First Time Homebuyer Credit

[Carlos]

Has anyone else encountered someone on Social Security wanting to file just for the FTHC?

[BOB W]

Unless a t/p has a tax liability it is foolish to take the FTHC. Remember this is not a credit, it is a loan to be paid back. Don't even think about it.

[WhiteOleander]

If the only income is SS, the t/p will not have a taxable AGI. Therefore, there would be no way to be qualified by the AGI limits to take the credit. And no tax to take the credit against.

[David1980]

I see no minimum AGI, and it's a refundable credit.

As for whether it's wise or not, that depends. A savvy investor who was planning to buy a house could use a 0% interest loan to put their money somewhere, anywhere else to earn some interest. Put it in a savings account at 1% and you're making money. Though it would create a need to file for 15 years.

Unless Obama does away with the repayment of the loan making it a genuine credit. If that happens then you'd be dumb not to take it, even if your only income is SS.

[Carlos]

I haven't read anything on needing AGI above 0 to qualify. It phases out after agi exceeds certain amounts depending on filing status.

[BOB W]

I guess the primary issue is " can your client afford to pay $500 + tax prep" for the next 15 years"

[Jesse]

I see no minimum AGI, and it's a refundable credit.

As for whether it's wise or not, that depends. A savvy investor who was planning to buy a house could use a 0% interest loan to put their money somewhere, anywhere else to earn some interest. Put it in a savings account at 1% and you're making money. Though it would create a need to file for 15 years.

Unless Obama does away with the repayment of the loan making it a genuine credit. If that happens then you'd be dumb not to take it, even if your only income is SS.

Exactly my thoughts. IF and if is a key word here you are a responsible person that can fully understand that this is indeed a loan at 0% you would be stupid not to take it - just my opinion. Put it in a long term CD and continue to renew the CD at $500 less each year when you need to start paying back the credit. And if the plan does go through to waive the repayment look how far ahead you might be. Personally I don't like it, but it is there to take advantage of.

If you advise someone not to take the credit and the plan to waive repayment goes thru you could be in for grief as well.

It's kind of like this stupid stimulus payment that came out late. Although they were few, I had custodial parents that every year sign the the Form 8332 to allow the noncustodial to claim the child(ren), only because the custodial parent had low income and EIC and the extra dependent(s) and child tax credit did not increase their refund. Everybody was happy...............until mid February, after they filed, comes this extra $300 per child (under 17) credit! Who was the a$$? Not the noncustodial parent. And now we have a custodial parent and a noncustodial parent who at one time did get along - bitter with each other over a lousy $300.

[BP.]

. . . no minimum AGI, and it's a refundable credit.

Put it in a savings account at 1% and you're making money.

Unless Obama does away with the repayment of the loan making it a genuine credit. If that happens then you'd be dumb not to take it, even if your only income is SS.

if . . . you are a responsible person that can fully understand that this is indeed a loan at 0% you would be stupid not to take it - just my opinion. Put it in a long term CD and continue to renew the CD at $500 less each year when you need to start paying back the credit.

If you advise someone not to take the credit and the plan to waive repayment goes thru you could be in for grief as well.

Agree with comments posted by David1980 & Jesse.

I can totally understand the hostility to the name of this tax benefit; after all, it's a loan not a credit. But I don't get the hostility to the benefit itself. Let's not put form over substance.

It is a refundable item, so no tax liability is needed.

It's a $7,500 interest free loan, payable over 15 years at under $10 a week. What's not to like? Plus, there are already a few no-recapture-needed rules already in place, even if the repayment doesn't wind up being waived by a new law.

[Larmil]

Intrest free plus a little life insurance!

If you die, any remaining annual installments are not
due. If you filed a joint return and then you die, your
surviving spouse would be required to repay his or her
half of the remaining repayment amount.

[BOB W]

Everyone's finances are unique and to push someone into this type of loan can be a problem for the tax preparer down the road. As this thread has stated, there are positive issues to be gained but the decission MUST be the taxpayer's after ALL the pros and cons have been spelled out "In Writing" and signed by the T/P. 15years is a long commitment.

This tax advise must be in written form to protect us.

[JohnH]

I had my first one of these yesterday. Taxpayer called to make an appointment & said she bought a new home, has read up on the credit, and knows she qualifies. I told her I'm not preparing returns with this credit and that she should go to HRB to get her return prepared. She said she will let me know how it goes in terms of preparation cost and documentation she must sign.

[JG EA]

What are your reasons for not doing? Is it because of the obligation you'd feel to track over 15 year?

[WhiteOleander]

I went to one of the free online filing sites to see if it would figure the credit with just SS income.

It did calculate the credit and made it available for refund.

So, I was wrong in my earlier post.

[Larmil]

A couple of questions

I had a client today that I will file for the credit. After years of renting he bought a home. He handed me the info (closing, 1098 etc) and said: "I believe that I qualify for the interest-free loan." He did qualify.

Will he get the loan with his regular refund or will there be a later check?

With so little documentation on the 5405, is there not a great potential for fraud on this credit?

Thanks

[Bucky]

I don't quite understand why one would refuse to do a return with the "credit". I don't agree with a lot of the tax code such as EIC, child credit, additional child credit etc but I prepare the returns because that is my profession. If they offered a 15 year no interest loan to me I would jump on it. I actually filed a return with the credit yesterday. He is going to use the money to update heating etc in the home. Others may use to pay off debt and I am sure others will use it for vacations etc. Not really any of my business. I explain what the credit really is to the client and have them sign a form that they understand the repayment side of the loan. My job is done.