5405 House sold

[Possi]

Client bought the house in 2008, took the FTHB credit.

Client sold the house in 2009, took a loss.

Filled out pg 2 of the 5405.

It cannot be e-filed.

I do not read that I must attach any paperwork to the return as we do when taking the credit.

Am I correct?

[ChEAr$]

Client bought the house in 2008, took the FTHB credit.

Client sold the house in 2009, took a loss.

Filled out pg 2 of the 5405.

It cannot be e-filed.

I do not read that I must attach any paperwork to the return as we do when taking the credit.

Am I correct?

I can't say one way or another as I've not looked into it, but it does make sense that no
paperwork should be required. After all, taxpayer is paying back the $ 8,000.
And paying back should be made as easy as "Possi"ble!

[Possi]

I can't say one way or another as I've not looked into it, but it does make sense that no
paperwork should be required. After all, taxpayer is paying back the $ 8,000.
And paying back should be made as easy as "Possi"ble!

Oh tooo cute!

HOWEVER, since she sold it at a loss, she is not required to pay it back!

[spanel]

How much did she buy it for and sell it for?

[Possi]

bought sold

Bought it for 279k and I don't know how much her closing costs were.

Sold it for 293k, minus closing costs of 14k.

[ChEAr$]

Bought it for 279k and I don't know how much her closing costs were.

Sold it for 293k, minus closing costs of 14k.

uh.. let me get this straight, now.

She bought house for 279. she sold house for 293 minus 14 equals... 279.

AND she got 8,000 from government and doesn't have to pay it back?

Talk about tax planning! wow.

[AJsTax]

But there is one important

fact that was left out. With the $8000 tax credit the basis of the house must be reduced by the amount of the tax credit, so the basis of the house is 271 plus costs, not 279,000.
could make all the difference in a case like this.

[Possi]

Oh holy cow!

fact that was left out. With the $8000 tax credit the basis of the house must be reduced by the amount of the tax credit, so the basis of the house is 271 plus costs, not 279,000.
could make all the difference in a case like this.

I better dig a little further....

I should stay off this board! The more I know... the more I WORK! hahahaha

I'll be back with the details...

thanks, y'all!

[spanel]

Also, the credit in 2008 was $7,500, not $8,000.

Yes, you have to reduce the basis by the $7,500.


Chris

[Possi]

Basis figures?

Purchase of home:
277640.31

Deposit 2500.00
Principal amount of loan was $266724.00

BUT WHEN SHE SOLD IT, the principal amount of loan payoff a year later was $273456.54 with another mortage company.

So, when she sold it, her payoff was more than her original cost? How does that happen?

She sold the house for 293000.00 but the payoff and settlement charges were 294060.54 so she had to bring 1035.46 to the table.

Can that 1035.46 be added to her basis?

If so, she only made $1221 on the sale.

[S T]

Payoff Higher

Possi,
I think the higher payoff is deferred interest or negative amortization, but not sure, there are so many "weird" loans out there.

What does the 1098 Mortgage Interest Stmt show? some of the ones I have seen will state the Negative Amortization or Deferred Interest Paid.

Sandy

[JohnH]

Get a transcript of the mortgage history. You'll be able to see everything, including negative amortization and anything else which has been added to the loan balance such as taxes, insurance, late payment penalties, etc. Given the age of the loan, it should be pretty easy to reconstruct exactly what happened without having to back into the numbers. Until you have that info, you'll have difficulty knowing what the basis is.

[spanel]

remember to deduct $7500 from her basis.

Chris

[David1980]

so she had to bring 1035.46 to the table.

Hopefully that $1035.46 came from the savings account she deposited the $7500 into when she got the credit.

[Possi]

Message to client...

...asking her about the loan. Maybe she can give me some insight so I can wrap this up. I am leaving Sunday and don't want this hanging over my head... especially if she owes money.

So far, I have the following:

cost 277,640.31
less 7,500.00 FTHB
$270,140.31 adj basis
_________________



selling price 293,000.00
plus closing costs 20,604.00
$272,396.00
_____________________

That might be as good as it gets.

The question came up about interest.... The interest pd in 2009 was 15,925.08 and was paid all year. Closing was in December, which brings up another point. When she purchased the house, it was in Dec of '08, so I put her points on an amortization table since we weren't itemizing that year and I didn't want to lose them altogether. Can I add those points to the basis now? If so, the balance of points is $2614.00 and that would bring her in pretty tight. $358.00 is all she would owe back.


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