Discussion:$8,000 tax credit in 2008 and refundable?

foriegn tax credit

adoption credit

the refund was over $16,000

I can't find details anywhere about which rules govern the purchase of a principal residence in 2009.

Are they going back with the new bill to eliminate the recapture requirement of the original credit?

If that's true, and I am not sure it it, then it is a rare occurance that legislation is retroactive with respect to transactions especially when it can be detrimental to the taxpayer.

Maybe, but I find that one hard to believe.

I would find that very frustrating. Especially if you are paying dues.

http://finance.senate.gov/sitepages/leg/LEG%202009/021309%20Joint%20Statement%20for%20the%20American%20Recovery%20and%20Reinvestment%20Act%20%20Divison%20B.pdf

"The conference agreement extends the existing homebuyer credit for qualifying home purchases before December 1,2009. In addition, it increases the maximum credit amount to $8,000 ($4,000 for a married individual filing separately) and waives the recapture of the credit for qualifying home purchases after December 31, 2008 and before December 1, 2009. This waiver of recapture applies without regard to whether the taxpayer elects to treat the purchase in 2009 as occurring on December 31,2008. If the taxpayer disposes of the home or the home otherwise ceases to be the principal residence of the taxpayer within 36 months from the date of purchase, the present law rules for recapture of the credit will apply.

Why include the underlined provision if a taxpayer can not elect to use the $8,000 used on his 2008 return and must be claimed on the 2009 return?

Thanks for everyone's input.

http://money.cnn.com/2009/02/13/real_estate/homebuyer_tax_credit_finalized/?postversion=2009021617

p.s. If I get reincarnated I want to come back as your brain!

TexCPA 21:11, 16 February 2009 (CST)

BTW, I am in that income range and have bought lots of houses. Three last year in fact. Was thinking of moving up, so I was hoping for the 15k credit of the senate. Oh well, we can't have it all!

from latest IRS newsletter taxea

[2]

Per the new Form 5405, you can take the $8,000 this year and still not pay it back.

Don't advise your clients that the 2009 credit does not require repayment unless you also advise them that they have to own and use the property as their primary residence for 36 months before Uncle Sam will forego repayment. If you flip the property, convert it to rental property, or it otherwise ceases to be the taxpayer's primary residence, the law requires repayment.

http://www.irs.gov/pub/irs-pdf/f5405.pdf

If the 2008 return has already been filed, an amended return can be filed to receive the remaining $500.

The IRS has announced a taxpayer-friendly option for individuals and married couples who qualify for the first-time homebuyer credit under Code Sec. 36, as amended by the American Recovery and Reinvestment Tax Act of 2009 (P.L. 111-5). Taxpayers qualifying for the amended credit have the option to claim the Code Sec. 36 credit on either their 2008 or 2009 tax returns.

The 2009 Recovery Act increased the maximum credit allowed under Code Sec. 36 from $7,500 to $8,000 ($3,750 to $4,000 for married filing separately). To qualify for the increased credit, the home must be purchased after December 31, 2008 and before December 1, 2009. The credit, as amended, does not need to be repaid as long as the home remains the purchaser's principal residence for 36 months after the purchase date.

A spokesperson at the Joint Committee on Taxation told CCH that the issue of whether the technical language of the Act supports the use of the $8,000 amount for credits claimed on 2008 returns for 2009 purchases, or whether the $7,500 amount should apply, had been debated among staff members. Their conclusion was that the congressional intent was to allow the $8,000 amount for all 2009 purchases, regardless of whether the credit was claimed on a 2008 and 2009 return. The staff economists then used that conclusion in determining the final revenue estimates assigned to this provision, as published in JCX-19-09.

I anticipate a 2009 form with the 2009 tax return that will address situations where the taxpayer's AGI changes the amount of credit the taxpayer qualifies for from the actual credit they received.

A) The government has stopped caring if they overpay you, and B)you're making an election to treat the purchase as being made on 12/31/08, which means the credit, if you take it in 2008, will have no connection to your 2009 AGI.

1. Increased credit from $7,500 to $8,000

2. Dispensation from credit repayment if they live in the home as their main residence for 36 months.

I just wanted to make sure both are true...the latter is the much more compelling reason.

Thanks, Chris

The $7500 credit for 1 st time home buyers is for a home purchased in 2008 and has to be repaid. It is considered a tax free loan.

I don't see anything that says that the two points I made regarding amending a return that was filed early in 2009 (before the Feb 25th update) based on a home purchase in 2009 would now be disqualified for either the $8,000 credit or the waiver of recapture after 36 months.

However, you said "nope" so I must have missed something (?)

My question - is there any election that needs to go with the return stating that it is the 2009 credit, not the 2008 repayable credit. I have checked the box that I am choosing to claim the credit on your 20008 return for a main home purchased after 12/31/08 and before 12/1/09.

Thoughts?

Is there an election that needs to be made to verify which credit is being taken on the 2008 return?

And I guess there is no election that needs to be made, since they bought the home on 2/20/09?

Is the deduction that (for Rebate credit purposes only) buying a home in 2009 is a better decision than buying in 2008? Is there any legislation going around for people who are going to begin repayment in 2010?

Thanks for you help and sorry for resurrecting this thread.