Taxpayers who claimed the $7,500 first-time homebuyer tax credit two years back need to get ready to pay come tax day 2011, reports the Philadelphia Inquirer. Come Monday, April 18, the tax day blue will set in as the first of 15 annual payments come due. Source of article – First-time homebuyer tax credit: Get ready to pay by MoneyBlogNewz.
Using the first time home buyer credit
A tax credit close to 10 percent of a home price, for a total of $7,500 maximum, was given to homebuyers. The tax credit might be divided by unmarried homebuyers or married individuals filing separately could get $3,750 each, according to the House and Economic Recovery Act of 2008. The credit applied to homes purchased after April 8, 2008, however before January 1, 2009.
Many people were looking forward to the tax credit. It was popular. It was really just an interest-free loan, not “credit” as it was called. For the next fifteen years, first-time homebuyers who claimed the tax credit can be repaying the government in equal installments each year. Somebody who gets a credit of $7,500 will end up paying $500 a year. This isn’t charged if the house is sold right away though. When selling the home, the balance is due instantly. It is not paid over time anymore.
The homebuyer tax breaks given
Congress made two other tax credits extended on top of the first-time home buyer tax credit. There was an $8,000 credit given to first time home-buyers. Between January 1, 2009 and April 30, 2010 was when this credit was valid. As long as the contract had been signed by April 30, the sale could be completed by September 30, 2010, and the taxpayer could qualify for the credit. The second (for $6,500) applied to long-term homeowners who purchased a new or existing home between Nov 7, 2009, and April 30, 2010.
The tax credits, whether it be for $8,000 or $6,500, had to be repaid by the homeowners if the home is sold within three years of purchase or if it is a secondary residence. However, there’s a bit of an escape hatch if the property is sold within three years. If the profit on the sale (when in contrast to the original purchase price) is less than the amount of the tax credit, then homebuyers only need repay the amount of the profit.
IRS having trouble processing returns
The Inquirer reports that there are many issues the Internal Revenue Service is having with tax refunds for married couples filing jointly. Working class individuals who submitted Form 5405: “First-Time Homebuyer Credit and Repayment of the Credit” before February 22, 2011, forced the IRS to process their returns manually, creating slowdowns.
The $7,500 first-time home buyer tax credit can be repaid by 1 million U.S. households, according to the IRS. Those working class individuals who haven’t gotten their refunds yet can check IRS.gov and click the “Where’s My Refund?” link for more information.
Articles cited
Housing and Economic Recovery Act
frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=110_cong_bills&docid=f:h3221enr.txt.pdf
IRS
irs.gov/newsroom/article/0,,id=204671,00.html
Philadelphia Inquirer
philly.com/philly/phillywomen/119915874.html
How Canada helps first-time home buyers
youtube.com/watch?v=lg_i8SRhMO0
1 comment:
When you start visiting houses for sale, you ought to bring a notebook and a camera. Real estate agents take typical clients to see an average of 5 and 10 properties; a number of of them will have features you want to remember. Scoring homes between 1-10 as you see them and taking photos of your favorite features can help you remember which properties best fit your qualification. As you make notes on the properties you visit, jot down distinguishing features of the communities as well. All this might not be necessary if you really like the first home you see; however, it is best to be prepared.
first time homebuyer credit tips
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