By Renee Porsia | March 18, 2009
After my first article regarding the $8000 tax credit, I received even more e-mails and questions so I wanted to touch on the subject a bit more.
I wanted to clear up misinformation that has been aired on NBC’s Weekend Today. Mrs. Barbara Corcoran was on Today last Sunday and stated to Jenna Wolfe that first-time home buyers can use the $8000 as part of their down payment. I then received quite a few e-mails asking me if this was true. No, it is not. It’s not true because a new home owner can not get their credit until they file their taxes.
Now it would certainly be a nice thing if home buyers could get their hands on that money for their down payment. So to that I say, if you have a family member or friend who can gift you the $8000, you should do that and then pay them back after you receive your tax credit. This way you can take full advantage of the money at a time when you most need it.
There is a way, however, to access the money sooner rather than waiting to file your 2009 tax returns. This would involve adjusting your withholding amount on your W-4 forms via your employer or through their quarterly estimated tax payment. IRS Publication 919 contains rules and guidelines for income tax withholding. In this situation, the buyer would be able to accumulate extra cash by raising his or her take home pay. Keep in mind, though, that this is different than just receiving the $8000 out right. You would have to be very strict and save the extra money you take home.
You also should already be approved by a lender and working with your buyer agent to find your home by now if you want to take advantage of this tax credit. You only have to December of this year to find your home and be eligible. Time goes extremely fast. Remember in most cases it does take a minimum of 30 days to get to settlement, barring any issues. You don’t want to put yourself up against a wall rushing to find a home in October, just so you can take advantage of the money.
Who qualifies for the tax credit? Anyone who has not owned a principal residence during the 3-year period prior to the purchase.
So, if you own vacation home or a rental home and it is not used as your primary residence, it does not disqualify you as a first-time home buyer. That may be good news for some people and news to those of you who simply weren’t aware of that.
There are income limits for claiming the tax credit. Those limits are $75,000 for single tax payers. For married taxpayers filing jointly, the limit is $150,000.
You can claim your tax credit by filing form 5405.
Any type of home qualifies for the tax credit. This includes single family, townhouses, twin, row homes, condominiums, mobile homes and houseboats.
If you already filed your taxes but purchased your home in early 2009, the good news is that you can still claim your credit by filing an amended 2008 tax return with a 1040x form. Always consult with your tax adviser to make sure you file this form properly.
I really hope this answers your questions. Now get out there and find your first home.
If you have any comments or additional questions, feel free to e-mail me at firstname.lastname@example.org.
My thanks also go to the National Association of Home Builders for their contribution to my article.
Renee Porsia is a Realtor in Philadelphia. Visit her website to learn more.