Tax Credit

The IRS has finally released a new Form 5405, the form that is required to claim the homebuyer tax credit.   You can download the new form here.

Because the original tax credit had been amended and expanded, the form had to be updated to reflect the changes, and as a result, people who purchased a home after November 6th have had to wait until now to claim the credit.

According to CNN, you’ll no longer be able to e-file to claim this credit because of the number of fraudulent claims that have been filed.  You can, however, still prepare your tax return via Turbo Tax or other similar software, but you’ll need to print out and mail the forms instead of e-filing, since there is additional documentation required that can’t be accepted via e-file.

Buyers who qualify for the tax credit have until April 30th to place a contract on a home, and until June 30th to close on that home. Time is ticking, especially if you’re looking at purchasing a short sale or doing a rehab (203k) loan.

Feel free to give Jeremy a call at 719.231.9043 or email him at jeremy@thecircagroup.com to explore your options in purchasing a home and claiming the tax credit.

Special thanks to Amy Cavender for the heads up.

Yesterday, it was announced that the Federal Housing Administration was going to allow homebuyers to use the $8,000 first-time home buyer’s tax credit as part of a down payment through a short-term bridge loan.  Almost as quickly as it was announced, however, the Office of Management and Budget placed at least a temporary hold on the plan.

So, at least for now, you can’t plan on using the $8,000 tax credit as part of your down payment on an FHA loan – hopefully we’ll have more of an update soon.

Jeremy explains the First Time Home Buyer’s Tax Credit in plain English, including important information on the deadlines you must meet to claim the credit:

We have a lot more information on the First Time Home Buyer’s Tax Credit here at SpringsHomeBlog – see posts tagged “tax credit“.  If you have any question we haven’t answered yet, call or text Jeremy at 719.231.9043 or email jeremy@thecircagroup.com.  You can also ask via an @ reply on Twitter – just send it to @jeremyjisaac.

There’s still a lot of questions about the $8,000 first-time home buyer’s tax credit this year, so I thought I’d review some of the questions and misinformation I’ve been hearing.

The $8,000 tax credit is available if you purchase a home between January 1st and December 1st, 2009.  This means that you must close on the home by November 30th.  A lot of people, including some financial professionals,  think that this is available for any home purchase in 2009, but that is not the case.  If you close on a home on December 31st, you won’t be able to claim the tax credit.  You must have the keys in hand by November 30th.

If you want to get a great deal by buying for a bank-owned or short sale property – and there are plenty of them out there – and plan to claim the tax credit, it’s wise to at least begin your preliminary search now.  Many “distressed” properties can take longer than the traditional 30 days to close, so don’t count on being able to put in an offer on November 1st and close by the 30th.

If you still have questions about who qualifies for the tax credit or how you can buy a home in Colorado Springs and use this credit, call or email Jeremy – 719.231.9053 or jeremy@thecircagroup.com

You also can read more posts about the tax credit:

Common Questions Answered

e-Filing The Tax Credit With Turbo Tax

If you’re buying a home this year and qualify to use the Federal Housing Tax Credit, you just need to file the new IRS Form 5405 along with your 1040.

I contacted TurboTax to find out what to do if you want to use their software to prepare and e-file your taxes.  They told me the following:

“If you plan to claim the credit for a home you bought in 2009, wait until the Form 5405 is updated in TurboTax in mid-March before you file, or before you amend a return you have already filed.”

You should be able to download an update to TurboTax from their website once they update the software. Not exactly sure why it’s going to take them until mid-March to update it, but I’d guess that would still be faster than filing via mail.

The President signed the economic stimulus package just now in our own capital city of Denver.  Only time will tell if it will be of long-term effect on the overall economy, but there’s hope that the Federal Housing Tax Credit, in combination with the great values in real estate right now, will pump some life into the housing market.

The federal housing tax credit is designed to bring buyers into (or back into) the market.  It’s pretty simple at face value: qualified buyers will receive a credit of $8,000 on their 2008 or 2009 tax return.

Here are a few more details and caveats:

•  Tax credit is $8,000.00, or up to 10% of the value of the home, so unless you’re buying a house less than $80,000, you’ll get the full $8,000 credit.

•  You qualify if you made $75,000 or less on 2008 taxes if filed as single – if filing jointly, you qualify if you made $150,000 or less.

•  If you make more than $75,000 but less than $95,000 ($170,000 if filing jointly), you can still get a partial tax credit.

•  Tax credit applies to first-time home buyers.  You are a first-time home buyer if you have not owned a home in the previous three years.  (Technically, this doesn’t apply to just “first-time” home buyers, then.)

•  Applies to your primary residence only.

• This is a tax credit, not a deduction – meaning your tax “bill” will be reduced, not your taxable income.  For instance, if you underpaid your taxes by $3,000, the first $3,000 of the credit will be applied to your outstanding tax bill and you would then receive the remainder of $5,000.  If all your taxes were correctly withheld from your paychecks and you don’t owe anything when you file your taxes, you’ll get all $8,000 to yourself.

•  Credit will be applied against your tax bill for either 2008 or 2009.  If you’ve already filed your 2008 taxes, you can amend it to reflect the credit.

•  Credit applies to homes purchased from January 1st, 2009 to November 30, 2009.  The closing date is the one that matters.

•  Unlike an earlier version of this bill, this credit does not have to be repaid, unless you sell the house in less than three years.

•  Applies to new or existing homes.

If you really, really want the nitty gritty, you can read the full bill.  Still have questions?  You can leave a comment on this post or email Jeremy directly at Jeremy@SpringsRealtor.net.  We’ll answer it ASAP!