As anticipated, President Obama signed the 8,000 first-time homebuyer tax credit extension into law on Friday. You can now collect the credit if your home purchase is complete by June 30, 2010. But wait, there’s more! The extension also offers a tax credit for people who are purchasing a new residence, but aren’t first-time homeowners.
The key, of course, is that the newly purchased home needs to be a primary residence—no rental properties or vacation homes, thank you. Current homeowners within the income guidelines can receive a $6,500 credit after purchasing a new home—new homeowners will still receive $8,000.
Expanded First-Time Home Buyer Tax Credit Becomes Law [U.S. News & World Report]
(Photo: nicolas.boullosa)
Scenario:
Husband owns house they need some quick cash. Husband sells house to wife for exact amount owed on it, no lawyers needed no inspection in most cases, simply a brokerage fee (which many banks don’t even charge) no Realtor’s fee. Just a sale and transfer. can the wife then receive the first time credit of 8k. (incomes are lower than required).
@Skankingmike: the way the rules had been written before if one spouse has owned a home in the last three years and the other spouse hasn’t, then even if the spouse who hasn’t is the only name on the new deed, the credit doesn’t apply.
from what i have heard, the details like that haven’t changed
@catastrophegirl: fair enough. Just curiosity.
@Skankingmike: it’s a great question though if you consider the fraud investigations going on for the credit already – some of those situations may be exactly like what you described.
@Skankingmike: I think that would be a Garn Act exception anyway…so you’d probably end up with people trying to get you to transfer the original mortgage.
I’m not sure if they could make you do it, but it’s one of those things they keep track of…so as I think out loud, I think they’d probably say the same thing if you tried to do it to an immediate relative (parent/child/sibling) as well.
Ah – found an article on fraudulent claims – under who does not qualify:
[www.mlive.com]
@Stephmo: that’s the one silver lining for gay/lesbian couples…since federal law doesn’t recognize the union, those individuals are in the clear should they sell to the other.
@coffeeculture: Someone asked the taxgirl the same question -
[www.taxgirl.com]
I imagine if
a) Your state has no domestic partnership law/recognition
b) You’ve taken no advantage of anything that previously required you to declare your domestic partnership (i.e. insurance benefits through a company)
c) Your state doesn’t recognize same-sex marriage
Of course, though, she offers the caveat of saying that it’s all first-blush yes and not in concrete, blah blah.
Was the 7K deal offered before Obama’s term switched from “loan” to “free”?
@catskyfire:
Free? You mean the tax credit isn’t a loan anymore, it’s a handout? That’s BS. I got the homebuyer’s credit last year and I have to pay it back. =
@WraithSama: The first tax credit (7k, for purchasing a house LAST year) was a loan. The 8k one this year (and it’s extension) is free money.
@catskyfire:
I had the exact same question; early adopters are always screwed. Enjoy your free money everyone, while I’m paying mine back @ $500/year.
@Wireless Joe: Yeah, that’s pissed off a lot of people. Overall, there weren’t *that* many people that used the $7500 credit, so the govt could write it off fairly cheap.
Until that happens, we’re screwed and get to pay it back $500 per year. And since the tax tables for married couples are so screwed up, we’re likely to wind up *owing* despite buying the house.
@pot_roast: You didn’t have to take the money. The government was not holding a knife to your neck, demanding, “Take this interest free loan, OR ELSE! muahahahahaha!” … or were they?
Dun-dun-duuuuuuun!
@hotdogsunrise: That is true, but it still rather sucks that the -next- year’s buyers get more and without a payback schedule.
Wow!!! More free money from the government. Working is for idiots when you can just buy houses.
@laserjobs: Lots of cities are giving away even more to tear down houses. Collecting 40k and subcontracting to 2 guys with a rented excavator and dump truck for 10k sounds like more fun.
@laserjobs: You realize that it has similar tax treatment to the interest on a mortgate. It needs to be your primary residence.
I have a question about the consecutive 5 years that I can’t find the answer for anywhere – maybe a trusty Consumerist commenter can find the info….
Does 5 consecutive years mean 5 years, to the day, or am I safe if I filed as a homeowner on 5 consecutive years of tax returns? I think I’m just a month shy of 5 years, but I did file on 5 years of tax returns…
@laserjobs:
Does this apply to traditional home purchases (ie..mortgage) or can it also apply to a home purchase through land contract?
Love the Tumbleweed homes. Would own one if I didn’t have to use this pesky wheelchair. (Of course my chair is small, a Quickie GPV sports chair.) As for the tax, we have something similar here in Canada (First time homeowners tax credit or the HBTC), unfortunately I’m currently renting (a small house…..lol) and I am not in the market yet for a new home. (Maybe in 5-10 yrs we’ll see.)
I’m still hoping they will change the rules for the first homebuyers credit and not make us pay it back…all the other ones are ‘free’ if you stay in your house for 5 years.
@Shappie:
You don’t have to pay it back.
@bubby1124:
[Citation needed]
They also expanded the income limits with this new bill as well. Which I’m sure in some geographies seems rather insane (the limit is now $125k for a single individual and $225k for a married couple)
In more expensive coastal areas it makes sense because you couldn’t really buy a house on the old $150k limit without stretching your finances according to the classical debt to income ratios.
@JeffM: Yeah, the good news: I make more than the income limit. The bad news, I make more than the income limit.
In most places, not a big deal, but I live in the D.C. area, where it’s enough salary to live in a 50-year-old townhouse.
Oh well. I hope everyone enjoys my salary subsidizing *YOUR* home purchases.
I’m wondering if this new tax credit will apply to my situation.. My father purchased a house to resell for a profit. I chose to purchase it from him. We’re in the process of getting this thru. The problem with the tax credit as it WAS is that you can’t be purchasing it from a family member. Is this restriction present in the newly extended form?
Too late for the homebuyers who just bought my parents house, the sale recorded last Thursday.
@theblackdog_FeelingRandom:
Why is it too late for them? The current credit is good until 11-30-09. It’s not 11-30-09 yet.
Housing prices just jumped $8000. The average person can now afford $8000 more house so asking prices will rise accordingly. But now you get to pay property tax and interest on the higher value.
@DoctorMD: Yeah… Except that’s not true.
@Stephmo: Find a good friend that wants to split 8k minus sale and sell back costs with you?
Yet another BS scheme by the Obamunists that only applies to people who can’t afford the additional debt.
Cash for Clunkers (think of how many had a clunker for a reason, eh?)
New House Tax Credit (but not for those of you who actually worked hard and have a good salary; let’s just give it to people who might have a harder time paying).
This is like offering vinegar to the parched.
@hankrearden:
Yet another BS scheme by the Obamunists that only applies to people who can’t afford the additional debt.”
Yeah, preach on brother! If you’re not making more than $125K/yr (the new upper limit) You shouldn’t be buying a house. (BTW Less than 5% of american workers make more than $100,000/year)
“(think of how many had a clunker for a reason, eh?)”
It could be the ppl who bought SUV’s during the boom and now are siting junk that nobody wants to buy because they get 12mpg.
The number one car traded in…The Ford Explorer.
You are probably some bitter Kiyosaki acolyte who bough at the peak, and now has negative equity.
More Haterade® will not quench your thirst.
The furthering of this credit just puts me off of buying a house for another year or so. Yes, I only make ~$30,000 a year, but I can afford to buy a house of about $100,000 on a 30 year fixed rate mortgage. With housing values dropping like a rock, and living in Michigan, working in a stable industry with actual growth prospects, I don’t have a problem with buying. With the tax credit, it’s hard to get a true value of a house now. I have a friend who closed on her house, first time, on Friday. Last year, the same kind of house in the same neighborhood was going for above 100k, this year, she paid, after the credit, just under 100k. Without the credit, would she still have bought? Yes, but not in the same neighborhood. It’s not new construction that’s taking this credit near me, it’s 50 year old homes under $100,000.
Looks like another extension to 2010 is in the works, with a new provision in HR 4213 bill….http://www.savingtoinvest.com/2009/02/15000-first-home-buyer-tax-credit-in.html ….
This is one credit that keeps on giving!
@catastrophegirl: Oh, I hadn’t heard of these–thanks for the alert! I love the design of small-space living, but yes, conceptually I lack the discipline.
@catastrophegirl: The Tumbleweed is my dream house – I have the property bought, now I just have to line up the $$ for the construction!
@catastrophegirl: Reminds me of the A-frame my wife owned before I met her. It was so small that she kept her washer and dryer in a shed out back!
@gStein_has joined the star bandwagon: If the “child” is realted to seller, then it won’t qualify.
@MaytagRepairman: Did you spend a lot of time in that shed, waiting for the washer/dryer to break? Or were you scandalized because she owned a non-Maytag washer?