Terry D EA Posted February 14, 2009 Report Share Posted February 14, 2009 Since the stimulus package has just passed, I have a client who can claim the credit for the first time homebuyer. She meets all of the requirement regarding the home purchase. 10% of the home = 7200, income less than 35k, qualifies for the full credit of 7200 which after I complete form 5405, the full amount of the credit flows to page 2 of the 1040. This credit appears to be fully refundable. If anyone else has eny experience with this, please check my calculations as I find it a little odd the whole amount of 7200 is refundable which gives her a 9k refund. Here is the good question. Since the bill just passed and it now states that this is indeed a credit and doesn't have to be repaid, would you advise the client of such at this time? The IRS says more information is coming and I am just a little uncomfortable with this whole thing. Thanks, Terry D. Quote Link to comment Share on other sites More sharing options...
TAXBILLY Posted February 14, 2009 Report Share Posted February 14, 2009 Sorry. Doesn't apply to 2008 purchase. http://www.fairmark.com/news/09021301-arra.htm taxbilly Quote Link to comment Share on other sites More sharing options...
Charley in Ohio Posted February 14, 2009 Report Share Posted February 14, 2009 When did the taxpayer purchase the house? If it was in 2008, I don't think the new rules apply (meaning that it won't need to be paid back). The modifications apply to houses purchases on or after 1/1/09. Therefore, taxpayers purchasing in 2008 only have the credit/repayment option. I confirmed this via a CCH briefing on the tax provisions of the stimulus legislation Charley Quote Link to comment Share on other sites More sharing options...
Terry D EA Posted February 14, 2009 Author Report Share Posted February 14, 2009 I just read a shorter version of "The American Recovery and Reinvestment Act of 2009 - February 12, 2009", and it does state that the non-repayment portion and the increase in the credit apply to homes purchased after Jan 1, 2009. So, are my calculations correct? My client doesn't care about repayment if my calculations are right. Everything I have looked at says yes but I want to be sure before I transmit this return. Terry D. Quote Link to comment Share on other sites More sharing options...
TAXBILLY Posted February 14, 2009 Report Share Posted February 14, 2009 The credit is fully refundable and he will have to pay it back at the rate of $500/yr. taxbilly Quote Link to comment Share on other sites More sharing options...
Terry D EA Posted February 14, 2009 Author Report Share Posted February 14, 2009 taxbilly you are correct. I have calculated the credit manually and it is pretty clear cut and dry. I will advise my client of the repayment requirement that will begin with her tax return in 2010. Thanks to all Terry D. Quote Link to comment Share on other sites More sharing options...
mcb39 Posted February 14, 2009 Report Share Posted February 14, 2009 That is correct from what I see. I have had three of these so far; the last getting a $12K refund, $7500 of which will have to be repaid over 15 years. I think there will be a lot of bitterness when some of these folks find out that if they had waited a few months to purchase, they would not have to pay back. I wonder if this was an intentional oversight and/or if some provisions will be made later to forgive repayment for 2008 purchases after April. However, the law is the law and, of course, this isn't even officially the law yet. Quote Link to comment Share on other sites More sharing options...
TAXBILLY Posted February 14, 2009 Report Share Posted February 14, 2009 There is an interesting change to the deductibility of car loan interest in the reference I gave. taxbilly Quote Link to comment Share on other sites More sharing options...
BulldogTom Posted February 14, 2009 Report Share Posted February 14, 2009 I have a neice who bought a house and closed Dec 17th. Sucks to be her. My other neice (her sister) is trying to close this month. Great for her. Tom Lodi, CA Quote Link to comment Share on other sites More sharing options...
mcb39 Posted February 15, 2009 Report Share Posted February 15, 2009 There is an interesting change to the deductibility of car loan interest in the reference I gave. taxbilly Yes, I saw that as well as a credit for buying a NEW auto, rv or motorcycle. That's not good news for my Used Car Dealer husband, who is drowning in nothingness right now. Quote Link to comment Share on other sites More sharing options...
Don in Upstate NY Posted February 15, 2009 Report Share Posted February 15, 2009 The credit is fully refundable and he will have to pay it back at the rate of $500/yr. No, she repays it at the rate of $480 per year. [she only got $7,200.] Quote Link to comment Share on other sites More sharing options...
TAXBILLY Posted February 15, 2009 Report Share Posted February 15, 2009 You are correct Don. I have the number 7500 stuck in my head! taxbilly Quote Link to comment Share on other sites More sharing options...
Cathy Posted February 16, 2009 Report Share Posted February 16, 2009 mcb, I hope taxpayers who bought those homes in 2008 will scream loudly....possible correction to the bill at a later date, I hope. This is what you get when legislators vote for a bill 1,071 pages long when they haven't even read it. Cathy Quote Link to comment Share on other sites More sharing options...
jainen Posted February 16, 2009 Report Share Posted February 16, 2009 >>taxpayers who bought those homes in 2008 will scream loudly....<< That would be the Biblical response (Matthew 20:1-16). Like Jesus said, "the last will be first, and the first last." Quote Link to comment Share on other sites More sharing options...
mcb39 Posted February 16, 2009 Report Share Posted February 16, 2009 >>taxpayers who bought those homes in 2008 will scream loudly....<< That would be the Biblical response (Matthew 20:1-16). Like Jesus said, "the last will be first, and the first last." You have that exactly right, Jainen. I also had a client call last night. Young couple bought their first home in Feb, 2008. I had to tell them it doesn't qualify. I felt like an idiot. How do you explain the sense of these cutoff dates to anyone. Now I have one two months short on one end and two that are two and three months short on the other end. Just telling them that you never know what Congress will do just doesn't cut it. How are the roses doing? Mine are buried under 2 feet of snow. Quote Link to comment Share on other sites More sharing options...
TAXBILLY Posted February 16, 2009 Report Share Posted February 16, 2009 Why do you feel like an idiot? Are you supposed to have a crystal ball and foretell what Congress will do or not do? I had a client once who bought a crystal ball for her business. Before I finished her return she asked if she was getting a refund. I said don't you know? There was a hesitation and then she said the crystal ball doesn't work for her, only her clients! taxbilly Quote Link to comment Share on other sites More sharing options...
joanmcq Posted February 17, 2009 Report Share Posted February 17, 2009 Ok, so old credit they get an interest free loan. New credit they get free money. I can see being short on one end...buying before July 2008. But the new credit is good throughout 2009. So how can they be short on the other end, since the last time I checked 2009 was still in progress. And they bought a house in Feb. Did they get a good deal? Can they afford the house? I may be buying another house this year, so I was kinda hoping for the credit that wasnt just for 'first time homebuyers', but they didn't pass that, so oh well! So am I supposed to whine? Quote Link to comment Share on other sites More sharing options...
jainen Posted February 17, 2009 Report Share Posted February 17, 2009 >>the new credit is good throughout 2009<< My understanding is that the election to treat as a 2008 purchase has also been extended to 12/31/09, and they still don't have to recapture even if they take the credit on a 2008 return. Quote Link to comment Share on other sites More sharing options...
TAXBILLY Posted February 17, 2009 Report Share Posted February 17, 2009 I believe the date is 11/30/09. taxbilly Quote Link to comment Share on other sites More sharing options...
mcb39 Posted February 17, 2009 Report Share Posted February 17, 2009 Ok, so old credit they get an interest free loan. New credit they get free money. I can see being short on one end...buying before July 2008. But the new credit is good throughout 2009. So how can they be short on the other end, since the last time I checked 2009 was still in progress. And they bought a house in Feb. Did they get a good deal? Can they afford the house? I may be buying another house this year, so I was kinda hoping for the credit that wasnt just for 'first time homebuyers', but they didn't pass that, so oh well! So am I supposed to whine? They bought it in Feb 2008; credit doesn't start until April 2008........you may not whine, Joan, but a lot of people will. Quote Link to comment Share on other sites More sharing options...
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