone eight grand? I’m grateful for the $7500 I’ll have to pay back, beause the interest-free loan is going to help me pay back for the appliances and window coverings on my house. I think that part was a great idea—it gave me a chance to buy a house that would have otherwise put me in debt, and might possibly have not been an option for me. Definitely “stimulated” me to buy now instead of waiting. But this new one that doesn’t have to be paid back? WHY?

    • jon says:

      What a whiner. Its ridiculous for you to be angry that others have a better situation than you. Sad.

  22. Amy says:

    Hey, here’s another thought: suppose there are any people out there who, instead of think what a great opportunity this could be, might instead be thinking how great the deal might be in eight months if they hold out even longer?

    I’ve been reading so many angry responses from people who feel they were swindled out of $8000, and look foolish because of it. There must be people who have not purchased yet who are thinking “Gee, if I buy now, I’ll get a fantastic credit, but what if they offer something even better down the road? What if no one buys, so they DO offer the $15,000 they were talking about before?”

    What if this new credit causes people to worry that if they buy now, they will be the foolish ones months from now when an even better credit comes out?

    I can’t believe our goverment thought that giving the money away was a good option…

  23. jon says:

    Anyone find any paperwork regarding the amended tax forms needed for filing for the 8000 credit on 2008 tax return? I can’t seem to find them anywhere.

    • Lee VH says:

      I looked for the 1040x on the IRS website and found that they are COMPLETELY outdated. Even the instructions are outdated. The available 2007 revised 1040x instructions do not properly follow the lines on the 2008 1040A nor 2008 1040 form.

      I also went to the IRS local office. They do not have them up to date instructions either.

      Essentially it is pretty much impossible to fill out an ammended return a this time, rather convenient for the IRS.

      Even the dependent deductions are wrong on 1040x from the website. as it reflects 2007 deduction rates. NOT 2008.

      Adding the FTHBTC form is as simple as adding just that when you are able to complete a 1040x. Plus adjusting the credits on the 1040x in the appropriate places.

      As far as the $8K I have heard rumor that cannot be used until Mar 1. Considering it was not signed into law until 2/17 that is not too bad of turn around time.

      Lee

  24. Lee VH says:

    Hey All,

    When reviewing the credit mobile home/trailer owners are disqualified. My home has gone in value from $34,000 in 1996 to around $2000 in todays market.

    not to mention the fact that we still owe $1900 on the house and even if it was paid off we still need to pay lot rent. PLUS abide by unregulated lease agreements, that impede our inalienable human rights. NOT A JOKE EITHER!!

    I think we are LEFT out in the cold on the FTHBTC. Funny considering NO OTHER gov’t or lending agency consider a BOX on wheels a home. Unless it is on a permanently affixed foundation which mine is not. Actually uses metal straps.

    Well at least the drug dealers out on parole will qualify.

    I’d only qualify for the credit if I divorced my wife. nothing like sticking it to the working family trying to be happy healthy and TOGETHER!

    Lee

    • anon from MT says:

      My boyfriend owns a mobile. It is totally unfair that a mobile home in a park is considered a “principal residence” in regards to the $8000 home buyers credit.

      You don’t own the land, so you have no rights and no say on what happens in the park. It is nothing like owning your own home on your own land.

      It is interesting that gov’t loan programs like Rural Development, for one, consider mobile home owners in parks as NOT owning a principal residence for qualification for their purposes.

      So on one hand, the gov’t says it is a principal residence and on the other, it isn’t. It should be defined the same—a mobile on a rented lot SHOULD NOT be considered a principal residence.


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