mcb39 Posted February 2, 2009 Report Share Posted February 2, 2009 Expand home buyer credit: Senate Budget Committee Chairman Kent Conrad, D-N.D., said last week he would propose an expansion of a temporary $7,500 first-time home buyer credit so that it applies to all purchases of primary residences. Some Republican senators have called for an increase in the credit to $15,000. On "Face the Nation," Sen. Charles Schumer, D-N.Y., said Sunday that lawmakers "can do more for housing." The proposal to increase the home buyer credit to $15,000 and make it available to all home buyers is "something that we look favorably upon," he said. The Senate recovery package as it stands now removes the requirement under current law that the credit be repaid by buyers over time, assuming they don't sell their home for three years after claiming the credit. The credit phases out for individuals making more than $75,000 ($150,000 for joint filers). Does this mean that filers that opt for the "Loan" in 2008 will also be forgiven the payback if they don't sell the house for three years? This is very critical as to how we advise our clients, pro or con. They are starting to ask about the $7500 credit. Quote Link to comment Share on other sites More sharing options...
TAXBILLY Posted February 2, 2009 Report Share Posted February 2, 2009 Common sense would say of course but then we are dealing with Congress. taxbilly Quote Link to comment Share on other sites More sharing options...
mcb39 Posted February 2, 2009 Author Report Share Posted February 2, 2009 Common sense would say of course but then we are dealing with Congress. taxbilly Thanks taxbilly; I agree that common sense has nothing to do with it. This whole thing makes me very uneasy. I have a young couple who are leaning toward taking the credit. Their 2 year old will be driving by the time they get in paid back according to the present law. However, $7500 is very tempting to a young couple in the present economy, who just bought a house in October. How are we supposed to know how to advise them? Prior to the publicity on the new bill, I would have STRONGLY advised against it. This is like rolling dice. Quote Link to comment Share on other sites More sharing options...
jainen Posted February 2, 2009 Report Share Posted February 2, 2009 >>how we advise our clients, pro or con<< Tell your clients what the current law is. Explain that a change has been proposed in a bill now before Congress, but that all taxation issues are very controversial so it's impossible to say what the final law will include. As always, the decision to buy a new home should rest on non-tax issues. If it only makes sense with the tax credit, then it doesn't make sense at all. If it makes sense even without the tax benefit, go for it. On this particular issue, the House version (which has already passed) and the Senate version are quite similar. One current difference is that the Senate would extend the time to buy through August instead of June. Neither version waives the payback for homes bought in 2008. Quote Link to comment Share on other sites More sharing options...
Virtual Managed Solutions Posted February 2, 2009 Report Share Posted February 2, 2009 I've never dealt with this particular issue, but every other had similar outcomes. You could explain the pros & cons until you are blue in the face, but most people will do what they want to do anyway. Once they have a decision in their mind, it's hard to sway either way. I do agree with jainen though - just tell them how it is and wait for them to tell you how they want to proceed. Give advice where you deem necessary. Quote Link to comment Share on other sites More sharing options...
JohnH Posted February 2, 2009 Report Share Posted February 2, 2009 If they've already bought a house within the time limits or if they are planning to buy one, then they certainly should take the credit on their return. But if they are thinking about buying just to ge tthe credit, then they should forget it. I'd advise anyone who is eligible for the credit to claim it, and I'll also send them to HRB or JH to get the return filed because I don't intend to put my name on any return claiming the credit. (And I have already given that very advice to one client). Nobody can predict whether future legislation will make it a true credit with no repayment requirement, and if so whether the repayment will be fogiven, but the only advice I'd give them is "there's no way to know what Congress might do." Quote Link to comment Share on other sites More sharing options...
mcb39 Posted February 2, 2009 Author Report Share Posted February 2, 2009 >>how we advise our clients, pro or con<< Tell your clients what the current law is. Explain that a change has been proposed in a bill now before Congress, but that all taxation issues are very controversial so it's impossible to say what the final law will include. As always, the decision to buy a new home should rest on non-tax issues. If it only makes sense with the tax credit, then it doesn't make sense at all. If it makes sense even without the tax benefit, go for it. On this particular issue, the House version (which has already passed) and the Senate version are quite similar. One current difference is that the Senate would extend the time to buy through August instead of June. Neither version waives the payback for homes bought in 2008. Thanks, jainen, for putting it all in a nutshell. Ultimately, it IS their call. I know that the purchase of a home should not rely on tax credits, and this one didn't because nobody even knew about it then. I would, however, feel terrible for all people who take the credit this year and have to pay it back, if a new bill goes through and purchases in 2009 would be exempt from payback. Of course, this is the age-old dilemma of having to draw the tax law line somewhere. Thanks again. Quote Link to comment Share on other sites More sharing options...
Bart Posted February 2, 2009 Report Share Posted February 2, 2009 I'll also send them to HRB or JH to get the return filed because I don't intend to put my name on any return claiming the credit. Why won't you put your name on a return that claims the credit? Quote Link to comment Share on other sites More sharing options...
JohnH Posted February 2, 2009 Report Share Posted February 2, 2009 I don't like the potential liability aspect of it all. If I prepared one, I'd have the client sign lots of paperwork clarifying that they understand the payback requirements and then I'd have to plan to keep all that CYA stuff around for 15-17 years, even if they eventually go somewhere else to get their tax return prepared in future years. If the repayment provisions stay in place, then there are going to be taxpayers who sell their homes or convert them to rentals in the next 4-8-10-12 years and they will conveniently "forget" that they were supposed to pay the remaining balance back. Then a couple of years out when IRS tags them, they'll run for cover by claiming the original preparer never told them about this. When that happens, the preparer will regret it if they don't have all the documentation on hand. Even then it will be a hassle. Anyone who has dealt with the Mortgage Credit Certificates probably knows what I'm talking about. And at least with the MCC's, the taxpayer had to sign paperwork with the lender and the government acknowledging the repayment requirements. With this credit, all the notification responsiblity lies with the tax preparer, who had better have their bases well covered. I'm going to leave that chore to others - I'm just not interested. Quote Link to comment Share on other sites More sharing options...
jainen Posted February 2, 2009 Report Share Posted February 2, 2009 >>feel terrible for all people who take the credit this year and have to pay it back, if a new bill goes through and purchases in 2009 would be exempt from payback<< I'm not sure if you are worrying about someone who could have delayed the purchase into 2009, avoiding payback (if such a law were to be passed). Most people buy when the right house and the right time come together. As I said, the tax issue should take a back seat to the other questions in buying a home. Why waste psychic energy on laws passed later that don't effect what has already actually happened? If you are wondering about someone who buys in 2009 and elects to treat it as purchased in 2008 for purposes of taking the credit, that's an interesting question. Congress is trying to get the stimulus bill to the President by mid-February, so maybe we should advise anyone to wait until we see the specific wording. They aren't likely to get outbid on the desired property in two weeks, although an interest rate lock might be prudent. Quote Link to comment Share on other sites More sharing options...
David1980 Posted February 2, 2009 Report Share Posted February 2, 2009 So does this mean house prices will rise by $15,000? Quote Link to comment Share on other sites More sharing options...
Virtual Managed Solutions Posted February 3, 2009 Report Share Posted February 3, 2009 If not the houses, then something else. That's just how it is. You get a cut/break somewhere such as in the real estate market, next thing you know gas rises an extra $100 a gallon. Gas goes down and food skyrockets, etc. etc. America the Beautiful. Quote Link to comment Share on other sites More sharing options...
jennifer35mm Posted February 5, 2009 Report Share Posted February 5, 2009 I already filed my taxes (my refund is being processed now). I took the $7500 credit. Will i be able to re-file and get the rest of the credit if this passes? Quote Link to comment Share on other sites More sharing options...
kcjenkins Posted February 5, 2009 Report Share Posted February 5, 2009 NO. Quote Link to comment Share on other sites More sharing options...
Booger Posted February 5, 2009 Report Share Posted February 5, 2009 I already filed my taxes (my refund is being processed now). I took the $7500 credit. Will i be able to re-file and get the rest of the credit if this passes? YOU SURE CAN....just use the Form 1040REF and don't forget to attach Schedule U with it. This particular form and schedule is available ONLY by calling the IRS at 1-800-821-1040. Quote Link to comment Share on other sites More sharing options...
KEYWEST_RICKS Posted February 6, 2009 Report Share Posted February 6, 2009 for everyone who thinks this is undoubtably a bad idea for the taxpayer to take the credit, please send me $7,500 and i will pay you back interest free over the next 15 yrs. please put me in this terrible situation! i had a banker advise one of my clients that this was a bad credit to take. i told them to go back and ask the banker if they would loan them $7,500 interest free for 15 yrs??? for many people this will simply mean that there refund will go from $2000 to $1500. why not use that money to reduce the amount of the mortgage on the house? @ 5.25% you would be saving $390 per year in interest expense. almost enough to offset the payback amount. if i can take an interest free loan to pay down someone who is charging me interest... i do that any day. jeff Quote Link to comment Share on other sites More sharing options...
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