7500 First Time Home Buyer

[davejace1]

A couple takes the 7500 first time home buyer credit. Is there any penalty or do they have to repay immediately if they sell there home before the 15 years is up?

[KBTS]

If they sell the house at a gain during the 15 year repayment term, they must repay the entire remaining balance of the credit in that year. The repayment is limited to the amount of the gain and if they sell at a loss, they would not have to repay the balance. So, if the repayment amount is $5,000 and they sell the house at a $3,000 gain they only have to repay the $3,000. At lest this is how I understand it.

[FEDUKE404]

Creative financing for home seller?

Interesting - If that is the case then the homeowner might come out ahead by just reducing the contract price and thereby also reducing the realtor commissions, tax stamps, etc.

FE

[Gretel]

I guess it leaves at lot of room for creativity. One could you arbitrarily reduce the sales price and have a separate buy/sale for appliances that are not fixed to the house. Of course there is the risk not getting the money from the buyer, but what does have the seller to loose?

[Nashville]

Irate Client - "New" homebuyer credit

Prepared a client's return on Feb 5. Taxpayer had purchased a home last fall, and I told her she was entitled to a $7500 refund in the form of an interest-free loan. She would have $500 added to her taxes over a 15 year period. She wasn't aware of any of this, and arranged for me to e-file to receive a deposit in excess of $11K into her bank account. At that time she was deliriously happy.

Now someone has told her of the stimulus package. I haven't got to the bottom of it yet, but apparently there is something about an $8,000 refund which doesn't have to be paid back.

I talked to her yesterday. She is furious. Says I should have waited on the $8000 deal so she wouldn't have to pay the money back.

Go figure.

[BP.]

Now someone has told her of the stimulus package. I haven't got to the bottom of it yet, but apparently there is something about an $8,000 refund which doesn't have to be paid back.

I talked to her yesterday. She is furious. Says I should have waited on the $8000 deal so she wouldn't have to pay the money back.

The $8,000 credit is for purchases 1 Jan 09- 30 Nov 09. So she's the one who should have waited . . . to buy!

[FEDUKE404]

Future-telling not my strong point!

The $8,000 credit is for purchases 1 Jan 09- 30 Nov 09. So she's the one who should have waited . . . to buy!

Among my (limited) tax skills, ESP and/or clairvoyance are not yet included......

FE

[WhiteOleander]

Prepared a client's return on Feb 5. Taxpayer had purchased a home last fall, and I told her she was entitled to a $7500 refund in the form of an interest-free loan. She would have $500 added to her taxes over a 15 year period. She wasn't aware of any of this, and arranged for me to e-file to receive a deposit in excess of $11K into her bank account. At that time she was deliriously happy.

Now someone has told her of the stimulus package. I haven't got to the bottom of it yet, but apparently there is something about an $8,000 refund which doesn't have to be paid back.

I talked to her yesterday. She is furious. Says I should have waited on the $8000 deal so she wouldn't have to pay the money back.

Go figure.

Tell her you can amend and she can pay back the 7500 she has already received. Then tell her that as soon as you can through to the psychic friends network hotline, you'll let her know what bone-headed thing Congress will come out with next.

[Burke]

There is no doubt in my mind that they will eventually rescind this $7,500 "payback" provision.

[Nashville]

What Good will it do

...if they rescind it? My client bought the home in Fall of 2007 and doesn't qualify for the "new" credit.

They could rescind it effective January 1, 2009 or whenever the new credit goes into effect.
Why would anyone eligible for the "new" credit be interested in the "old" one?

[Burke]

I am referring to the "payback" provision in the old credit, not the entire thing, which would mean -- if Congress does this -- that your client would not be under an obligation to pay the credit back. It is presently set up so that payback begins the 2nd year following the year the credit is taken, or in her case, on her 2010 return, due by 4/15/11. They have plenty of time to act on this. Tell her to complain to her congressional representatives about how "unfair" she thinks this is.