$7,500 Tax Credit for First-Time Home Buyers

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I’ve been hearing a lot about this new $7,500 tax credit for first-time home buyers, which is part of the newly passed 2008 American Housing Rescue and Foreclosure Act. Is it as great as it sounds?

A new website has been put up with more information about this tax credit. Curiously, the fact that this “credit” has to be paid back over the next 15 years (or when you sell) is conveniently left out of the “At A Glance” section, and you have to scroll down to question #15 in their Frequently Asked Questions to learn about the repayment terms. Did I mention the site was created by the National Association of Home Builders? No way would they want to mislead potential home buyers, right?

To qualify, you must close on your new house between April 9, 2008 and July 1, 2009. A good summary of this tax credit interest-free loan is in this Fortune article:

The “first-time home buyer credit” is a temporary refundable, repayable tax credit equal to 10% of the purchase price of a home, up to $7,500 for singles and married couples filing jointly. (Singles who buy a house together get only $3,750 each, as do married couples filing their tax returns separately.) […]

But the way the credit works, it’s actually more like an interest-free loan. Two years after you claim this credit, you have to start paying it back. The payback comes over 15 years in 15 equal installments–meaning you owe an extra $500 on your tax return each year. Sell your house, and you have to pay the rest back that year from your profits. (No profits, no pay back. Also, if you die, your heirs are off the hook.)

The allowed credit starts being reduced once a single has $75,000 of modified adjusted gross income, or once a couple has $150,000 of income. The credit goes away entirely at $95,000 for singles and $170,000 for couples.

The justification behind a $7,500 interest-free loan is that it is supposed to ease the “pain” of having to come up with closing costs and a downpayment. But wait… Wasn’t the housing bubble caused in part by people being tempted into buying houses they couldn’t really afford because they didn’t need to first save up for closing costs or a downpayment? I find it ironic that our choice of “buyer assistance” is even more easy lending.

Now, of course I would still grab this tax “credit” if I was going to buy a house anyway. I’d happily take a 0% interest loan on $7,500 for any period. But why not just give us something simple and straightforward, like a check for $1,000? My guess is that the phrase “$7,500 tax credit” works better to pacify angry citizens.

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  1. This makes me mad, only because I am a new home buyer, but I purchased my home at the end of January. What a stupid time frame, April 9-July 1, 09. At least make it retroactive to the beginning of 2008.

  2. Latarian Milton says

    Sooooo….if I only make a gain of let’s say $5k in 5 to 6 years on the home…do I only have to pay back $5k of the $7500 interest-free loan?

  3. Thanks for posting that on your website! My fiance and I were under the impression that it was a $7500 tax credit, and because of that we were motivated to buy something sooner than later. How the gov has termed it as “tax credit” is very misleading.

  4. "Mo" Money says

    It sounds like the government is going into the real estate business and they are use marketing tactics of someone in business. I don’t like it!

  5. "Mo" Money says

    Is the government going into the real estate business? It looks like it!

  6. I closed on my house on Feb. 13, man I want a $7500 no interest loan. I’d love to pay off parts of my car loan with it.

  7. Banditfist says

    The Housing Bailout (should be renamed to Lender bailout) bill that was just shoved down the taxpayers’ throats is an abomination.

    The bill only did one good thing: It eliminated DPA (down payment assistance) from the FHA. Of course, the NAR and AHB are already on the case to “fix” that. But the concept that a seller can pay or provide assistance to a buyer is dangerous. Dangerous in the sense that if you cannot afford a down payment, you probably can’t afford the house.

    The housing downturn will be donw when we get back to normal lending practices:
    36% debt to income
    20% downpayment
    30 year fixed

    What CONgress does not realize is that never in history has there even been an asset that is more affordable that is increasing in value. To make housing affordable, you make it cheaper. Also, owning a home is a privledge you earn through work. Homeownership is not a right.

  8. Wow great read. I didn’t know the details of this “tax credit” until now. The government sure has gotten better at their marketting ability.

  9. The price is not a hundred bucks, it’s only $99.99!

  10. Last weekend’s Marketplace made it sound like recent homebuyers could apply for this too.

  11. This is ridiculous. I can see problems arising from this when people can’t pay that money back at the end of the fifteen years. It is good to have temporary money to use, however.

  12. interesting, thanks for doing the research for us!

  13. It’s a great point that the government is helping people afford houses that they otherwise would have trouble affording. It’s a great thing to have a 0% interest loan to supplement a responsible saver’s mortgage and downpayment, but for people similar to those responsible for the subprime mortgage it’s just not learning from past mistakes.

    I’m currently reading A Random Walk Down Wall Street by Burton Malkiel (upon your suggestion) and just finished up the behavioral finance chapter. Calling it a tax credit rather than an interest-free loan is definitely explained by behavioral finance and risk aversion.

  14. Given the cost of houses, $7,500 is nothing.

  15. It’s not really “nothing” since it will be used for a downpayment. If you only put 10% down then a free $7,500 lets you buy $75,000 more house, which is nontrivial. Why in Detroit you can even almost buy an entire house for $7,500!

  16. Thanks Jonathan for posting information on this! I’ve been looking all over for a clear explanation of what is going to happen with this, so it’s nice to have someone spell out exactly what it is.

    On a side note, keep up the great work! You are reliably one of the best bloggers in my reading, I find your coverage of different topics excellent. So thanks!!

  17. A little confused here, how does this really help a home buyer. Hear me out on this one….

    If I am going to buy a house tomorrow (thank Jebus I am not considering what hell buying my first place was) having knowledge that sometime next april $7,500 is credited back to me wouldn’t do anything for the mortgage.

    Example: If I qualified for a $500K home (which is the run of the mill where I live (North Shore Long Island), the fact that in 9 months I am getting a $7,500 credit would NOT allow me to get a $575K home BECAUSE I WOULDN”T QUALIFY. When I saw qualify I mean with a down payment (even if less than 5 – 10%).

    As usual, I think the gov’t missed the point here – this is a private lending issue. Do I have a better solution? Nope, but I don’t think this one does anything except try to get people into homes that they may or may not be able to actually afford.

  18. Thanks Jonathan, I’ve read up all over the web on this “credit” as I closed on the 9th of July. No matter how much I read about it though I still want to confirm info with additional sources. I hadn’t read the Forbes article so thank you for highlighting it.

    It’s too bad the credit has to be repaid but seriously, a 0% loan is not bad… it’s just not as good as it could have been. I’m right there with you.

  19. Chuck Harris says

    I’m a first-time home buyer, buying right now!

    Looks like I don’t qualify since I make over $75k/year (single)? If that is the case, that seems so stupid. Congress has recognized the variation in home prices in high cost areas such as San Francisco (going as far as to making FHA back loans of up to $750k permanent in THIS VERY BILL), yet they don’t recognize that SALARIES are commensurrate with various areas of the country? hmmmm…..

    I’m I missing something? Am I wrong? Did I read this wrong?

  20. Nice find. I read a few articles online and little was mentioned about the tax credit. I wish I could take advantage of it somehow. An interest free loan would be nice 🙂

  21. I wouldn’t qualify anyway, I’m not a first time home buyer. I sold my home last August and purchased one from builder inventory in January with my new bride.

    Even though she has never owned a home, since we are married, both of us must not have owned a home in the three years prior to purchasing for this tax-credit/interest free loan.

  22. As usual, the government’s brilliant financial “incentives” for first time home buyers doesn’t do much for people living in the nation’s highest housing cost areas (e.g. San Francisco bay area, California).
    Just affording a mortgage on a house in Silicon Valley pretty much means making at least 6 figures AGI to qualify for a (typically non-conforming) loan, thus thereby not qualifying for any amount of this potential “tax credit”…

  23. THIS WILL HELP ME A GREAT DEAL! I will close on MY FIRST home soon. The various fees and downpayment will almost deplete my savings. Just knowing that I have 7,500.00 coming in January will keep me comfortable until my next payraise in March of 2009. A lump sum is just what I need to tide me over. THIS IS AN UNEXPECTED BLESSING TO ME AND I’M SURE TO OTHERS ALSO.

  24. It’s better than 0% loan for 15 years. For example, you can adjust your tax withholding in 2008 so no federal tax is taken from your paycheck. Then all you have to do is buy a home right before filling a tax return in April 2009, and apply all that tax credit, without having to pay a dime in taxes for tax year 2008 or even getting a refund if total taxes owed are lower than $7,500. Basically, by doing that, you’re getting the money from that credit in advance. That’s a lot of savings.

  25. My husband and I are buying our first home in under a month so he can be 5 minutes away from work as opposed to 45 minutes. I’d rather personally have the $7500 upfront to pay off some bills, but it doesn’t sound like that is how this works. I did, however, find this…

    “How to use the $7500 tax credit now!

    The key is to change your withholding. While I recommend that your check with your tax adviser, you may be able to experiment yourself in this way. Obtain a form W-4 from your payroll service. Increase your FEDERAL withholding (increase federal withholding & increase take home pay). How many deductions can you take? The simple answer is to increase withholding by 10 and see what the impact is on your next check. If your objective is to take your credit by year end by reducing your withholding, calculate if you need to increase or decrease your withholding based on the impact of 10 additional withholding exemptions. Good luck.”

    Is this really the way to go if I could use the money sooner rather than later? Or is this just an awful idea?

  26. You don’t automatically get $7,500…..his article said that it is 10% of the purchase price. I bought a home in June for $148,900 so I will only get $1,480. For me, I would rather let Uncle Sam keep the money and not have to worry about paying him back for 15 years.

  27. To reply to you Amy

    “I bought a home in June for $148,900 so I will only get $1,480.”

    10% of $148,900 is $14,890, not $1,489… you figured it out for 1%. So you would get the full $7,500 if your income lets you qualify.

  28. Thanks Donna! I realized later on that my logic was faulty. I’ve been painting this new house I bought and the paint fumes must have taken a few brain cells.

    And I graduated Summa Cum Laude…imagine that!??! Ha ha.

  29. Not a problem, we all have our moments, right?

  30. And if you purchase the home in 2009, there’s an option to file an amended 2008 return and get the “credit” early.

  31. Interesting post. What part of the mortgage lending crisis was unclear to the architect of this tax credit ? Part of the pain of coming up with the downpayment to buy a house, is what keeps us out of a mortgage lending crisis. As a former banker, I can’t understand the logic behind this.

  32. And the housing bubble continues…

    man, I am not going to own a US home for a very long time. The truth is (and our elected officials should know this), this type of incentive will cause prospective homeowners to “bid up” the price of the house and further leverage their way into debt.

    This just depresses me because more people are going to dig themselves a grave and then the government is going to depreciate my dollars by merrily bailing them out.

    OK, look I can’t vote b/c I’m a resident and not a citizen. For those of you who can vote, please find somebody who understands why this form of tax incentive is wrong.

  33. The problem with hands-off approach to corrections is that they tend to overblow and overlast, just like the bubbles. The problem with overblowing and overlasting is that while it will correct itself in the long term, to quote a wise man, “in the long term, we are all dead.” Just think of what you do for a living. Don’t you think that while “the scam gets what it deserves”, the same wave will not blow you away? Unlikely. Housing hits the fan? Construction follows. Finance is behind. Heavy machinery is only a few years away. Tech and consulting services get put on hold. All of you in the food/retail business, who will be your customer; will you be a customer of anybody’s then?

    Bottom line: it’s unfortunate, but to teach the idiots to not overeat, we will all have to hide the food for a month and not eat for a month with them; we cannot just force them to starve up a bit while we continue to eat in moderation as we’ve done always. Any takers?

    And Jonathan…1000 check now is not the same as a 7.5K interest free loan for 15 years. Crossing Bay Area bridges was $1 12 years ago. It’s $4 today. With reasonable passive investment, 7.5K interest becomes 20 large in 15 years. 1K will be 3K in 15 years. Stop the savings account thinking. 7.5K now is to save us from us.

  34. Ah, finally some straightforward information about this credit! My fiancé and I are in the process of buying our first home so of course this credit perked our interest. However, discovering the details has left us rather disappointed. Well ya know what they say, it it’s too good to be true it probably is. The last thing I want to do is owe the IRS money and be in more debt! Unless of course, someone convinces me to see this otherwise.

  35. Mandy – Well, the interest saved on $7,500 – if you were going to borrow it otherwise – can still be substantial. For example, paying 6% interest for a year on $7,500 is $450.

  36. An Interest Free Loan is good. Most salaries increase each year. After two years, paying the amount back will not be too difficult for most people. However, if you think that you’ll have problems paying it back for 15 years, by pass the 7,500 and just take the normal tax credit for purchasing a home.

  37. So, I will qualify for this ‘credit’….but what should I do with the money? I have an emergency fund and put down 20%. Should I use it to make home improvements, pay down my mortgage, add to retirement, etc???? What would make the most sense to take advantage of making money off our government?

  38. “The last thing I want to do is owe the IRS money and be in more debt!”

    Indeed, this credit should be taken only by those who know how to play the arbitrage game, and much more effective if you withhold federal taxes from your paycheck this year to invest the extra money in non-risk and liquid investments (i.e., Munis, CD, open a non-risk Roth-IRA). Many other people might choose to get the credit to buy stuff from China at Wal-Mart, like they did with the stimulus check.

  39. LargeTalons says

    This is the most ridiculous thing I’ve ever heard of. Arg! More government incentives to artificially prop up the home values. It’s this exact kind of thing that got us into this mess in the first place. STOP GIVING PEOPLE WHO CANT AFFORD IT A REASON TO BUY HOMES! So, what happens when these people have to increase their withholding in order to pay back the loan and then cant afford their mortgage payment because their checks are short? The government loves to talk about the great benefit that home ownership provides, but what they leave out is the great benefit that home ownership provides the government in the form of property taxes. Don’t get me wrong, I’m not against home ownership, but guess who gets to collect more money when home prices rise? If the government really cared about fixing the housing market, they would repeal the FHA, get rid of tax incentives and instead lower property taxes. This will never happen, your money is just way to important to the government. Isn’t it a bit ironic that we create policies to prop up home values, which makes housing less affordable, so we can spend tax dollars on low income housing? The whole thing makes my head hurt.

  40. I don’t really think that this tax credit/interest free loan was a good idea, but since I bought my first house about 2 months ago, I will absolutely take full advantage of it. I had already been planning to buy my first Harley this winter, after I get my big raise to bump me up to “full” GS-12 engineer salary for completing the developmental first 2.5 years of my career. My home is the only thing I have borrowed money for, so I know that my interest rate on the motorcycle loan won’t be very good. I had expected to put 20-25% down on the bike, but with this, I will probably put around 50% down, which will allow me to save quite a bit on interest and I may even pay it off sooner.

    Chuck, what is this “normal tax credit for purchasing a home”? I’m apparently not familiar with this tax credit, but I just bought my first home recently, so I guess I need to learn about it.

  41. I think I have figured out a very good use for this interest free loan. I could use it to pay off some of my student loans saving me the interest. There doesn’t seem to be a reason not to do this.

  42. I purchased a home 6/25/08 with my boyfriend for 205k. We both make less that $75,000.00. He is a first time home owner and I am not. I sold my home 6/18/06 to my ex husband after a divorce. I hadn’t lived in the home since 7/05. Am I considered a “first time home owner”? When is the 3 year rule start from? Your closing date or 12/31/08? If not can my boyfriend just claim the 3750 because he truly is a first time homeowner? I haven’t found much info on singles that buy a home together. Any info will be appreciated 🙂

  43. How do you apply for the tax credit? How does it works, do you qualify automatically when you get the mortgage?

  44. Lorena,

    if you make under $75,000 per year single, or $150,000 married then you qualify. The “tax credit” (technically an interest free loan), is applied at tax time, with the appropriate paperwork provided by you lending company. Give that paperwork to whomever does your taxes, and they will know what to do with it.

    Hope that helped.

  45. My question is do you actually get the full $7,500 or is it just used like a tax deduction? In other words say im getting $1000 back on my taxes before I decide to accept the tax credit. Then if I decided to accept the tax credit I would be getting $8,500 back or is it just a percentage of the $7,500. For example: say I claim $8,000 on my taxes for child care I only get a small percentage of that back on my refund amount is it the same for the tax credit or is it like getting $7,500 cash.

  46. I just found the answer to my question. Here it is in case anyone else has the same question.

    A tax credit is different from a tax deduction. A tax deduction reduces the income one is taxed on. A tax credit, however, is a dollar-for-dollar reduction in what the taxpayer owes. Here are some examples of how a tax credit would work. Let’s say the taxpayer is receiving a tax return of $2,000. With a $7,500 tax credit, the taxpayer would receive $9,500 on his return. Let’s say he owes $2,000 in taxes. With a $7,500 tax credit, he would receive $5,500 on his return. If he owes no taxes or is exempt from paying taxes, he would get $7,500 with this tax credit.

  47. Jonathan, congress probably chose this because it’s, in budgetary terms, it’s a neutral give-away. Congress effectively paid for the tax break by insuring that it has to be repaid… Crazy, stupid budgeting rules…

  48. if i didnt own a home, i would use this 0% interest loan to buy an investment property, which i would rent out, and make income on (rent), while allowing my $7K to sit in the bank and earn interest.
    living in a college town, this is a completely possible move.
    Or, do you have to live in the house as your primary residence?

  49. The house has to be your primary residence. So unless you want to be roommates with a college kid you can’t rent it out. You can, however, invest your 7k even if it is your primary residence. You don’t have to put that cash towards the mortgage.

  50. Jonathan,
    I sent you an email with information and questions about this about a week ago. I’m sure others did too. Come on, can’t we get a little cred?

    Good discussion though. That’s what I was after.

    I believe Red mentioned the recent Marketplace highlight on this. If you bought a house recently (past few years), I’d look into this some more. It might still apply to you even though it doesn’t explicitly say so.

    Also, the main purpose of this thing is that the interest-free loan helps you out with the downpayment on a new house, which we all know has risen higher overall as lender’s grow deeper into their own problems. The days of 0% down are largely over, so that $7,500 loan is helpful.

  51. Me and my girlfriend both purchased our home together were not married. will we just get one lump sum of 7500 or will we both get money? If we only get 7500 dollars how will it work, like will it go on the primary buyer and then the primary buyer has to pay it back??

  52. Is anyone aware of any stipulation which might make us eligible for this tax credit -we had a closing date of 4/3 – took possession of the property 4/20/3008. we did not receive the title to the property until early May.

    Are we out of luck ?

  53. Does anyone know if the tax credit can be claimed on 2007 income and not 2008 income? I am going to close on an apartment in october, and using 2008 income, i would be not be qualified. Anything would be helpful.


  54. I’m not sure why he’s getting so much praise for this article. I hit this link when Googling for information about the tax credit. This article doesn’t do anything except summarize someone else’s website.

    Hopefully, before accepting $7500 from anyone, government or otherwise, you would research the stipulations of the deal. Or maybe you wouldn’t, and maybe that’s why the housing market is hurting so much right now.

    Either way you look at it, the tax credit is not necessarily a bad thing. It’s actually a great idea to stimulate the housing market by encouraging renters to buy a first home. Where else will you find $7500 interest-free?

    Admittedly, the term “tax credit” does seem misleading, but there again I emphasize the importance of doing some research on the issue.


  55. You should all be talking to your CPA’s about the details of this interest free loan. The IRS hasn’t even published any code about the credit as of yet so be aware that these details may change- check irs.gov and don’t rely on blogs etc as your primary source.

    Having said that, I don’t understand all the negativity surrounding this credit- it seems to me a classic case of ‘you just can’t please everybody’. It has been explained in no uncertain terms that tax payers will need to pay the money back starting in 2010. Have your employer take $10 more in federal withholdings each week so you won’t even notice the difference. Not to mention $500 will become less and less of a burden as the years go by- if you know anything about the time value of money you would understand why interest and inflation free is good, not bad.

    Do you know how beneficial this money can be?! Put the money into some sort of investment product and let it accrue interest. If you put $7,500 into a CD with 4% APR you can almost double your money in 15 years- (and that is conservative considering you will have the ability to grow your money with rising interest rates and the government will not). Even if you decided to pay off your credit card bill you are saving money by not being charged interest by your credit card company. Put the money into your house and you are increasing your equity, on the government’s dime!

    Also, the ‘credit’ isn’t enough money to push people over the edge and into their own home by next July so stop biting your nails over it. And stop complaining! If the credit doesn’t work for you than don’t apply for it but honestly, there is absolutely nothing to get upset about.

    There are also other tax benefits for all homeowners this year so I suggest you guys check them out and when you do, try not to get too upset over the money that the government is letting you save in this horrible economic time.

    Lighten up!

  56. You know what makes me mad about this?

    The fact that $170k is a ton of money outside of major metros like NYC/LI , San Diego, LA San Fran etc. But here on long island Nassau County its not. It’s actually just enough to get by. Nassau County, where my property taxes are 1/2 of what my 400k mortgage is and my 2 bedroom home would cost less than 125k in mid America or metros in TX, But I wont get this incentive. The government pays its employees based on the area the job is located why doesn’t the government adjust its incentives for the area the house was purchased. My Job, which helps me pay my taxes and the simple fact I have 90% of my family within 30 miles of here, forces me to live here. The fact that I pay the same tax rate as everyone else in my tax bracket but it costs me MORE to live doesn’t make it fair. There aren’t enough deductions out there to make it fair. Most of the country considers my wife and I “upper class”. I got news for you – We are at best middle class in my area.

    We just closed on our House on July 31. At this point with all the fees (my mortgage tax was over 7k) that $7500 could go a long way in getting a better return to make improving our home (and its value) much easier…

    I guess uncle sam wants me to hit up uncle home depot at 24.9% interest.

  57. This $7,500 credit, despite being more of an interest-free loan than actual federal tax credit, it worth a lot if you consider what you can do with that money, and the time-value of money. You only have to repay $500 per year over the next 15 years (15 years times $500 per year = $7500).

    For this example, we have some assumptions/pre-conditions:
    -25% federal tax bracket
    -6.7% fixed 30-year mortgage
    -You can afford your home regardless of the tax credit
    -I calculated a mortgage loan of $170,000 (reasonable starter home in **most** parts of the country – sorry NE, NW, and California especially).
    -3% long-term inflation (this is a fair long-term rate).

    If you take the $7500 and use it as a one-time principal payment at the end of year 1, you save yourself $38,813.58 in interest payments over the 30 year loan (you end up paying it over 26.5 years instead). If you turn this amount into real dollars (3% compounded over 26.5 years) and the $38k turns into $17,733.61 in today’s dollars.

    Factor in the money you’re paying the federal government back is worth less over time. For that, use compounding inflation rates (I used 3%… keep in mind that inflation is nearly double that at today’s rates, but this needs to be a long-term calculation). By devaluing the $500 for each year for 15 years, your repayment to the federal government is worth $5,968.97 in today’s (real) dollars which means you’re also getting $1,531.03 in addition to the $17,733.61 saved in mortgage interest for a total of $19,264.64.

    This does mean that you’re spending an extra $5,968.97 of your own money to turn it into $19,264.64 but it’s a decent return that you wouldn’t have otherwise.

    ALTERNATIVE EXAMPLE – Building on the example above, let’s say you can afford the home (same as above), but you can’t afford to use this money (your own money when you’re paying the gov’t back $500 each year) to pay down the mortgage principal (in theory, you’re using $5,968.97 of your own money in my previous example). In this example, you’ll just let the money work for you.

    1) Consider that you can have an extra $7500 in your pocket this year (or next if you buy then). You could invest it in stocks or you could put this money into a CD at the bank. For the sake of this example, we’ll play it safe with putting the money into a CD at the bank.
    Year 1 – $7500 * .05 = $375 CD interest at maturity. Since you’re likely in the 25% federal tax bracket if you’re taking this credit, that’s $281.25 after taxes.
    Year 2 – $7500 – $500 (pay back fed gov’t) + $281.25 from above = $7281.25 which you reinvest in a CD again and realize $273 more in after-tax interest.

    Rinse and repeat for the next 15 years. After 15 years, you’ve earned yourself $3,200.30 in interest (after taxes, not adjusted for inflation) and would have $3,566.42 (still from the original $7500, not adjusted for inflation). That’s a total of $6,766.72 which converts to $4,343.30 in real dollars (adjusted for inflation over 15 years).

  58. Building on my previous post, let’s say you can afford the home again, but you can’t afford to use your own money to pay down the mortgage principal (in theory, you’re using $5,968.97 of your own money in my previous example). In this example, you’ll just let the money work for you.

    1) Consider that you can have an extra $7500 in your pocket this year (or next if you buy then). You could invest it in stocks or you could put this money into a CD at the bank. For the sake of this example, we’ll play it safe with putting the money into a CD at the bank.
    Year 1 – $7500 * .05 = $375 CD interest at maturity. Since you’re likely in the 25% federal tax bracket if you’re taking this credit, that’s $281.25 after taxes.
    Year 2 – $7500 – $500 (pay back fed gov’t) + $281.25 from above = $7281.25 which you reinvest in a CD again and realize $273 more in after-tax interest.

    Rinse and repeat for the next 15 years. After 15 years, you’ve earned yourself $3,200.30 in interest (after taxes, not adjusted for inflation) and would have $3,566.42 (still from the original $7500, not adjusted for inflation). That’s a total of $6,766.72 which converts to $4,343.30 in real dollars (adjusted for inflation over 15 years).

  59. Response to Mark – areas like yours with very high comparative real estate costs typically have jobs which compensate more and living there is often more desirable as well. If that weren’t the case, it wouldn’t cost so much. If you’re unhappy about that, I recommend getting a job somewhere else in the country where you could take full advantage of a bill like this.

    You probably make double what your profession would pull in in Ohio or Michigan for example.

    It is unfortunate (especially because it’s hard to live away from most of your family), but it’s a reality you must face. I considered moving to NY and LA for jobs, but I’d rather not get paid double only to have my rent/mortgage increase nearly triple.

    Keep in mind, this bill was passed to help real estate where it’s crashing. That’s not the case for NYC. If you’re unwilling to live there for its current prices/cost, there’s someone else out there who is.

    That is not the case in many other parts of the country where no one is willing to buy these homes for what people hope to get out of them or what banks want after the previous owners have been forclosed on.

  60. @David: Either way you look at it, the tax credit is not necessarily a bad thing. It’s actually a great idea to stimulate the housing market by encouraging renters to buy a first home.

    Actually, it’s a bad thing for a lot of people. If you live and deal in USD then the government has just deflated the value of your money by essentially “printing more of it”.

    I’m a renter and now it’s even tougher for me to buy a home b/c house prices will “flex” to account for this adjustment. People will bid more on the house b/c of this tax credit which makes my potential home that much more expensive.

    It’s also questionable whether or not we need to stimulate the housing market. In general, the housing market has been on a 15-year run with double-digit growth numbers meaning that home prices have far outpaced inflation. In the US, the median family income does not buy the median family home on a 25-year mortgage. These are just a few of many indicators that the housing market is over-priced and likely doesn’t need any stimulus (it probably needs to “chill”).

  61. To Gates VP:

    Like I said, the ‘credit’ is not for everyone but come on, it’s the the first time in a long time (maybe ever) that congress has passed a tax law that looks out for the little guy as opposed to their croneys.

    As far as printing more money- that’s rediculous, the Federal Reserve Bank makes that decision, not Congress, and it doesn’t happen when tax law changes. The rest of the act (and you do have to read it) compensates for the credit. Paying back the credit (interest free mind you) over 15 years and a change in the capital gains exclusion will compensate for the initial credit. And for future reference, you can’t get anything for free, especially from the government, but it’s as close as we will ever get.

    You people are a tough crowd I’ll tell ya!

  62. Gates VP says: “I’m a renter and now it’s even tougher for me to buy a home b/c house prices will “flex” to account for this adjustment.”

    $7,500 is not enough money to get someone into a house they cannot afford. Not to mention you have to buy the house before you get the money. Which means you have nothing to worry about. Just try to buy before 2010 when all those arm loans that are defaulting start to clear up and prices should be at the bottom. You never know, waiting out the storm could end up being more lucrative than the $7,500 credit.

  63. This is an excellent article. With every law, it seems there are dishonest people who try to take advantage of consumers by using it to their advantage. It’s great to see blogs like this that are looking out for people.

  64. Wait… How does this credit work out to the governments advantage?

  65. Lauren: As far as printing more money- that’s rediculous, the Federal Reserve Bank makes that decision, not Congress, and it doesn’t happen when tax law changes.

    Umm, the Congress instructs the Federal Reserve to “print” more money. Either way “somebody” is giving you $7.5k that you have to pay back interest-free over 15 years. The question is, where does that $7.5k come from?

    If the government is giving you the $7.5k, it’s not like they have it in the bank. They just “invent” the money and give it to you. If 10,000 people take advantage of this program, the government just creates $75,000,000 “IOUs” (dollars) and gives them to you. Now, with more of these dollars floating around, their individual purchasing power is reduced.

    Yes, $75M is a small sum, but it’s just another of the constant dilutions.

  66. Whoever makes the decision- tax laws do not involve the printing of more money, they compensate for themselves.

    Which is why I’m curious that no one is upset about the capital gains exclusion esentially going away for people with second homes. I think the reallocation of the exclusion as it is described in the act is a great idea b/c it will be a self regulator for the housing market. But I’m really suprised no one has here thought to complain about it considering the people that were counting on the exclusion are the ones that will be paying for the $7,500 tax credit…

    Unfortunately Gates VP, thin air will not be footing the bill for the credit, it is the people that need to sell their second home or rental property that will now have to pay a capital gains tax on their profit starting in 2008. I bet Jeff Lewis has a thing or two to say about that.

  67. Great information. After reading about 1/2 down I saw that it isn’t just a $7500 reduction off your income but an actual check sent to you with your rebate check. I am in the process of buying an $83K home in KY and this will be nice money for some new furniture or something for the house. Good to hear about this!

  68. Check this out!!! I just want to say I think this is a great idea for those of us that will use the money in a smart way…..For instance, I qualified for the VA loan being full time military. I don’t have to pay any down payment, and the seller is paying my closing costs. I do qualify for the tax credit full 7,500 which I plan to put up a privacy fence and build a nice size deck and paint where I choose to paint. All of this will only add value to the house. I think this is the best way for homeowners to use this money (home improvements).

  69. I am taking advantage of this money and placing it in a money market account and leaving it there. I will then take 40 per month in addition to what I am already saving to “pay off” the 500 tax bill at the end of each year if need be. I think this is a good thing for someone who can manage their money, realize it has to be paid back, and who does not need it to live on. The whole intention of this credit is to be there for those who may find them in a situation like losing a job where the money can be used to pay for their mortgage and not go into foreclosure. I think people need to remember that this can go either way. You can have responsible home buyers who can pay for their house without the credit and this money would be extra or not so responsible buyers who got themselves into a house they couldnt afford and will use the 7500 in the first year to just get by possibly ending in foreclosure anyway. My personal opinion is that its a no interest loan from the government, make the money work for you by investing it or putting it away and get more out of it than you paid back.

  70. My husband and I closed our house on April 8th… how crappy is that!! I mean, I could have lived with it if we had bought our home in January or even March, but one flippin’ day before the tax credit starts?? We are so bummed!!

  71. That is a bummer- I guess it goes both ways, though. I am a lender and have a client who closed on April 9th!

  72. Does anyone know that if you took the down payment assistance if you are still elligible for the $7500 ‘credit’? I’ve heard conflicting information on this. Thanks!

  73. So is there a grace period for this? i mean, what about the people, myself included, that closed in the beginning of April, but before the 9th? Any loophole around this? Any possibility that the dates may change?

  74. I am a first time homebuyer, but the house is an owner finance contract. Do I still qualify for this tax credit? We sign papers this month.

  75. I’ve said this before and I will say it again, talk to your CPAs!!! Having said that, the American Housing Rescue and Foreclosure Prevention Act of 2008 is officially a law (well, it has been but the IRS is finally setting the rules in place.)

    FOR THOSE OF YOU WHO BOUGHT A HOUSE BEFORE 8/9/08!!! It looks like you will qualify for the tax credit if you MOVED INTO your home AFTER 8/8/08. Closing dates do not decide the date of ownership under this law. Just make sure you can substantiate the claim if you did move into your home after 8/8/08.

    Also if you purchased your home from a spouse or other relative you DO NOT qualify for this credit so don’t play that game. The transaction has to be at ‘arms length’ as does most everything having to do with transactions and the IRS. Remember this as it is a huge no-no and one of the first things the IRS tests for when auditing.

    Again, your best bet is to talk to your CPA. If you don’t have one and you just bought a home I suggest you go out and find one so they can help you with your credit and the other tax savings under this act. Shit, go to H&R Block if you need to do it on the cheap. This is a good year to find an accountant as the IRS is really trying to save Americans some money and you WILL miss out if you have assets and you don’t have an accountant.

    Good luck everyone!

  76. My wife and I currently put an offer on a house and hoping to get it and close by Nov 1, 2008. Our combined income is 130,000. I will also be withdrawing 70,000 from my employee stock. I know that the 70K will need to be claimed as income which would total 200K for 2008 and make me not qualify for the 7,500 credit. Question is, can I claim the 70K for 2009 when I fill out my tax return in April 2010? Or, do I need to claim all income for that year when filing your tax return by April the following year?

  77. You need to file all 2008 income on your 2008 return, no matter when you file.

  78. One more thing!

    You could try filing ‘married filing separately’ and maybe your wife would qualify for at least $3,500. Sometimes it’s worth it to file that way anyways but it can be a pain to figure out and it can be expensive to have your accountant figure it out. But, it sounds like in this case it might be worth a try- but have your accountant do it. Exercising an employee stock option can have other tax effects. Even though your employer will just add it to your W-2, they may screw up and you also may be subject to AMT. So that’s why I say get an accountant involved- you seem to have a lot going on this year 🙂

    Good luck!

  79. This is helpful to me as I am about to buy my first home (in Boston no less $$$$) my down-payment and closing cost money is in mutual funds where they have been for 20 years or more. I was planning on setting aside a portion once I cashed out to cover capital gains taxes (since I will hopefully be closing in Nov./Dec I don’t think the normal home ownership tax benefits will balance out the thousands owed in capital gains tax).

    I am young and confident that my salary will only increase in coming years so that extra $500 a year to the IRS won’t be a big deal when compared to the ability to put more towards things like installing a washer/dryer and motion detector lights now without COMPLETELY draining my savings temporarily.

    I am in the crowd that has budgeted and I know what I can afford, but this will allow me greater flexibility in the short term and will not be too much of a burden in the long term.

    WHEW….I just saw a comment about adding funds from stocks etc. to you income to qualify…I hadn’t thought of that! luckily I will be about $500 shy of the limit!! (I did read somewhere though that if your income is too high you can still get a percentage of the ‘credit’ based on how far over the limit you are)

  80. I close on Friday with my first home at $87K. I am so looking forward to the $7500 next March.

  81. do you mean 500$ will be deducted or pay back on filing tax return?

  82. Really?

  83. Thanks for the post.

    Some of you make some salient points here, however, with mortgage underwriting is more strict than ever and it is nearly impossible to get a mortgage if you can’t afford it. I know this because I am a first time buyer. The housing market in my area is stable, so in my case, homes are selling on avg. 95% of the asking price (if in good condition of course) the rest of the houses- where people couldn’t afford them in the first place stay on the market for over 75 days and the seller’s still refuse to lower the price b/c they are trying to recup. their costs.
    I am taking the interest free loan. I can afford my mortgage. The $7500 will be helpful. And if the individual who takes it plans for it (the key here) they can have additional money taken out of their paychecks. For instance, we are planning to stay at our house 5 years (this could change)- so I will have them take $29 out every paycheck. (this is based on $3,750)
    I see where it doesn’t make sense as my income is higher than someone who could only afford a house that costs $75,000.

  84. Several others have written concerning their displeasure for the chosen dates to qualify, and I am also here to ask a specific question:

    How was this date in April chosen? What makes a person that bought their first home in February or March 2008 less qualified to take advantage of this credit as opposed to a person that purchased in April?

    Any insight into this question?

  85. Candice, good points.

    I just wanted to caution you about ‘over paying’ the yearly $500 payback of the interest free loan. You would be better off having $10 taken out of your paycheck each week to cover the $500/year and have the other $19 put into an interest bearing account. That way if you do sell your house in 5 years you can pay back the rest of the loan in one lump sum and have money left over from the interest. And if you don’t sell your house you have a nice looking amount of money in your savings account.

    Also, I don’t think the IRS will accept more than the $500/year, you are only required to pay as many taxes as you actually owe each year and not more. The IRS will more than likely end up refunding you the additional tax paid anyways and you will not have earned any interest on money. I am almost positive that they will not allow Americans to pay different amounts each year as that would create quite a bit of confusion for them and us accountants, but I could be wrong. Just find out b/4 you have the $29/week put into an IRS interest-less savings account 🙂

    Good Luck!

  86. To everyone who has a complaint:

    What are YOU going to do about it?

    Let me guess: sit on your rumbus and wait for the world to change! Or post angry comments on the Internet!

    Well, the change may not be what you expect or desire. Your comments are falling on deaf ears – even if you post to a government web site.

    Go out and protest – stand up for your rights! Let’s make the government fear its citizens again – the way it should be. Ironically, people have time to protest the Anthony’s about Caylee, but have no time to preserve our way of life (which is deteriorating like sands in an hourglass).

  87. Lauren, thank you for your help. A CPA has been contacted and she also stated what you did that if we bought our house before 4/9 but can prove we moved in after 4/9, which we can, then we are good to go.
    Once again, thank you.

  88. I’m hoping someone, anyone has any idea if there is a loophole my husband and/or I can git into here. We were married in September, and are closing on our house in November. The problem is, we are buying the house from his parents. Is there any way to prove that we are buying the house for fair market value so the fact that we’re buying it from his parents shouldn’t matter? I’m sure there isn’t, but I thought I would ask.

    Also, if we file our taxes separately, could I qualify since they aren’t my parents (the law doesn’t say anything about in-laws from what I can tell)??

    We were counting on this to help furnish our new home, and a lot of the information we read didn’t even mention that you couldn’t buy from relatives, so we’re pretty bummed. Help!!

  89. Hello, I’m hoping someone can help me. I am currently looking to purchase a home with my girlfriend. We are not married but will both be going on the mortgage. We both make about 42,000/yr. How does this tax credit work for us? The house is going for $200,000. First, will we get $7500? Second, do we both claim this in our taxes or just one of us?

    Any help would be awesome!

  90. I dont think that anyone would tell yo a loop hole. you cannot be purchasing from family period. Even if it is your in-laws it is family. It is your husbands parents. Best bet is to talk to a CPA. I would cover your self by having someone else file your taxes for this credit.

    Good Luck!

  91. I know. It is just unfortunate. I work at a CPA firm so I ask people practically daily how to get around it. We are using an FHA loan so the purchase will be completely legitimate. We are purchasing the home for the fair market value so it just kind of sucks that we get punished for it.

    Some of the people I work with did say a taxpayer advocate could maybe argue for us, but I don’t think $7500 that we have to pay back is really necessarily worth it.

  92. Hi, I have a question for anyone who knows about this tax credit deal. My fiance and I bought a house and we meet the date and income requirements. But to claim the tax credit you have to be a first time home buyer (not own a home in the last 3 years). I am a first timer but he owned a house and sold it on February 27th 2008. He was NOT on the mortgage loan but WAS on the deed. We were going to get married the end of this year but now I’m thinking we will wait until next year so that I qualify for the credit. If you are married you BOTH have to be first timers. But my question is, will I qualify for 7500 or only half of that since he is on the loan AND the deed for this house? I figure we’ll take the credit and use it to pay for a nice small wedding next year…..let me know if anyone has the answers to my questions, thanks!

  93. Since we are all asking questions here… My wife and I just bought our first house Apr 18. Unfortunately we have found issues (mold) and are trying to find another place to have somewhere to live while going through the whole legal/arbitration thing.

    In order to qual for another place the new one most likely will have to set as the new primary residence and the first one as secondary/rental. Which, by the way, we do hope to offer as a rental if/when it gets fixed.

    So, if our first house was purchased as the primary residence but has to be switched to other, would we still qualify for the ‘loan’?

  94. I myself are excited about this Interest free loan/tax credit.

    Me and my husband were tossing ideas about taking out a loan for home Improvements on our Fixer upper we just bought.
    But now with our earned income and tax credit It will give us enough to do this and take a small vacation. And I wont even notice the payback as we have earned income that will offset the 500 payback.

  95. Alright, after all this time reading everyone’s reply I think I only have one more question left! And no one seems to know the details of this thing!

    Who gives you the “paperwork” needed for tax person/accountant (H&R block) that gets you the tax credit? The lender?

    And when? Do you get the money? Once your approved for the loan or only when you close on the house (before July 2009)?

    We want to know if this money can really go to the down payment & closing, or is it just going to reinburst later us once we pay it upfront?

    BTW: We plan on buying a home at the end of our lease March 2009, right about when we get our tax return!

    Any help would be nice 🙂
    Thanks in advanced!

  96. Cyndi,

    My fiance and I are closing in November, from what I know, when I file my tax return for 08′, there should be a box for claiming this tax credit. You will then get it when you receive your normal return or payout. For instance, once I get my W-2 from work, I send it to my accountant immediately and he files my taxes for me, I generally end up getting a refund averaging approximately $1600 a year on or before March using Direct Deposit. Now, you will file for the tax credit and it will be included in your payout of your refund. So for instance, this year, I will get $1600 + $3750 (Other $3750 goes to my Fiance’s tax refund since it was purchased jointly and we are filing single separate right now)

  97. I bought a home 04/15/2008 and should qualify for the full 7,500. I bought a home that I can more than afford but it needs some work. I was planning on doing a little at a time.. over time with an out of pocket spending as I have it. Instead now I can get a lump sum to fix things now and pay it back over time instead. This is good since the price of home repairs are increasing along with everything else.
    The new windows will help with energy costs. Now I can use government loaned money to pay for energy saving windows.. and then write that off on my taxes since I updated my home to be more energy saving. So who is double dipping now.. It is about time I can find a way around things. Just a small victory.. but still a victory.

  98. Can someone answer this one? On the “First Time buyer” – Loan, it is defined that a first time buyer can not have owned a primary or main residence in the last three years. In 2004 I seperated from my wife and I moved out and had a lease on a rental property that became my primary residence. I still was required to pay the mortgage on the home during the divorse and later ended up loosing the house to my ex in the divorse. The house was refinance without my name and I signed over ownership. Since this was not my residence since 2004 and can prove with utility bills and lease would I qualify for the $7,500.00?

  99. Leo,

    The way I understand it, you have to have had no principal interest in another residence for 3 years. It makes no difference if you actually lived there. If your name was on a deed, you had interest in that house. I don’t mean interest as in money, it means interest as in you owned a share of that house. The day you signed the deed over to someone else in the sale is the day your 3 years starts.


  100. If you can afford to pay your rent and you have good credit then you should be given the chance to own a home. This notion that you should have such and easy life that you are able to save up $50k in cash and then spend that all in one shot is ridiculous. This interest free loan is smart business in most of the country. The fact that it means little in NYC or San Francisco should not be a determination of its worth. From a social aspect home ownership is the only way to raise the quality of life in less affluent parts of the country. Renters often have little stake in there communitys Home owners usually care what happens around them. Homeownership in one of the keys to revitalizing our crumbling society. This tax credit is a good thing.

  101. My husband and I closed on our first home in August. We are in the process of renovations and have not “moved in” as of yet. This is our first time to buy a property, however we “own” the residence we are occupying now. This is a result of inheriting the land from his grandparents and the mobile home from my grandparents. The property we occupy is homesteaded in my husbands name and we cannot “homestead” the new house until Jan. ’09. My question is this, since our present property was inherited and not a purchase and the new home is truly our very first home purchase ever, will we qualify for this “credit/loan”? We meet all the other requirements as far as income, time of purchase etc. We do not intend on selling our present home but instead are giving it to our daughter to live in once the renovations are completed on the home we purchased in August.

  102. A Song Bird says

    I love the idea of this loan/credit. I think I’m over the salary, cap and I may not be able to get it, BUT, it would be nice to take that 7500 dollars and hold it in a CD for the next 15 years… Depending on the return rate, you could earn several thousand dollars just letting it sit there for teh durtion of the loan….

  103. I’m kinda confused. here’s my story…we are closing on our house Nov. 24th and the seller is paying $5900 in closing cost and we are paying the other $3100 and we were told that we get the tax credit to cover that $3100. And we were under the impression that we could only get anything UP to $7500 to cover the closing costs not the whole 7500. so we would only get the 3100 back. So as I’m reading over all these posts it would seem as if we could get the whole 7500…so is that true??

  104. It there a way to pay this back early rather than paying it off over 15 years?

  105. `(a) Allowance of Credit- In the case of an individual who is a first-time homebuyer of a principal residence in the United States during a taxable year, there shall be allowed as a credit against the tax imposed by this subtitle for such taxable year an amount equal to 10 percent of the purchase price of the residence.
    `(b) Limitations-
    `(A) IN GENERAL- Except as otherwise provided in this paragraph, the credit allowed under subsection (a) shall not exceed $7,500.
    `(B) MARRIED INDIVIDUALS FILING SEPARATELY- In the case of a married individual filing a separate return, subparagraph (A) shall be applied by substituting `$3,750′ for `$7,500′.
    `(C) OTHER INDIVIDUALS- If two or more individuals who are not married purchase a principal residence, the amount of the credit allowed under subsection (a) shall be allocated among such individuals in such manner as the Secretary may prescribe, except that the total amount of the credits allowed to all such individuals shall not exceed $7,500.
    `(A) IN GENERAL- The amount allowable as a credit under subsection (a) (determined without regard to this paragraph) for the taxable year shall be reduced (but not below zero) by the amount which bears the same ratio to the amount which is so allowable as–
    `(i) the excess (if any) of–
    `(I) the taxpayer’s modified adjusted gross income for such taxable year, over
    `(II) $70,000 ($140,000 in the case of a joint return), bears to
    `(ii) $20,000.
    `(B) MODIFIED ADJUSTED GROSS INCOME- For purposes of subparagraph (A), the term `modified adjusted gross income’ means the adjusted gross income of the taxpayer for the taxable year increased by any amount excluded from gross income under section 911, 931, or 933.
    `(c) Definitions- For purposes of this section–
    `(1) FIRST-TIME HOMEBUYER- The term `first-time homebuyer’ means any individual if such individual (and if married, such individual’s spouse) had no present ownership interest in a principal residence during the 3-year period ending on the date of the purchase of the principal residence to which this section applies.
    `(2) PRINCIPAL RESIDENCE- The term `principal residence’ has the same meaning as when used in section 121.
    `(3) PURCHASE-
    `(A) IN GENERAL- The term `purchase’ means any acquisition, but only if–
    `(i) the property is not acquired from a person related to the person acquiring it, and
    `(ii) the basis of the property in the hands of the person acquiring it is not determined–
    `(I) in whole or in part by reference to the adjusted basis of such property in the hands of the person from whom acquired, or
    `(II) under section 1014(a) (relating to property acquired from a decedent).
    `(B) CONSTRUCTION- A residence which is constructed by the taxpayer shall be treated as purchased by the taxpayer on the date the taxpayer first occupies such residence.
    `(4) PURCHASE PRICE- The term `purchase price’ means the adjusted basis of the principal residence on the date such residence is purchased.
    `(5) RELATED PERSONS- A person shall be treated as related to another person if the relationship between such persons would result in the disallowance of losses under section 267 or 707(b) (but, in applying section 267(b) and (c) for purposes of this section, paragraph (4) of section 267(c) shall be treated as providing that the family of an individual shall include only his spouse, ancestors, and lineal descendants).
    `(d) Exceptions- No credit under subsection (a) shall be allowed to any taxpayer for any taxable year with respect to the purchase of a residence if–
    `(1) a credit under section 1400C (relating to first-time homebuyer in the District of Columbia) is allowable to the taxpayer (or the taxpayer’s spouse) for such taxable year or any prior taxable year,
    `(2) the residence is financed by the proceeds of a qualified mortgage issue the interest on which is exempt from tax under section 103,
    `(3) the taxpayer is a nonresident alien, or
    `(4) the taxpayer disposes of such residence (or such residence ceases to be the principal residence of the taxpayer (and, if married, the taxpayer’s spouse)) before the close of such taxable year.
    `(e) Reporting- If the Secretary requires information reporting under section 6045 by a person described in subsection (e)(2) thereof to verify the eligibility of taxpayers for the credit allowable by this section, the exception provided by section 6045(e) shall not apply.

  106. Good thing you posted this Warren, I think it’ll back up what I wanted to say.
    I checked with my mortgage company today, and they said that to qualify for the $7500, I need to get a Government Loan (FHA, etc).

    Please correct me if I’m wrong, but the (d)(2) section says qualified mortgage…..an that must be a FHA or another type of gov’t loan.

  107. I was looking for info about any exemptions, loopholes, etc. regarding the $7500 credit because I closed on my house on March 26. So, I was excited to read what was posted by Lauren (September 3, 2008) and Gary (September 25, 2008) about the date being your move-in date, not necessarily your closing date.

    I talked to my CPA and he said that he understood how some people would be able to qualify in that situation. The move-in date scenario would be for people who may have bought a lot before April 8, then constructed a NEW home and could not move into the home until after the April 9 date. It was about when the house would be available for occupancy. If you were buying an already built home, the house would be available for occupancy on the day of closing, which is considered the “purchase date” in the bill.

    So, all you who bought a previously built home before April 8, don’t get too excited until you talk to your CPA.

  108. When Lauren (September 3, 2008) and Gary (September 25, 2008) talk about people being able to use a move-in date as the date of purchase, it can be misleading.

    This scenario is for people CONSTRUCTING (not buying) a NEW home, and then the move-in date would be treated as the “purchased by” date.

    Here’s the language from the bill…

    ‘‘(B) CONSTRUCTION.—A residence which is constructed
    by the taxpayer shall be treated as purchased by the taxpayer on the date the taxpayer first occupies such residence.”

  109. My wife and I are going to put new windows in our home with this $7,500 interest free loan! PLUS we will be able to claim up to $500 because we will be making an energy efficient upgrade to our home in 2009! Awesome deal!

  110. I closed on my house on April 1st. Can I still get the tax credit?

  111. DLH, well, as my CPA informed me, the gov’t is very forgiving with this tax credit and construction or an already build home wont matter. The move in date covers both and not just the closing date. If he is giving me a bunch of crap and there is another CPA on here who knows otherwise, please say so. that way i can look elsewhere for a CPA.

  112. The “tax credit” will not help with down payment or closing costs because you have to “purchase or have purchased” the house in the specified time frame. You get the money after the fact. I think it’s a good thing if you use the money responsibly. You could put the money towards your principle on your home loan or make repairs, pay off debt etc. You also get two years before you have to start repaying. This is probably a better solution than getting a home equity loan. For more info you can visit this site.

  113. very interesting forum here…I too purchased my first house and closed on it late feb. but it was a forclosed home and needed lots of work…we did not move in until may 1st (ask my land lord) still was paying rent…I sure hope I can claim this…but will ask my cpa too…anymore positive feed back on this …I agree make it for all of 2008…

  114. So what if I buy my house for 125K then sell it in 18 months for 125K? Is the whole tax credit forgiven?

  115. If my parents cosigned on the loan (co-borrowers is the actual term) Can i still claim a credit in proportional to my interest in the house?

    I’m not sure how or IF the need shows percentage interest but they paid 50% of my downpayment . I pay the full mortgage.

    My parents do not live in the house – they do own their own.

  116. Skip,

    I had the same question for my fiance and I. I’m a first time home owner and he is not. We are not married so we don’t have to both qualify. I could just apply for the credit myself and claim the house on my tax return. I would have claimed it anyway because I make more and only one person can claim it if filing separate returns. If we were married BOTH of us would have to be first timers, but since we are not getting married until next year, I can claim it by myself.

    My question was similar to yours. Since HE owns half of the house (we are both on the mortgage as co-owners and both on the deed) would I only qualify for half of the $7500. I spoke with an accountant at H&R Block and they said I qualify for the ENTIRE amount since we aren’t married. No one on this site answered me, but I found out from an accountant. You should be eligible to claim the entire credit.

  117. Kelly,


    Looks like you can note your interest in the house on form 5405 if someone OTHER than a spouse has interest.

    Is it always 50/50 (BOTH my parents are on the deed but it’s listed as Mr. and Mrs. Mom/Dad and Mr. (me)) or can *I* say who has what %.

    Maybe I can just put 95% and have my parents fill one out for 5 . . .(or 100 for if that’s possible)

  118. Can anyone answer this one for me??
    My husband and I are currently building a home that we are closing on in March. Do we have to wait until closing to be able to get this tax credit or is there someway we can get the credit before closing and be able to put towards a bigger downpayment then we already have saved?

  119. I am aware that the tax credit has to be paid back, but who wants to reject a tax free loan from the IRS? If you have a loan that is accruing interest, use this money to pay it off. Use the money to put into a Roth IRA and make interest. Pay off bills. Put it into savings. My goodness, $500 a year for fifteen years is cheap. It’s interest free! My husband and I bought a house this summer. so, I am looking forward to this. We plan to pay his truck off and be without a monthly payment. We always get money back from our taxes, so it will be ok if we receive $500 less each year.

    And Mandi, my understanding is that you have to be a first time homeowner to receive this tax credit. I don’t think you’ll be able to get it this year. You should be eligible for it next year.

  120. Ashlee, that all sounds great and I have been mulling this whole thing over for quite some time now. The only thing is, if you sell your home before the 15 years is up, you owe the balance of the $7500 upon sale of your house. That is what scares me to death because we don’t plan to stay in this house that long. The $7500 could really eat up any profit to be made when we sell. I’m thinking of taking half the credit to put in a fence which will at least add some value to the house.

  121. You can prorate this credit. If you buy a house before July 1, 2009 than you can put it on your 2008 tax return.

    Also, if you sell your house within the 15 year payback period any profit up to the amount you still owe will go straight to the government. If you sell your home for 0 profit or at a loss the loan is forgiven. Which is where the really issue with this loan lies, as far as I’m concerned.

    The form for this credit is Form 5405. You can also look at page 61 of the 2008 form 1040 instructions on IRS.gov for more info.

    Also, I apologize for the misinformation – DLH was right, you can only use a move-in date as date of occupancy if you are constructing your home. See, this is why you need to be talking to your CPA’s 🙂

  122. andrea amir says

    Mandi yes you can. When you file your taxes claim the housing credit. You need to make sure though that you are actually qualifed and you will be buying the home before the deadline. Or you will be paying this back next year..

    Of course consult a tax professional as I am not one..

  123. Josh Woolheater says

    Well THANK YOU for the great detail on this “credit.” I was totally mislead on this. Its amazing when you can use the word credit (commendation or honor given for some action, quality). when it means LOAN(the act of lending; a grant of the temporary use of something). I dont know about all of you but those dont sound the same. Im glad I was not really depending on what I was told about this tax whatever you wanna call it.


  124. Skip,

    I actually spoke to the IRS directly about this. She asked how the home is divided percentage-wise. I said I didn’t know and asked how I would determine that, I assumed it was 50/50. She said “no, that’s up to you, the two of you should have decided the percentages when you bought the house” So then I said “well, I make more money than he does, I make about 65% of the income and he makes 35% so should I put that on the form?” She again said “that’s up to you”. I said “well I’m asking you what I should do so I don’t do something wrong! I don’t want to put I own 100% so we can take the full $7500 and then have the IRS knocking on my door a month later…..” She AGAIN said “that is up to you, I can’t tell you what to do”. It was VERY frustrating….She had said we should have gotten a notarized statement when we bought the house saying who owns what. So I just typed up a statement saying we decided I own 100% of the house until we get married next year, then and only then is it 50/50. We both signed it and had it notarized. And I put something on their about how much of the monthly bills he pays and how much I pay and said if the relationship ended before the marriage date I would pay him x amount of dollars per month that it has been since the closing on the house and he would sign the deed over to me and I’d keep the house. After we are married in July it becomes 50/50. If the relationship ended after the marriage date, then a judge in divorce court would decide the fate of the house. This way I can submit this paper with my tax stuff and get the full $7500. So just type something up saying that although your parents are on the loan and/or deed that you have a 100% interest in the house, both of you sign it and get it notarized and take the full amount of the loan.

    Of course I plan to hire a CPA when I file my taxes also just to make sure I’m doing the right thing. It’s pretty sad when you ask the IRS these questions so you don’t do the wrong thing and even THEY can’t answer you…..My mortgage broker said take the whole credit and then I just pay it back like everyone else. The government doesn’t care, you are taking a LOAN and paying it back. As long as you aren’t married, the fact that he owned a home doesn’t matter.

    Hope this all helps!

  125. How annoying to hear people complain like that!

    Josh, ignorance is bliss. You’re going to let some dude online that posted his opinion in a blog answer all your questions about this credit?? Not to mention that $7,500 grants a larger return than $100/year over a 15 year period not to mention the fact that you do not have to account for inflation or pay interest, which in itself allows for over $1,500 in savings when calculated conservatively.

    Lets be sure of something so that you are not so disappointed in the future: the government makes sure to pay itself back for every tax break it gives taxpayers, this credit is no different. If you thought differently about such things than you are even more stupid than you sound.

    Just to make things even more clear: You can be VERY sure that the government will never give you anything for free, but this loan is pretty darn close to free. If you are too ignorant to see the potential benefits that this loan can offer to some people than you probably shouldn’t claim it but you should definitely shut your mouth because you have absolutely no idea what you are talking about.

    Good luck to you, you obnoxious brat.

  126. I read through many of these responses, and I’d have to say to the folks that will not be taking this, yet you qualify….USE YOUR BRAINS! It’s simple. It’s ZERO percent. Comments like”I don’t want to owe the IRS any money” is just being lazy. Take the 7500. Let it build interest in a CD. Give it back throughout the 15 year period and you’ve got yourself FREE money on the interest you earned alone. That’s just one example of what you could do. Or if you’re in debt up to your chin (like I’d bet more than 50 percent of america is), then pay off these high interest debts with a zero percent debt. It only makes sense. If you qualify, take it. This shouldn’t even be a question.

  127. Mike, what if the house is sold way before the 15 year period? The balance is then taken out of any profit made off the sale. With the way things are going with home prices, I’m not sure if it is worth the risk.
    And I don’t think “not wanting to owe the IRS money” is being lazy, I call it being cautious. I’m young, un-experienced, and this is my first home… can I get a break?

  128. With the way home prices are you can sell at no profit or a loss anytime during the 15 year period and the loan will be forgiven. If you put the $7,500 into your home in a way that will allow its value to appreciate than you should have no problem getting a return on that investment and then some.

    I know I sounded like a woman on the verge in my earlier post but it is so frustrating to hear people whine about this credit. It is every first time homebuyers choice to either claim the credit or not, but complaining about it because the government is calling it a credit and not a loan is a bit juvenile. The goverment isn’t pulling to wool over anyone’s eyes, if the credit claimer didn’t have to pay the loan back than it would be paid back in another form. I am just glad that those who get the money have to pay it back and not the rest of us. We should all be happy about that (ehem $750 billion bailout).

    The bottom line is: If this credit works for you than great, it can be extremely beneficial. If it doesn’t work for you than you are smart for putting a lot of thought into it. If you are going to complain and yell conspiracy than you are wasting everyone’s time, including your own.

  129. Another pathetic and stupid government program. Lets reward everyone except people who actually were responsible.

    I closed on my house in March, 2008 – I am no longer in need of assistance I guess? WTF? The housing bill has mountains of provisions for people who are about to foreclose or go under, refinancing abilities to fixed loans and all sorts of good stuff.

    Why can’t responsible normal people get a break. Instead they take MY money and disperse it all over the damn place.

  130. The dates of this credit are ridiculous. How was april 9th decided that it will be the date this begins on (A wednesday in April). I would really like to take advantage of this, but I settled on my house on april 7th and therefore are out of the time frame. Does anyone know if they are making exceptions on this? Or if there is anything I can do so I can take advantage of this? We originally had settlement set for April 12th, but moved it up to accomodate the sellers with an emergency they had come up.

    Thanks for any input anyone has.

  131. I agree with Tom…. I bought mid January…. my house needed the windows replaced but in the midst of negoiations, that was left on us. All estimates came to $8k…needless to say, we havent been able to afford to get it done yet….this money sure would come in handy for that… Why does it start in April?! Why not the entire year?! That really annoys me. Guess I should just be glad I didnt buy April 8th ?!

    I also wish I had known about this before now (just found out about it this weekend!)…we may have made some other decisions.

  132. Has anyone found a loop hole that would allow people that purchased their first home before the April date to qualify to take advantage of this credit? I purchased my first home on February 14, 2008 and moved in the first week of March. I would LOVE to take advantage of this credit if at all possible? Can somene tell me why the government chose to begin their qualifying period in April instead January 1? Thanks for your help!


  133. I have a quick question, and am seeing if anyone has an answer……

    I bought my home in august 08, so I qualify for the loan, but I put 20% down on my home. The price of the home was 160,000. My loan is 128,000. If i sell in a year and sell for 160,000, will I have to pay the loan back as i will only owe like 127,000??



  134. Im 28 yrs old, married, and still living with my parents. My wife and I really want to buy our first home, for ex., a house for around $80,000. It looks like we qualify for the max $7500 (0% interest loan). My question is: How do we get this tax credit so that we can use it towards a downpayment for a house before the July 2009 deadline???
    I’ve read two different things… 1.) You have to purchase a home first.
    2.) You can claim the tax credit on your 2008 income tax, then you would get a $7500 credit included with your income tax return.
    #2 would be great! I’m still a optimist during these hard economic times and this would help us get one step closer to the American Dream.

  135. I think I’ve found the answer to my question:

    “Is there any way for a home buyer to access the money allocable to the credit sooner than waiting to file their 2008 tax return?

    Yes. Prospective home buyers who believe they qualify for the tax credit are permitted to reduce their income tax withholding. Reducing tax withholding (up to the amount of the credit) will enable the future home buyer to accumulate cash by raising his/her take home pay. This money can then be applied to the downpayment. Buyers should adjust their withholding amount on their W-4 via their employer or through their quarterly estimated tax payment. IRS Publication 919 contains rules and guidelines for income tax withholding. Prospective home buyers should note that if income tax withholding is reduced and the tax credit qualified purchase does not occur, then the individual would be liable for repayment to the IRS of income tax and possible interest charges and penalties.”

    So the way I read it is, yes you either had to of purchased a home within the time frame so that you can claim the tax credit on your 2008 income tax. Or, you could adjust your withholdings from your W-4, and save that money for a downpayment for a home purchase before June 30th 2009.

    Like most of the people here that have posted, my main issue is the time frame. I wish they would extend it and make it easier to get the $7500 for a downpayment. Better yet, just give everyone a $7500, 0%, 15yr loan 🙂

  136. Patrick,

    No you won’t. The PURCHASE price of your home was $160,000, you just chose to pay $32,000 in cash and finance the rest. But you still paid $160,000 at the end of the day. If you sell for $160,000 you will owe the government nothing. If you sell for a profit over that amount you will owe that to the government up to what you have left of the $7500. In other words, if you sell for $163,000 and still owe $6000 on the tax credit loan, you have to give the $3000 profit back to the government and the other $3000 is forgiven. If you sell for $160,000 or less, the loan is forgiven. If you sell for $170,000 and only have $6000 left to pay, then the government would get the $6000 you owe and you’d walk away with $4000 from the sale of your house. Hope this helps!

  137. I’m just not reading that the tax credit is for certain dates. I thought it was it you bought a house in 2008. Turns out I miss it by a couple weeks. I bet not but just thought to ask is there any way for an exception to the dates if you are close?

  138. The only exception is this: You can use your move in date as the date of purchase IF your home was being built when you bought it. It has to have been under construction in order to use a move in date.

  139. The law defines “first-time home buyer” as a buyer who has not owned a principal residence during the three-year period prior to the purchase. For married taxpayers, the law tests the homeownership history of both the home buyer and his/her spouse. For example, if you have not owned a home in the past three years but your spouse has owned a principal residence, neither you nor your spouse qualifies for the first-time home buyer tax credit. Ownership of a vacation home or rental property not used as a principal residence does not disqualify a buyer as a first-time home buyer.

    I am no longer married as of 2007. My exwife owned our home. Do I qualify considering I am not longer married and I have not purchased a main home within 3 years?

  140. Genio,

    It depends if you were on the deed or not. If you weren’t on the mortgage loan but WERE on the title of the house then you had an interest in that house so you HAVE had an interest in a home in the last 3 years. If it was COMPLETELY her house, as in, she bought it on her own and owned it before she met you and your name wasn’t on ANYTHING, then you will qualify.

    Hope this helps!


  141. I’ve read through a lot of post here, but still have a question. How/when can you get the $7500? My wife and I were talking with a real estate agent about a home recently, and if we bought the home now (and closed before 7/1/09), she was telling us that we could file an amendment after filing our tax return this year to get the $7500 right away.

    What I don’t know is if she was just trying to sell us. When can you get the $7500? Thanks.


  142. Why did they make it April 9 2008? As the date beginning for tax credit? And stop date for July 1 2009? Oh you need to buy a house to save the banks? What about the people before that? Bought my house closing date March 18,2008

  143. This article is misleading….

    You file for the $7500 at tax time. And it is given to you in your refund.
    Now if you owe money, it gets taken out of the $7500 first. So if you owe $500, you’ll get a check for $7000.

    To get the full $7500 your house has to be at least worth $75,000. Any less than that, you will get less of a tax credit.

    Also how you pay it back, is that every time at Tax time you will automatically owe $500. So + or – whatever your other taxes are. So the coming year if you owe another $500, you will actually owe $1000 at tax time.

    But on the other hand, if you modify how your taxes are taken out of your paycheck to where you should get around $500 refund, then voila at Tax time, you owe $0 and you paid your yearly bill for the tax credit.

    Only downside I see here is that no matter what you will always owe something to someone for the next 15 years. Like I want to use it to pay off credit cards and become debt free. Come on, its a 0% loan. But in the end, i’m not becoming debt free at all, I’m having to pay the government back.

    But it has so many more pros than cons, so I am definitely taking advantage of this

  144. This is a total crock of shit! I bought my first home on 1/31/08. Why the hell did they include 2009 this year? Why wasn’t it just for the tax year we are currently going to file and leave 2009 for 2009 tax time? Why am I always screwed no matter where I turn? I swear there is no winning in our crappy society. They should make it retroactive for anyone who purchased a home back from 1/1/08. Whoever drafted this crappy bill needs to revise it. I am sorry but the housing market was bad when I bought my home, not like it BARELY started going down after April. I worked for a Title Insurance Company, I know when it got bad and when the orders started to trickle in for new refi’s and purchase transactions. What a way to rape struggling law abiding tax payers like myself that are BARELY staying afloat.

  145. I completely agree with you Jason! I bought my house in June, so I made it in time, but I feel terrible for everyone in your position. I don’t know who came up with those dates, it doesn’t make sense! And I also agree the market was horrible for quite a long time. We got a crappy interest rate of 6.75% back in June and in only 6 months I’m already doing a streamline refi and dropping it to 5% which will drop our monthly mortgage payment 200 dollars! It’s sad when you have to refi in 6 months but with minimal closing costs and a kick-ass interest rate, you gotta do it!

    I’m sorry you are in the position you are in and I hope they change it to include all of 2008!

  146. Sigh, we closed on April 4th, and it would be great to be able to fix more of the broken stuff we have found. Maybe they will expand the dates but I doubt it.

  147. Closed the home in april 2nd. Is there any chance that i can apply for this credit? So far as i understood; you can use your move in date “if” your home was being built before april 9 and you moved in after april 9th? So in this case i would be out of luck by 7 days?

  148. What are you haters talking about. Who wouldn’t want an interest free loan. This is a good thing, it gives you a small kick start to pay off another interest loan and put some extra food on the table or use it for something useful. Again, I’ll take my loan and for those who don’t like this you can go ahead and open up a credit card at greedy% interest.

  149. I bought my house before I knew anything about this (it was being voted on around the time I closed). I was very excited. I planned to buy new windows to replace the 30-year old leaky things I have now and pay down my higher interest car loan.

    Then I lost my job in November. This money is now going to keep me from losing my house. It won’t last long, but will buy me extra time to find a job (or two, as is more than likely what I will need to do).

  150. I think one thing that many of you on the “people are buying houses they can’t afford” bandwagon are missing is just how impossible the down payment has become. If I were to buy the place I want today, with about 3.5% down, my mortgage payment would equal 31% of my income. I don’t think that’s so bad. Many posters here don’t think that’s so bad. The lender happens to think that’s bad (they are holding anyone who doesn’t make 100K+ a year to 28% here – TOTAL DEBT!!! – I dunno about where you are). I have managed to put that 3.5% away in about a year. I also paid off my car to improve my total debt (inch ever closer to that magical 28% of gross income). So, the logic is that, even though I could afford the mortgage, I can’t buy the place for another 6 years or so because I need 20% down. In 6 years or so, the value of the home will have increased, but my savings probably won’t have earned much in interest, so that really works out to 10 years or so to save 20%. Did it take 10 years for our parents or grandparents to save the down payment for a house??? (and before you go jumping down my throat, I save approximately 25% of my net income (add that to my rent at 34% of my income) and you can see why I CAN afford the mortgage), not including contributions to my retirement account…and I know the math doesn’t seem to work here, and that’s because the mortgage is 31% of my GROSS income while my savings are 25% of my NET income, and that the mortgage is 30 years long at 5.1% interest!)

    Lenders are not taking normal people with smaller down payments. They are continuing to take risks on people who look good on paper…large bonuses, fuzzy math. Those of us who can verify our income and stable employment, but maybe don’t “seem” to make as much are still frozen out of the housing market.

  151. Not trying to solicit use of any particular tax prep software here….I’m just a work-a-day new homeowner. Some might find this helpful:


  152. iIs homebuyer still eligible for $7500 If house is purchased using the USDA Rural Development program? Thanks in advance for replies!

  153. Okay question….I am purhcasing a home for the first time there for I am a “first time home buyer” but, my uncle is going to co-sign for me because i need his help (credit wise) to be approved for a loan. He is not a first time home buyer and we will both be on the loan and title. Will i qualify for the tax credit?

  154. Amanda,

    Yes you still qualify. You will check the box on the form that says you are taking the first time home buyer credit. There will be a box underneath it that asks if “anyone other than you has an interest in the home and what percentage that is” you reply no. You can either reply no or put yes and then put 0% for the percentage. Your uncle is co-signing just for you to get the home but he’s not living there or paying anything into it, therefore has no interest.

  155. Okay i just want to see if someone can clarify something for me. My husband and I just bought a house in late July 2008, we do meet the financial requirements to get the “tax credit” My husband owens rental property in PA (which at the time no one lives in), and it hasn’t been his primary residence since 2002, and it was only for a short time then. Do we qualify for the tax credit. And yes when he bought the property it was aready reantal property.

    And just one more quick question. When I bought the home I was married but still using my maiden name and now I have changed my named to my married name will this affect anything.

  156. My husband and I purchased our home Jan 15th, 2008. I don’t understand why there is a date of April 9th, 2008. I think that it should be the entire 2008 year! Totally upsetting! Is there anywhere that we can voice our concerns? We could use the extra $7500!! Who couldn’t at a time like this???

  157. I bought my house in oct 2008. But my AGI is close to $170000, and I may get a credit of about $1000 or so. One of the reasons it went over is that, I draw money from my retirement accounts. I am expected to have the AGI under $150000 in 2009. Can I claim my tax credit in 2009 returns instead of 2008 returns?

    Please advice.

  158. Riley Williams says

    This interest free loan is a great oppurtunity for those who qualify. As soon as I heard about this I called my real estate agent and closed on a house on December 31. Now there are talks in the government to forgive the loan. The best thing someone can do with this money is to put it in a CD or some other investment that produces enough interest to pay the loan back. That way you can keep your principle. As a tax professional, however, I see way too many Americans who don’t have the slightest idea on how to handle their money or take full advantage of these types of scenarios. I feel too many Americans have what I call “consumerosis”, which is the disease of poor money management, wasteful spending, and mounting debt. I predict that too many people will make ridiculous purchases with this loan. We are in a recession, so save your money and take advantage if you can!!!!!! Property is probably the best investment you can make in your lifetime. I’m so glad to not have to pay rent anymore!

  159. Stacy,

    Name changes do not effect anything. Ask yourself and your husband this question:

    Did you own a home as your Primary Residence at any time in the last Three Years?

    The IRS will look to see if you deducted any mortgage interest/property taxes on a Schedule A during the last three years. Chances are if you have deducted those expenses on a Schedule A at some point during the last three years, you have in fact owned a home as your primary residence.

    If your husband used the rental property as his Primary Residence at ANY time in the last three years, neither of you can get the credit. That means, that if he filed a Schedule A and a Schedule E for the same property, than you will not qualify for the credit.

    Basically, you should have been renting in the past three years in order to qualify for the credit.

  160. I sale one house octuber 4 2005 i got other house octuber 2 2008 the cuestion is i can take this credit the 7500dlls the diference is 2 days please i need help with that thanks.

  161. Wow, it sounds like there are a some out there that are not very excited about this “tax-credit”. I just purchased a home in September and this “tax-credit” will come in handy. There aren’t a lot of people out there who are throwing money at me… especially at 0% interest and to be repaid in 15 years. This will be used to pay off my credit cards, something I have used more since purchasing my home. My credit card companies aren’t about to lower my interest rate to 0%. I think this loan is great –who really cares how it is worded. Did you really think the government would just give us $7500 with no strings attached? While I realize the government is not giving me something for free — they are giving me $7500 at ZERO interest!!!

  162. To: Many Says
    I was reading and it says I belive move in date. Or the date you take occupancy. How are you filing your taxes? I would talk to a CPA In regards to this as well.



  163. Zero % Interest vs. 20%

    I bought a car over a year ago. I financed it at 20% because of my bad credit. It is only a 12k car, but 7500 off of 12,000 at 20% is great. I plan to put this in a savings account and double up my payments and fix my credit so that I can finance at 1/2 the rate for the remander of the loan. So this saves me a lot of bucks.

    If anyone wants to forfit their $7,500 loan to me… feel free =)

  164. Not gonna work Many, you have owned a home as a primary residence within the last 3 years. If you had purchased on the 5th than it would have been ok.

  165. The purchase of my first home was finalized in August 2008 and am well under the income limit for this tax credit. However I still didn’t qualify for this because I went through Minnesota Public Housing for the first time homebuyer assistance unknowingly disqualifying me.

    Really sad that things like this is ‘snuck’ into tax credits…. 🙁

  166. Who or where do I contact to voice my opinion that the bill should be ammended to include all 2008? Those of us who purchased our homes in the beging of 2008 should start a petition or something!!! I am clearly not the only one upset about the April 9th 2008 DATE!!!!

    First time Homebuyer Jan 2008!!!

  167. I was wondering if anyone knew for sure if the loan I get for the house has to be a government loan or not, I am closing on a house tomorrow but my loan is just a normal loan through a bank. Will i be able to get the tax credit? it would be very helpful for me. as the house needs some repairs


  168. Having a normal bank loan is ok.

  169. Not that I doubt Lauren, but If anyone has sources to back that comment up, please post some kind of link or URL. I would really like to know for sure

  170. I am with you Kathy..I would like to know who we can contact to start a petition to get this amended to include all of 2008. I was the first home on my street closing on March 21 roughly two weeks before this ridiculous mandatory credit date. Which includes incentives for folks who haven’t even bought a damn house yet! I pay my mortgage on time…I am a single mom working my ass off to provide for my children. I am the only one on my street that will NOT receive this credit, is that really fair?

  171. WOO HOO I bought my house in May of lastyear. I can sure use that money to pay off my car!!

  172. Seriously, i don’t like this type of credit at all.
    1st of all, this is not really a full credit that government give you for FREE, it’s just a no interest loan for 15 years. Secondly, I still don’t understand why the government is willing to pay out that much $$ to help those people who already get the house so cheap (the house market is already declined after April). My thought is that why don’t the government takes that $$ to help people who suffering about their mortgage loan since they bought the house in high price. And now they can’t afford to pay for the loan ’cause their house value is lower than what they actual owe. If they can get some $$ from government now, there won’t be many foreclosure and Government will not have to back up so many Bank. I understand that $7500 is not a big amount of money, but they would help the suffering mortgage loan homeowner to make their home payment at least 2 months. For those homeowner who bought the house after April 9/08, they already got the cheap house, and if they could qualify for the loan then they should be able to make their payment. Why would like need help?? Think about that, are you willing to give food to people who are starving for 3 months or give food to people who are already full???

  173. It makes absolutely NO sense at all the dates that were picked. Why not any home purchase for first time home buyers for the entire year of 2008. Sure all those who haven’t even bought a house yet can get the benefits of the tax credit. I happened to close the end of February 2008. I would SURELY sign a petition if 1 were generated.

  174. Just curious, what kind of help would this credit be if a normal bank loan didn’t qualify for it? Here’s some advice: look it up yourself. Go to irs.gov. Figure it out.

  175. Wanda,
    I am doing some digging to see what we can do to voice our opinions! I don’t think that it’s fair at all that we don’t receive this credit. I will let you know if I find anything.

  176. I’ve looked everywhere and cant find an answer. I am planning on purchasing a house in May/June of 2009, which will be after I have submitted my 08 taxes. Is there some way I can claim that on my 08 return to get a larger refund? If not, how does the credit help with the down payment or closing costs if you actually get the money after you purchase the house?

  177. You can put it on your 2008 return, it is up to you to actually close on a house before the deadline in July 🙂

  178. cottonlily says

    Sam, don’t get too excited. After you pay off your car loan with this money you’ll then have to pay the government back for it! Basically you are taking a loan to pay a loan. We are being grossly mis-lead about this so called “credit”. Read the fine print people. Sure it’s a “credit” in the sense you get a little more back from your 2008 or 2009 refund. But remember you have to pay all that back over a period of 15 years, which means you trade a 1 year “credit” for 15 years of owing even more to Uncle Sam. This is a 0% loan – nothing more – certainly not a credit of any kind.

  179. This is my question. I am purchasing a home right now and qualify for this tax credit. The house is perfect size for us right now, and in 5-7 years we plan to move up to something bigger. The purchase price is $91,000. Lets say I spend $5000 in material for updating my house, ie: fencing or finishing basement, but do the work myself and add $10,000 of value to my house… Lets say I sell the house in 5 years. If I sell it for $100,000, does the IRS consider the house’s value at $91,000 the purchase price, $96,000 the purchase price plus actual costs spent on the house, or $101,000 (the purchase price plus value added my improvements)? This question is important becasue if I had to repay the credit when we sell, but I spent all that money on the house, it wouldn’t be worth taking the credit. I would rather use my own money that wouldn’t need to be repaid. But if the houses value increases and according to the IRS I don’t make a profit becasue of the work done to the house, then I wouldn’t have to pay the loan back, making for a perfect situation to take the loan.
    I hope this makes sense… cuz the numbers are swirling in my head… and I don’t even know if I explained it clearly enough for a reply. = )

    or do they consider the $10k in value added to the house at $101,000, or do they base it off actual money spent in updates, in this scenario $5000 for a house value of $96,000. I guess the biggest question is can I build sweat equity in this house?

  180. Ryan Mason says

    Hello all.
    I visited this site while searching for specifics about the time frame for the credit, and what qualifies as a first time home buyer. Unfortunately, I do not plan to buy until 2010, and I sold my last house at the end of 2007.
    I have been skimming through everyone’s posts about this tax credit. Surprisingly, I did not see any mention of the new stimulus package for 09. The new bill eliminates the requirement to repay the 7500 tax credit. Of course, the provision may be eliminated before the bill passes, but I thought I would mention that to everyone.
    I am assuming the new provision now puts the burden on society (socialism) rather than the individual. I hate the fact that I do not have much control over how my earnings will be spent in future. We will all be paying for the governments actions for a long, long, time.

  181. I purchased my first house in April of 2007. It may have been a year before the Year of B.S., but I still had to take a huge pay-cut this year due to a bunch of washed up actors (News Anchors), and one Publicly Pessimistic President openly trying to depress the masses.

    I see no reason why I shouldn’t still be eligible for this 0% Interest loan, especially since I have proven myself as an American who can be responsible with money. I may have to pay it back to the government withing 15 years, but I will sleep better at night knowing that part of my tax money isn’t in the hands of a bunch of incompetent politicians.

    Has anyone found a way to appeal the the qualifying dates for the Tax Credit? Please?

  182. Hey, I really need this credit, but i’m not too sure if i qualify. I bought my home late Nov 07, but didn’t claim anything on my 2007 taxes as it was only one month. But I refinanced in Jun 08, would I qualify as a first time home buyer and be able to use this credit?

  183. No, you wont qualify.

  184. No disrespect to you Cottonlily but don’t discourage Sam from making a GREAT move from a 20% loan to a 0% loan!!!! It’s a God send for him. He/she very clearly realizes that it is a loan in his/her comment. I think you’ve missed the logic altogether.

  185. I am having a House constructed now and will not be down till around may-june time frame can I file for the 7500 tax credit now or do I need paperwork from the closing which has not happened yet, or do I need to just file the form 5404.. thanks for any help.

  186. No, John, you will not qualify. But, really?

    Cottonlily a 0% loan greatly outwieghs a 20% loan. Also, he doesn’t have to start paying it back until 2010 and it’s only $500 a year with all payments going straight to principle. If you still think he should stick with his 20% loan that probably costs him $500/quarter with the payments only going to interest, well that would just be wacky.

    From reading these posts I think a lot of the point of this loan is going over peoples heads. You can’t please everyone. If the start date for this loan was 1/1/08 than people that bought their homes in Dec 07 would be just as ripped as you all are.

    I also think that it’s extremely naive to bitch and moan about the fact that the Gov’t is calling this a credit and that people will have to pay it back. If you would rather everyone pay the credit back, well then keep bitching but I’m pretty happy having someone that qualifies pay it back.

    It’s a fucking 0% loan. One more time: 0% loan. It will cost you $500 a year to pay it back. One more time: $500 a year. All payments are going to go straight to interest. Give me a fucking break! What is there to complain about?! You people are so sad.

  187. Hi guys, first time poster.. wife and I a putting in an offer tomorrow on a house. I have been reading about the credit but we, like most people, don’t have enough to cover the down payment. We are going to use a first time buyer program for the down payment and then pay it back in full in a month or two when we get our return, assuming we file early… not the best plan, but its all we have…

  188. my husband and I did a remorgage on our house this is our first home

    does this apply to any one who remorgage

  189. my coworker, who bought her house in 2006 claimed the tax credit on her 2008 taxes and claims she is getting a 12600 tax refund. how can this be? i seen her printout from the tax company. im trying to figure out how can she qualify if she bought her home in 2006? that means all of you on here that missed the deadline by weeks or months can try your luck and see if they give it to you. they didnt ask for loan paperwork, closing papers, or nothing to substantiate the claim for the credit. she used her purchase date of summer 2006 and the amount she paid. how??

  190. As a previous poster stated, Pres. Obama’s proposed economy stimulus plan does include a bill to forgive the payback of the $7500 credit (loan). Sure hope it remains in the plan and passes. I’m waiting to file my taxes pending the outcome of the stimulus plan. Here’s a link to FAQ on the credit http://www.irs.gov/newsroom/article/0,,id=187935,00.html

  191. Cathy,

    The IRS has a way of letting people know when they slip up on their tax returns. She will probably receive a love letter from them after she files. I hope she doesn’t try to spend all of that in one place…

  192. Can someone answer this? My lender says I have to ask an accountant but I do my taxes myself. Does the type of loan matter? Someone told me that because I purchased a home using my state’s first time home buyer program that it wouldn’t qualify. Does anyone know if this is true? Thanks.

  193. jake,

    you will have to look at Form 5405 and Publication 17. The form is what you will fill out to claim the credit and Pub 17 will give you the rules on who qualifies and who doesn’t. If you contact your local IRS office they can probably mail you one or you can go in and get one. You can order up 10 publications/forms for free every year through the IRS. I usually get a couple Pub 17’s for the office I work in before each tax season. If you’re doing your own taxes, you should have one.

    You can also look at the 1040 instructions that you may have already received in the mail.

  194. You can also access Pub 17 on irs.gov if you key it in as a search item you should find a PDF version. Good luck!

  195. Home Buyer says

    I want to make one thing VERY clear…

    We’re all aware of the issues with the housing market and problems we have with it being WAY too easy to get in over your head. The blame for this situation rests squarely on the shoulders of one particular group: The borrowers.

    We live in a world where it is assumed that everyone is an idiot – you have to put warnings on EVERYTHING. So it comes as no surprise that when you make lots of money available people will come take it and will get in over their heads.

    The problem is not that the money is available, it’s that people have zero self control and very poor judgement. Don’t blame the government for helping people get houses, and don’t blame the banks for being greedy (even though they are). Blame the idiot making a $20K salary for taking out a $450,000 mortgage. He deserved to lose his house.

    We are all free to make our own decisions, and we should take responsibility for them. So the next time you shove your finger into an electrical socket, don’t blame the power company for the consequences.

  196. My wife and I just purchased our first home in the middle of January 2009. I am looking at taking advantage of the tax credit on my 2008 return to help off set some of the up front costs that we have had. The proposed stimulus package has language in it to make this a true tax credit that does not have to be repaid. But the language as it stands now will only apply to home purchased between January 2, 2009 and July 1, 2009. If this is the case and it passes through with this language will I disqualify myself from the new no repayment clause if I take the credit on my 2008 return even though my house was purchased on January 23, 2009? I appreciate the help.

  197. so is it possible that she may slip through the crack and get this refund even though she doenst qualify?

  198. Bryan, I’m not aware of the language of the stimulus package so it’s hard to say. I would consult with your CPA, if you don’t have one you might consider getting one this year since you want to claim the credit. And once you have a house it is always beneficial to have a CPA firm do your tax return.

  199. Cathy,

    I have no idea what will happen with your coworker. You said in your comment that ‘you seen her printout from the tax company’ I have no idea what that means either.

    Having said that, no tax preparer (‘tax company’) in their right mind would do what you say they did. Also, I don’t know what printout ‘you seen’ but there is no such thing as a $12,600 credit and there is no place on a Form 1040 for such an amount or thing.

    So if what you say is true than the IRS is going to see a credit claimed for $12,600 and a purchase date of 2006. You think about that and tell me what you think the IRS would do.

  200. Does anyone know where the new House And/or Senate stimulus bill is published? I just read the part about the 7500 credit yesterday, but cannot find that anymore.

  201. I bough a condo in July 2008. It is my first home. I paid fair market value for the property and am paying a motrgage through the morage company. The last owner is my grandmother (who is not deceased). Can I get the fist-time home buyer credit becasue I did buy the property and not just acquire it.


  202. Not fair at all! Who the heck picked the dates of April 9, 2008 through July 31, 2009? We closed on our 1st home on March 21, 2008 and we don’t qualify because we were SMART and bought what we could AFFORD at a time we could afford it? *shakes head* It would seem as though this “tax credit” (actually LOAN) should be retro-active to January 1, 2008 and continue through ALL of 2009! JMHO

  203. Please let me know if a petition is started or news on the change of dates on the credit for first time buyers. I closed March 18, 2008 and could really use this credit for a new efficient furnace not a 50 year old boilerthat doesn’t reach my 2nd floor. Freezing in Cleveland!

  204. Molly you do not qualify, it is a related party transaction. It doesn’t matter if you have a regular loan, the IRS doesn’t know if you paid FMV for the property (you may have paid more or less becuase you were purchasing from a family memeber). And no, you can’t try to prove anything, you just do not qualify.

    Before people start complaining about THIS part of the credit, the related party transaction disqualification is actually a good thing and you will find that PRTs are very closely scrtinized by the IRS, AICPA and SEC for individuals and businesses for a reason (well if you’re in the accounting profession or if you chose to research the matter you would find that). This is because related party transactions are never objective, it is easy and often lucrative for family members to set prices for other family members to receive a benefit from the transaction greater than what would have been had you sold the asset at FMV.

    Transactions always have to be at arms length and it is too hard to investigate every instance so the laws that be are set in place such that in some cases you just cannot be involved in a related party transaction and expect to receive a tax benefit from it in the end. Well, in most cases they are simply not allowed.

  205. Ya know what grinds my gears here is the timeframe this “tax credit”covers! My husband and i bought our first home the 28th of Feb 2008. He was deployed for a year a few days after we moved in. It was a foreclosed home and, despite having to pay the “tax credit” back, we would have loved to gotten that to fix up this home. Heck, wouldnt it make more sense to use the extra money to fix up the home (walls and electrical and insulation not the best!) than to pay out the rear in repair/excssive heating bills and such out of pocket thus, making the money free up to pay the mortgage in full and on time??? I wish that it was for all home buyers in 2008. If your gonna bailout and wave $ in faces in hopes to spur new homebuyers, wouldnt it make sense to help those who purchased their first homes in 2008 (Jan/Feb/March And April 1st-9th) make it? Im just seeing the uninformed see this 10% “tax credit” as purely incentive and going out there and getting homes and not making the responcible choice financially thus, losing home down the line etc…. this whole thing is half assed!

  206. Hey Sky Sands! I hear you 100% there! You would think they would make dates for all of 2008. Shoot, im paying out the nose for heating bills when all it would take is a few $k to put some insulation in place to keep heat from escaping thus, me not paying huge heating bill thus, not taking away from mortgage payments or anything extra i could put towards principal but, nooooooo…….living on paycheck to paycheck affords little to no wiggle room to do this on our own. and if i were to pay out of pocket upfront to remedy this situation as it seems smart to, god forbid the car break down some other calamity that would require immediate financial assistance. This plan was not well thought through!

  207. Ya know what….when and if if and i stress “WHEN AND IF” someone gets the loan for the full amount of $7500.00 its not that hard to pay it back, people will stress out when it comes time and their balls are getting closer to the bandsaw.I have heard people ask ?’s such as “what if i lose my job?” or “what happens if i have to take a cut in pay?” simple answer here…. Repating at $500.00 a year is not that hard! It’s called saving and financial responsibility!!! If you qualify and get the “tax credit” then, you have already taken on the lovely responsibility of purchasing your 1st home! you should know all of what it takes to do so and what financial sacrifices it takes to keep you in your home! Many go blindly in to homeownership thinking they can buy a home and lavishly furnish it and keep up their old spending habits, and on the other side theyre are the ones that buy a home by the skin of their teeth! In either situation, buying a home is a major financial step, nobody no matter how much their home cost or how much they take home each paycheck, can afford to screw the pooch when it comes to payments and deadlines! please people, consider 1st before buying a home your financial obligation to getting the home and, that your not living beyond your means! I have seen many beautiful homes under $150K that rival the slapped together $250K+ homes. Evaluate what you can realistically before purchasing! and….if you qualify and get the “tax credit”, be smart…if you dont think you can pay it back then, dont take it! and if you find yourself in the boat like me where you really could use every cent of the credit (if i qualified/closed feb 28th 2008) to repair etc… then i sure as hell would make sure i could pay that back on time! heck, i will cut out the extra packs of smokes and coffee and junk each month to free up that $42.00 each month it would take to save all year to = the $500.00 to re-pay back the “tax credit/0% loan”…

  208. Latest news is the purchase date has now been changed to Jan. 1, 2009 – Aug. 31, 2009. BUMMER!!! Refer to this news article. http://money.cnn.com/2009/01/29/real_estate/tax_credit_near/index.htm?postversion=2009012907

  209. You can view the stimuls plan here I found a link to it on c-span if you search this term SEC 1301. it takes your right to it. As it is written now you will have to pay it back if you purchased your home in 2008 if you plan to purchase in 2009 then you will qualify for the tax credit and not have to pay it back. Here is the link


    If it does not work just remeber to go to cspan.com and you can find the link to it on the main page. Everyone should write there congress woman/man and get them to revise it to include all homes purchased in 2008.

  210. My wife and I just purchased our first home in the middle of January 2009. I am looking at taking advantage of the tax credit on my 2008 return to help off set some of the up front costs that we have had. The proposed stimulus package has language in it to make this a true tax credit that does not have to be repaid. But the language as it stands now will only apply to home purchased between January 2, 2009 and July 1, 2009. If this is the case and it passes through with this language will I disqualify myself from the new no repayment clause if I take the credit on my 2008 return even though my house was purchased on January 23, 2009? I appreciate the help.

    The way I interpret it is the year you claim it will not matter just the closing date is all that matters you should be good to go. Me on the other hand I will probably have to pay it back. We purchased on Dec 14th. Oh well we plan to use it to pay back my wifes school loans so no matter what even if we do have to pay it back its still worth it since we will save so much on intrest.

    If anyone does take this loan/credit don’t waste it either save it and make some intrest on it, pay off debt whatever you do don’t blow it.

  211. Molly,

    Chances are you did not pay fair market value from your grandmother. This is why they will not give you the credit. too many people could take advantage of that. I do not think you can be related to the seller. If I knew I could get 7500 for free if I sold my house to my son and then told him to give me the 7500 back after I bought the house back for the same amount, I’d do it. Hopefully no-one gets any ideas 😉

    Can anyone find where the details of the new bill that was passed last night in the House are at? Please post a link for everyone.

  212. Whoa, whoa, whoa, wait a minute!!! They BETTER not change the dates to include LESS of a time frame? And only 2009? I bought my house on June 27th, 2008 and have been planning a wedding for July 2009. I’ve been putting deposits down on things and have been planning a wedding with a budget that includes getting that extra $7500!

    Then I read that they are just making it that you don’t have to pay it back if you buy in 2009 but still get it if you bought after April 8th, 2008. Which is it? I could care less about paying it back or not, I’m a tenured teacher and will never lose my job and my salary increases every year per our contract. Paying it back isn’t an issue. But they aren’t changing it so that you only QUALIFY if you buy in 2009, are they? I will be raging!!! I’ll have to cancel my wedding and get married at the damn JP’s office!

  213. So, my question is, will I still be able to take advantage of the credit if I purchased in 2008 and still repay the loan over 15 years. Repayment of the loan is easy; you’re allowed to pay it back on each year’s tax returns as an additional $500 tax.

    Or, has that been dropped completely and now only available to 2009 purchases?

    Guess we have to wait to see what the Senate does on the bill. It’s still open for rewording from them.

  214. Hey I found the new House stimuls bill with the 7500 credit outlined.


    Basically it says if your purchase a house before July 2009 you do not have to pay the $7500 credit back, as long as you live in the house for 3 years.

    (a) In General- Paragraph (4) of section 36(f) is amended by adding at the end the following new subparagraph:

    `(D) WAIVER OF RECAPTURE FOR PURCHASES IN 2009- In the case of any credit allowed with respect to the purchase of a principal residence after December 31, 2008, and before July 1, 2009–

    `(i) paragraph (1) shall not apply, and

    `(ii) paragraph (2) shall apply only if the disposition or cessation described in paragraph (2) with respect to such residence occurs during the 36-month period beginning on the date of the purchase of such residence by the taxpayer.’.

    (b) Conforming Amendment- Subsection (g) of section 36 is amended by striking `subsection (c)’ and inserting `subsections (c) and (f)(4)(D)’.

    (c) Effective Date- The amendments made by this section shall apply to residences purchased after December 31, 2008.

  215. Kelly…..don’t put all your eggs in one basket….looking forward to getting the money and actually having it in hand are 2 totally different things! It’s pretty un wise of you counting on the money and putting deposits on things when you dont even have the cash! If it falls through the cracks then not only will still u owe your deposits and bills for the wedding but, will be starting a new marrage out in debt! PEOPLE GET SMART!!!!!!!!!!!

  216. Well, I’m not that stupid, thanks! I’m a high school math teacher for crying out loud. I did my taxes a couple weeks ago with my final paystub for the year and saw how much I was getting back. There was a place on the tax program I use for the first-time home buyer credit. I answered all the questions and the PROGRAM said I qualified. I was just waiting for my W-2 to make sure the numbers agree and they do, I got it last week. I’ve already FILED my taxes and use direct deposit. I looked up on the IRS site and my money is scheduled to arrive next Tuesday. ONLY when I did them with an online program and using my final paystub did I start putting deposits down for my wedding, thanks! And, I DO have the cash…..I wouldn’t put deposits down without it. I don’t use credit cards. People who DO are the stupid ones! The final bill for the reception won’t be due until that day, I’ll have the rest of my tax money by then.

  217. They did not change the dates, I just checked out irs.gov and Form 5405 has the same date on it as it did yesterday. News flash, the Housing Stimulus Act of 2008 has been passed, you can’t just take something like that back.

  218. They didn’t change the dates. News flash: The Housing Stimulus Act of 2008 was passes last year, you can’t just take something like that back. You have to amend it, which is what they did. They’re saying if you buy a home between 1/1/09 and 8/31/09 and apply for the credit you do not have to pay it back. But I have not read the new stimulus plan I just read that article, so don’t quote me.

    I have to admit though, if that’s true, that’s pretty fucked up.

  219. “Enhancing the first-time home buyers’ credit, which was enacted last year. Under current law, the credit, which is capped at $7,500 and applies to purchases of primary homes after April 8, 2008, and before July 1, 2009, must be repaid over 15 years, starting two years after the credit is claimed. In the House and Senate proposals, folks who buy homes in 2009 don’t have to pay back the credit as long as they don’t sell the house within three years.”

  220. I’m also having trouble understanding this eligibility date. We closed on April 4th, 2008 (due to the seller’s urging) instead of the originally scheduled 4/10/08 date. We didn’t move into the home until April 12th, 2008. I understand that one date won’t be able to satisfy everyone, but my question is if there is an acceptable margin for these dates. The bank, due to this being an FHA purchase, actually counts the pay off date starting from the first of May. An earlier post said the IRs was being “forgiving” concerning the credit, but what does that mean? I’m ready to drop the issue, but is there any new information that would qualify a purchase made in the general time frame (6 days apart) for an FHA loan?

  221. Unless the Senate changes the wording looks like anyone who purchased before Dec 31st 2008 and is eligible for the tax credit will have to repay it.

    This is straight from the House Bill:


    (a) In General- Paragraph (4) of section 36(f) is amended by adding at the end the following new subparagraph:

    `(D) WAIVER OF RECAPTURE FOR PURCHASES IN 2009- In the case of any credit allowed with respect to the purchase of a principal residence after December 31, 2008, and before July 1, 2009–

    `(i) paragraph (1) shall not apply, and

    `(ii) paragraph (2) shall apply only if the disposition or cessation described in paragraph (2) with respect to such residence occurs during the 36-month period beginning on the date of the purchase of such residence by the taxpayer.’.

    (b) Conforming Amendment- Subsection (g) of section 36 is amended by striking `subsection (c)’ and inserting `subsections (c) and (f)(4)(D)’.

    (c) Effective Date- The amendments made by this section shall apply to residences purchased after December 31, 2008.

  222. ok from what i understand i get nothing as far as a rebate on my home since i bought it in febuary of 2008 does anyone know please let me know thx evryone tom

  223. I hope everyone keeps in mind that this ‘credit’ is meant to “STIMULATE THE HOUSING MARKET.” If you purchased a home early last year not expecting $7500, then how can you get mad now?

    If this credit didn’t encourage you to purchase a home, then technically it wasn’t meant for you. I’ve owned my house for six years…I’m not complaining…

    How this will potentially benefit EVERYONE is this: The houses that people own, regardless of purchase date, will hopefully stop dropping in value. Be glad you aren’t LOSING MONEY!!!!!!!!!!!!!!!!!!!!!!!!!

    Yes, $7500 would be nice, and if offered to me I wouldn’t turn it down, but I’m not going to complain because some other guy got money and I didn’t. That’s called ENVY and it’s a sin (Thou shalt not covet thy neighbor’s credit).

    Anyway, I’ll be glad when my house stops dropping in value and I’ll thank congress for it. If this doesn’t work, I still won’t complain because at least they’re trying…not sitting around complaining about how bad things are like a bunch of lazy slobs.

    Let’s face it, recessions happen and when the government does something…ANYTHING…we should be happy because that’s what they’re here for…to do what they can to help the american people. Whether their ideas are ill-concieved or not, I’m happy that someone with power is using that power to do what they think is right and will help our country.

    Seriously guys, greed is also a sin. Be happy with what you have – a home, food, and a job (for now). Many people have much much less.


  225. Cathy

    The IRS doesn’t have to ask questions unless they are auditing someone. People can look up tax code to find out whether or not they can do something on their return, but if they don’t follow the meaning of the tax code and the IRS gets wind of it, that is when there’s trouble.

    The IRS puts a lot of onus on the taxpayers when it comes to filing their tax returns. That is why people hire CPAs to do their tax returns, that is why getting your CPA is so difficult.

    So, I have no idea if this credit is going to be a red flag for the IRS or not. By that I mean I don’t know if by claiming this credit taxpayers are subjecting themselves to an audit, or the likelier possibility of an audit but I think it would be safe to say that yes, if you try to claim this credit the IRS will be looking into the information you provide on Form 5405.

    I mean, lets be realistic here, people can put whatever they want on their tax returns. They can try to claim their cat a dependent with a bum social security number. People can get away with that stuff until they get audited.

    The IRS makes up one half of 1% of tax revenunes, that’s not a lot of money, they don’t ask questions unless they have to and certain things will make them ask more questions, like having a business that doesn’t make any money year after year after year.

    Also, sorry for snapping at you earlier Cathy, it’s tax season I’m a little Dr. Jeckle Mr. Hyde right now…


  227. I am having a hard time getting clarification on the new provisions put into the new stimulus. I bought a house in September of 2008 so I know I am eligible for the $7500 credit, but on the new stimulus it says payback will be eliminated. What i can’t figure out is if this is just for people who purchased there homes in 2009? I have heard many different interprtations. Would I still have to pay mine back? If so, I would not think this would be the way the governement should do it. The bill was passed for April 9, 2008-June 30,2009. If they eliminate 2009 payback, 2008 should be as well. Can someone please help me understand this more and if I have to pay it back does someone have a address to someone in congress I can send a letter to.

  228. Ok so I only read about half way down so if someone else mention this already then w/e. It doesn’t make a lot of since to me. You buy a home and several months later you get $7,500 interest free loan? You already took out the loan on your house and are paying off interest. So you take out an interest free loan to pay for the interest on you interest loan? What’s the point? Doesn’t seem like your losing or gaining anything just moving money around.

  229. You should take a finance class.

  230. Sarah- unless you’re twelve there’s no excuse to not understand how a 7500 0% loan with payemnts of 500/year is beneficial. in fact it is kind of scary that you think paying interest with a 0% interest loan is just ‘moving money around’.

    i think i’m going to just apply for the loan on my 2008 tax return and purchase a house before the deadline. i will keep the money in a bank account incase i can’t close b4 the deadline, closing can be a nightmare. plus, if the stimulus package goes through and i don’t have to pay it back than that’s even better!

  231. Sarah,

    Moving money around is absolutely true. But if you can move it to the right spots, it can save you time and money. Any time you can get an interest free loan, you can use it to pay of interest or principle on your other loan which can save you extra payments. The rule of thumb is if you pay an extra mortgage payment a year, it would knock 7 years off a 30 year loan. Time and money.

    Essentially, the “tax credit” could be more or less beneficial depending on the person and their circumstance, so you need to evaluate the position that you’re in.

  232. Tina Riley says

    If I already filed my 2008 taxes, do I still qualify for the first time home buyer $7,500.00 loan? And where should I go?

  233. yasmin perez says

    Where can I go to get the first time home buyer loan? Does my credit affect me?

  234. Thanks for the sin lecture Ben. It was entertaining. I really hope the final legislation does include retroactive non-payment of the tax credit. Every little bit helps. And for people who already have homes, it may help some of them keep them. That’s not being envious or greedy. Besides, if this helps just a small amount of people keep their homes, and some new people afford to purchase one (and stay in it), why shouldn’t people who bought a house in 2008 want to this to be a tax rebate versus a credit (loan)??? As soon as someone finds out the official status of the new stimulus plan regarding this issue..please post!!!

  235. Miss Valette says

    Okay, so I bought my home in Feb 08. I know it says it starts in April, but do I get ANYTHING for buying a home early last year? If so, what is it?


  236. my husband owned a home before we got married 18 months ago. He no longer owns the home. I have never owned a home. I am in the process of buying a house and he will not be on the mortgage or the deed. Do I still qualify for the credit even though he has owned a home? He will not be on this mortgage.


  237. Tina,

    You can file an amended return for 2008 and claim the credit. An amended return is a Form 1040X.

  238. I think I read in some fine print that if you “acquired” your home from someone related, that you are not eligible for the credit. Can someone clarify this for me or direct me on how to obtain clarification? I am not sure if that means that even though the house was purchased (not given), that we don’t qualify just because my wife is related to the group of people we got the house from. I am not sure that this makes any logical sense. I would understand if it was GIVEN to us that we should not be able to get a credit because we would not have actually purchased anything. But, considering we purchased it like any other perpon purchasing a home, I don’t see why we should be excluded.

    Thanks in advance for you replies.

  239. Say that I do take the $7500 credit. How does one pay it back? Do I have to pay $500 every tax time, or can it be deducted from my paycheck? Furthuremore, how will this affect my taxes come next tax time? My girlfriend this tax credit is a bad idea to take but I’m will to hear other opinions on this subject. So is she right or should I take the cash?

  240. Latest news from the Senate on proposed changes to the stimulus plan: “Schumer also said Democrats would support a GOP-backed idea to double a home buyers tax credit from $7,500 to $15,000 and make it available to all home buyers instead of those purchasing their first home.”

    Refer to article on yahoo http://news.yahoo.com/s/ap/20090202/ap_on_bi_ge/congress_stimulus

    No other information available, i.e., date range for purchase and whether it will be a true “credit”, etc.

    I’m sure this will start the rumor-mill again.

  241. See story below- They are talking about doubling the credit to $15,000


  242. RE: “I am not sure that this makes any logical sense”

    It makes perfect logical sense to not allow purchases from relatives to be included because there is no way to prove that you purchased the house at fair market value. Sure it wasn’t “given” to you, however it could have been sold at a discount considering you were related to the seller.

    Perhaps you may have purchased the home at fair market value, but it’s obvious many people could manipulate this credit by buying houses from family members at a deep discount, so the governemnt should and is eliminating this possiblity.

  243. Does anyone know if economic stimulus package is looking to extend the $7500 tax credit to all home buyers and not just first-time buyers? Reason being is that I purchased a home at the end of July 2008.

    I did not know of the 3 year waiting period to requalify as a first-time buyer. I sold my home on 8/1/2005 and not knowing of the first time buyer qualifcations closed on my new home July 30th 2008 technically missing the $7500 tax credit by 1 day or 24 hours which totally wreaks. I am looking to see if the stimulus package might be extended to include all home buyers.

    If anyone has any information, please let me know.

  244. In the new Obama House and Senate proposals, people who buy homes in 2009 don’t have to pay back the credit as long as they don’t sell the house within three years!!!! Not very fair if you ask me.

  245. Mimi-

    You qualify for the full credit as the requirements stand right now.


    Not sure how things will change but assuming things stay the same and you have to pay the credit back $500/year for 15 years, you could have an extra $10 withheld from your paycheck every payperiod (from your federal withholdings, not state) by filing a new W-4 with your company. Then you wouldn’t have to worry about paying a lump sum at tax time.

    No one can tell you if you should take the cash or not, it depends entirely on your situation. The only thing I would say is that if you need the cash, you probably should not claim the credit. But that’s all I can say. Good luck.

  246. I closed on my house on April 2, 2008…however, there was ongoing litigation with my final purchase. A radon unit needed to be installed by June 1st, 2008 at the expense of the sellers… The radon in the house did not meet EPA standards so I needed it to be installed. I did not move into this house until June 1, 2008 and I also rented an apartment from Jan 2008 until May 31, 2008.

    I don’t see any verbiage in the law that says it has to be a NEW construction…it just says you had to have constructed your home. Would putting in a radon unit that pends a sale by awaiting contstruction be considered constructing your home? …I know i may be reaching but its worth it.

  247. I would like to sign a petition for the unfair tart date for the tax credit. I bought my home Februry 2008 and a little extra money would help me as well as the people who purchased homes after April 8,2008. The economy was bad before then just listen to the news.

  248. Michael, well said.

    Richard, ALL transactions have to be at arms length, so why should this be any different? (If you don’t know what ‘at arms length’ means than you should look it up).

    You should all be warey any time you purchase something from a family memeber, it could mean that you loose out on potential tax benefits. This concept isn’t new, it’s been around as long as tax law and it is that way for a reason.

  249. People,

    Please stop with the sour grapes. No forced anyone to buy too soon. It could be much worse, like other Americans that are going thought the misfortune of Foreclosure.

  250. Ed’regina ,

    I emailed my congressman because I too closed on 2/28. I’m just confused by this whole thing, I mean we refi our house on 10/31/08. I wonder if that date could be used if nothing else? I used student loan money to pay my closing costs when we bought our house as well as the down payment. (Stupid, yes, but a good investment later on.)

    I am praying to God that they do it for all of 2008, we purchased as short sale, but didn’t move out of our apartment until 5/1/08 because of our lease. 🙁

  251. What happens if you have already claimed the $7,500 and they double it to $15,000. Do you get another $7,500?

  252. I bought my house march 19,2008 and my cpa sayed I’m not able to get 7500.00 tac credit ever thought I did take ownership of the house until april 10,2008 (people had to move out).I looked at the form 5405 for tax credit the word(acquired) IRS diff: means time of sighing.When I read the word “acquired” in dictionary It sayes: to come into possession or control.Why does the IRS get to change the meaning of this word? Possession Diff: Control or occupanncy of property without regard to ownership.Anyone finds loopholes let me know?

  253. Wait a minute. I purchased as a first time homebuyer on Jan. 5, 09 and my tax prep. said we didnt’ qualify becuase we had to close in 08. He mentioned how can you input something into your 08 tax return when it happened in 09. My mom also purchased in jan. 08 and she qualified…. I thought it’s only April 9, 2008 thorought July 1, 2009. Very weird.

  254. Thanks for the clarification Lauren! Let’s just hope that our lawmakers will get their act together, agree on something and give us an answer soon, good or bad. One thing is for sure: They love to agree on disagreeing with each other! So much for bi-partisanship….

  255. My wife and I are currently house hunting (have been for a year now) and as 1st time homeowners, I plan to cash out 40K from my employee stock (ESOP) to have extra money for the house and down payment (my ESOP plan allows for a Hardship Withdrawal as a 1st time homeowner). The median house price in our area is 425K with annual property tax averaging 8000 per year. The only time I can take out money from my ESOP is when I actually have a contract signed by the seller, which means most likely will fall in the same calendar year as my withdrawal. Having said that, the extra 40K needs to be claimed as income which will put us over the allowable 150K annual income for married couples. We would then not qualify for the credit. It would be great if they increased the allowable annual salary for singles to 100K and married couples to 200K. This will allow us to qualify for the credit.

  256. If you’re putting down $40K on a $425,000 house, do you really need this credit? This credit is for people who don’t have the employee stock option option…

  257. I heard about this tax credit before I even bought my house. Everything I
    read on it showed I would be qualified. I closed on my home in Sept. 08. I
    even went ahead and purchased (12 months no payment plan) new furniture
    with the expectation of paying it off after receiving the tax credit. Well,
    too bad, so sad. I just recently found out I would not be able to claim
    this credit. My loan was an FHA First Time Home Buyer Loan. Which did not
    require me to put very much money down. Apparently this type of loan is one
    of the loans they are talking about when they mention “Tax-Exempt Mortgage
    Revenue Bond” loan. I honestly had no idea. So basically you have a choice
    when purchasing a home….tax credit….or low down payment. You can only
    choose one. I just wished I knew when I bought my home. I even mentioned to
    my lender at the time how excited I was about the tax credit….and she
    didn’t mention I would not be able to take it. If someone had not informed
    me that this was the type of loan I had, I would have tried to take this
    tax credit. I just thought I had an FHA loan. I think this exclusion is
    going to effect many first time home buyers….and they don’t even know it.
    I thought about going ahead and attempting to claim the credit….but, I’m
    afraid that the refund I am already getting will be held up.

  258. I have a question:
    I needed my friend to sign with me on my second house because a new law was passed that you can’t count your rental property revenue as income unless you have 30% of equity in your home. So he cosigned with me.
    It was my second house, but his first. Does he qualify for the credit? Also, if I allow him to claim the house this year, will I be able to claim the interest on the house the next year since I’m the one living there and paying the mortgage?

  259. An FHA loan does not disqualify you. It’s only if you financed with a Veteran program or something else like that. Conventional and FHA are fine. They BETTER be because I already claimed the credit and my money is on it’s way. I plan on spending it so the IRS better not knock on my door for it back!

  260. I have searched the internet, and even called to the congressional switchboard (in DC), and spoke with a few people, and have yet to hear back from a guy that I left a message with. I am frustrated since we purchased our home Jan 2008. I DON’T understand why they made the date April 9th, 2008. AND now to hear that they might double it is extremely disturbing. They need to amend the bill to include all of 2008. My advice is for everyone who is upset needs to call their local congressman/woman and voice their concerns! If anyone knows of any other ideas…I’m listening!!!

    Frustrated new home owner!

  261. Ok, this is getting really annoying…..as far as the dates, NO ONE will ever be happy. I agree it should be all of 2008 and I don’t even care, I’m eligible either way, I closed June 27th, 2008. But think about it, WHATEVER date they pick, the person who closed the DAY BEFORE is going to be upset. You can’t please everyone….

    All I’m frustrated about is they need to pick something and STICK TO IT! Here’s the way I look at it….all businesses and banks by law have to mail you anything tax related BY JANUARY 31ST. That means, everyone and their Grandmother have ALREADY begun filing their taxes this week. How can they still be deciding on dates or if it’s 7500 or 15000??? Don’t you think these decisions should have been made before the 31st? UGH! Make up your mind and let us know please because now if you change it I, along with probably A LOT of others will have to file an amendment to our tax returns…….the IRS is just making more work for themselves……….DUH!

  262. Chris-

    He would only be able to apply for 30% of the loan if he even qualifies for it in the first place.

    A house is not like a dependent, you don’t have to claim it. But, in order to deduct the mortgage interest and property tax payments you have to have been the one that actually paid those bills. It sounds like you did so you are fine there. But you also have to be careful because there are rules about vacation homes and amount of time you have to had spent in the home before you can deduct expenses on it, so you should look into that before you try to take those expenses as itemized deductions.

  263. I already did my taxes via H&R Block online and As KELLY Stated previously “An FHA loan does not disqualify you. It’s only if you financed with a Veteran program or something else like that.”

    I got my 1st time home purchase via a VA loan so do I not get the $7500 now? The H&R Block online tax program did not ask me questions to see if I got a VA loan or not.

    Can someone clarify that for me?

  264. No no Tim, what I said was “a veteran program OR SOMETHING LIKE THAT”, meaning I wasn’t sure what programs disqualify someone, just that it was NOT an FHA loan. I looked it up for you because I feel bad I scared you. The only loan not eligible is a loan from “tax-exempt mortgage revenue bonds”. If you already claimed the Washington DC first-time home buyer credit you can’t claim this credit either. I was just stating that FHA doesn’t disqualify because this is NOT a tax exempt revenue loan. You will have to contact your lender to see if a veteran loan is considered one. Sorry to have scared you! I read this directly on the IRS website.

  265. Nice! It wouldn’t post my comment…………or so I thought. I was upset because I wanted to answer you so you weren’t scared you weren’t going to get this credit because of a veteran loan so I kept reposting it! OOPS!

    Ok, Kelly OUT!

  266. My lender has already told me that I will not be able to take the tax credit. The FHA First Time Home Buyer loan is supported by the Tax-Exempt Mortgage Revenue Bond.

  267. I am just terrified with this Law, I just want to fire them whoever made this law, this makes me angry because I closed my house on March’13th’2008, and looks like stupid date is Apr’8th’2008.

    Guys anyway I get quality for this $7500 tax credit, off course I am first time home buyer.


  268. I think some of you need new advisors, LOL. If you had one of those tax excempt loan, you’d know about it. By the way, I bought my home using the USDA Rural Development Gaurunteed Housing loan… best thing ever. If anyone out there is looking to buy I suggest checking out that kind of loan. Chris, to take this credit the home has to be your primary residence. So, if your friend claims the credit he is saying it is his primary residence.
    I’m looking forward to my $7500 even though I bought in ’08 and will probably have to pay it back. I just have to muster up the willpower to use the money wisely!

  269. how is joel saying he is claiming the credit if he has not bought a home? my co worker said the same thing. The other girl said she bought in 06 and she claimed it. whats really going on?? if thats the case im going to amend my taxes and claim the credit also, while i’m “thinking”about buying a house im going to be paying some bills

  270. Cathy, we’ve been over this.

  271. Write your representatives, senators, president. Write a letter to the editor of your local newspapers. January 1 to April 8 is 27% of the calendar year of 2008, there’s got to be a lot of people getting screwed by this April 9 date.

    This is a tax return for 2008, every expense and income that you incurred for the calendar year of 2008 is accounted for on your taxes. So why would the credit only apply if you bought a house on April 9th or later?

    2007 is over, 2007 tax time has come and gone. so to anyone who says “well if they moved it back to January 1st, what about those people who bought a house in December of 2007?”- it’s for the very same reason you wouldn’t have counted a dependent on your 2007 tax return if they were born in January of 2008. We are doing a tax return for 2008. There is no reason to not make the credit applicable all the way to the very 1st day of the year.

    I really hope something changes. I don’t know what else I can do. It sickens me that I can’t get this credit because of closing 8 days too soon. 8 days.

  272. who cares if you have to pay it back, I will make double this amount investing it over a 15 year period! Thanks IRS!!!!!!!

  273. Me and my fiance are fixing to close on our first home purchase on a home loan of 124,000 next week. My question is, Can I claim the 7,500 credit on my 08 taxes since I am the primary signer on the loan? My fiance is listed as the secondary signer on the home but she has already filed her 08 taxes and we are not legally married yet so we cant file jointly. Will I be able to soley claim the credit?

  274. Glad to know I am not alone on saying the time frame really sucks. I finally was able to purchase my first home on March 1 after renting for 23 years. What a mess…

  275. Does anyone know what the actual message of the change proposed and voice passed yesterday in the Senate was? The news said it was a 15,000 dollar credit for home buyers, but there was no mention of dates applicable, what effect if any this has on the existing 7500 credit, or whether either has to be paid back.

    Can anyone help? I closed in late April 2008 and qualify for the 7500 credit, but I am not filing my taxes until this is resolved one way or the other, as I don’t want to get screwed.

  276. So can i claim this if i plan on buying a home before july 09′, and use this money for a down payment? and what happens if i dont purchase a home? will they want it all back asap? or in 2 years when they said you have to start repaying it?

  277. After watching CSPAN2 last night (eek!), I saw that the $7500 tax credit doubled to $15k and approved, which is great but does it mean that we have to pay that back? They (congress/senate) weren’t too clear on that. Also I have a VA loan, does that disqualify me from claiming the $$$? (purchasd the house in July’08)

  278. Why the dates matter: If the new $15,000 credit is not credited retroactively to April 9, 2008, then there might be a chance that it won’t stimulate the housing market at all.

    Why? Because people might figure, hmm, they were giving a 0% loan for $7,500 in 2008. Now they’ve increased it to $15,000 and you don’t have to pay it back. I wonder what they’ll do in 2010 — they’ll probably increase it again. I’ll hold off and see.

    What the legislation will do is cause some people to start playing the housing market again, which is what got the housing economy in the mess it is today. The government shouldn’t be encouraging this sort of behavior.

  279. Lauren,

    if I only put down $40k on a $450k home, I will need to take a $410k mortgage loan. With an interest rate of 5.0 % (which is very good) and property taxes of $8k per year, that comes out to a monthly payment of about $3000.00. That doesn’t include homeowners insurance. On top of that, consider the other monthly expenses such as utility bill of $300.00, food $400.00, cable TV, telephone, car payment, car insurance, kids. That $3000.00 can turn into $5000.00 per month easily. My wife and I make decent money, but not enough to be comfortable with a $3000.00 monthly mortgage. You can make the argument for me to buy a less expensive home, maybe $350,000 instead of $450,000, but where I live a $350,000 home today is garbage and would need tons of work and a lot of money to fix/upgrade. Sometimes I wish I lived in a different part of the country, like Atlanta, where you get WAY more house for your money. So, needless to say, I would like to put as much as I can for a down payment, hopefully 20%, in order to get the best interest rate possible and lower my monthly payment. That $15,000 tax credit (especially if we don’t need to pay it back) would sure come in handy for closing costs…$10,000 in closing costs! I live in northeast NJ, Bergen County, and now I know why a lot of NJ residents decide to move to eastern PA. My brother purchased a brand new house there, built to custom in a new development, huge, the works, paid $460,000 and has an acre of land and property taxes are less then 5,000. Maybe I should consider moving there as well.

  280. All you people who complain about it not being on your dates – if they back dated it to jan 08 then people in dec 07 will complain and then if they back date it again to jan 07 then people in 06 will
    complain….jeesszzzz – get over it!!!! Bunch of winers if you ask me.

    All I know is that I am getting the money – so there !! (sticks out his tongue at everyone!!) LOL

  281. Sam – you wouldn’t be saying that if you closed a week before their eligibility date. All I’m saying is it makes sense to go back to January 1st, since we are doing our year 2008 tax return.

  282. LOL, Josh – I know your right – I am just messing with you all. Its a shame that its the way it is though.

  283. @Ryan: Thanks for clearing up the timing issue on getting access to the funds before you buy the home. Many buyers don’t know about this.

  284. Josh Worte:

    Write your representatives, senators, president. Write a letter to the editor of your local newspapers. January 1 to April 8 is 27% of the calendar year of 2008, there’s got to be a lot of people getting screwed by this April 9 date.

    I agree with you 100%… I have already written letters. I don’t know if it will make a difference, but atleast I tried.

    We purchased our home in Jan 2008…

    and SAM, you’re rude, that’s totally uncool to throw something like that in our faces, put yourself on the other side of April, 9th 2008…

  285. Ryan or Anyone out there that knows:)

    Please, tell us more. I am a 1st time home buyer. I have waited what seems like forever to buy. And can see it will finally pay off.

    I will attempting to purchase a FourPlex via Multi-Family FHA. The price is currently at $350,000. I was waiting for it to drop to $300,000. So, in theory I would live there for free based on collection of the $1,100 monthly rent the other 3 tenants are currently paying rent.

    I say 3, because part of the guidelines for the FHA is that I must live in one of the 4 units.

    I would like to use the now $15,000 tax break towards the 3.5% down payment.

    Also, would I qualify only for value of the loan portion of only my unit I live in? Or the actual complete loan value?

    Thank you in advance to anyone that can bring clarity.

    I want the American Dream, fourfold, lol. I’m Not greedy just ambitious.

    Sorry such a long post.

  286. Well you all, my coworker did indeed get that 7500 that she did not technically qualify for. it came straight from the irs. i guess they are not checking it out before they send it to the taxpayers. free money would you say ?

  287. does anyone know how to figure out the answer to the questions they ask; what percentage of you home do you own? are they asking if you are the only owenr i.e. 100% or how much of the house you have paid off, i.e 15% ?


  288. Tax fraud I say… your duty as an American you ask? Report her to the IRS!

  289. Yes, that probably is fraud since she claimed this credit knowing that she didn’t qualify for it. If the IRS does audit her and does decide she was engaging in ‘fraud’ than they can look at every tax return she’s ever filed (which they probably will) and she will most likely end up owing the IRS way more than $7,500 after penalties and fines. And, if she does get any love letters from the IRS she will probably have to hire a lawyer and a CPA to handle correspondence with the IRS and to examine amounts they say she owes or to argue that she did not engage in fraud and that she did not know she that she didn’t qualify for it which would lower the amount owed a lot but not below $7,500. In any case- definitely not worth it if you ask me.

  290. I have purchased Land and construction of house will be starting soon does that count as being purchased or do I have to wait till the house is done, I have paid in full the cost of house and land.. just checking to see if that would allow me to claim for the 7500 credit.

  291. Here’s the latest verbiage I could find on the proposed changes to this credit. I just wish it was more specific about the actual year(s). I’m thinking both changes are intended for 2009. I’m sure it would clear up a lot of confusion if someone could find out the actual timeline

    House — $2.6 billion to repeal a requirement that a $7,500 first-time homebuyer tax credit be paid back over time for homes purchased from Jan. 1 to July 1, unless the home is sold within three years. The credit is phased out for couples making more than $150,000.

    Senate — Doubles the credit to $15,000 for homes purchased for a year after the bill takes effect, increasing the cost to $35.5 billion.

  292. At this point and time all everyone can do is sit and wait until the actual tax credit is detailed in the actual Stimulus Bill. I’ve read words like “existing”, and “retroactive” at various sites which seem to be contradictory to one another. Then you have to consider the fact that although it appears that the Senate has kinda sorta agreed to their version of the Bill, it has to be reconciled with the House version of the Stimulus Bill. So at best all we can do is speculate what the final signed version will be. Or we can stress our selves out like Cathy is doing.

  293. I bought my house in August of 2008 with tax exempt mortgage backed financing. However, I ended up refinancing out of that loan b/c I was able to get a significantly lower rate. I know the rule regarding the $7,500 credit states that the home can’t be financed with tax exempt MBF to get the credit. However, does that mean I can’t buy the home with tax exempt financing or that I can’t have tax exempt financing when I request the credit?

  294. Vab, when they ask for percentage they are asking what percentage of the home you have personal interest in. For example, my fiance and I bought a our first house in ’08. For tax purposes, since we file seperatly, he owns 50% of the house and I own 50% of the house.

    Robert, I don’t think you qualify for the credit at all because you are building your home.

  295. Robert, you should qualify if you pass all of the other first time homebuyers tests.

  296. Manda, thanks for your answer but I did check you still qualify for the tax credit if you are building your home just wasn’t sure if I had to wait till it was finished to put the credit on my taxes or since it has been purchased already if I could file the credit now.

  297. Thanks lauren I pass all of the requirements I just don’t have the closing documents yet since house isn’t finished but have the address and everything, or do I need the closing paperwork or does the IRS not ask for anything.

  298. Has anyone actually seen this money yet? i have filed for it and qualify, but i am yet to receive it. been about 2 weeks and i use direct deposit.

  299. I suggest that everyone, esp. 2008 First-time home buyers write an email/letter or call their respective senators or congress representatives to make them aware of unfair treatment being meted out.

    If the new law to provide home buyers in 2009 with an amount up to $15,000 is made final, then it must include the first-time home buyers as they did their bit to do what they could do. Or else it looks that the new bill is a solid slap in the face of those who made a move to buy a home earlier.

    Their thinking is – You bought a home in 2008, well, you must be punished. Lets reward those who waited – they will get a clean check of $15,000 as well as a better deal because home prices have gone down more in the last 6-8 months.

    This is just not fair. Please do write to your representatives and make sure that your voice is heard. We must not be taken for a free ride.

  300. Rick, I e-filed and received my refund a few days ago, first time homebuyer credit included.

  301. Im a first time home buyer and I purchase my home for 170k in Jan 08 and I dont think its fair to me that I dont qualify for the tax credit. Why did it start in April 08, Instead of the beginning of 08. Anyone who may purchase a home in 09 before the deadline may qualify for the tax credit verses the people who purchased a home and had to wait until the beginning of this year to earn credit for their home I really dont think its fair for the other first time home buyers who purchase their home at the beginning of the last year and could not claim it on their 2007 taxes.

  302. My wife and I bought our first home in late April of 08. We did qualify for the 7,500.00 and it is in the bank now. I feel greedy, but I’m somehwat irritated that others will be able to get 15,000.00 if this package passes. My hope is that it will be at least retro to the start of the other credit, and then all I would need to do is file an amendment to my 08 return.

    I feel awful for those of you who purchased a home in early 08 and didn’t meet the deadlines for the first credit. One of my co-workers missed the date by 3 weeks. I wish it was just a calender year mark, somehow that would seem slightly more fair. I can’t complain, we’ve gotten the 7,500.00 at least, but I hope that the new credit does end up being a retro credit that would encompass all of us who have already qualified for the first time home buyers credit.

  303. People,

    If life was fair.. We would not be stuck in this recession/Depression.

    Please, stop crying. No one force you to buy in 2008 during end of the Miserable Failure-Bush era!

    “I stopped crying that I had no shoes until I saw a man with no feet.” Unknown

  304. Everyone just remember this first time home buyers tax credit not only has to be repaid over 15 years, but if you move out of your home before it is COMPLETELY repaid, you have to immediately pay it back to the government – PAID IN FULL. So if you plan on taking this credit, be sure that you’re staying in your home for a long time… that or have backup funds to pay it back.

  305. Now I have read that if you’re a SINGLE first-time homeowner, which I am, and purchased April 9, 2008 – July 1, 2009, that there is a cap of $3,750 for the credit. Has anyone else read the same thing?

    I’ve researched the new stimulus plan extensively and my best interpretation is that if the credit is made “non-payable” and is increased to a cap of $15,000, that it will only apply to 2009 purchases.

  306. Diane,

    That’s only if you are married filing separately, then you both claim the house and get half of the 7500 which is 3750. My fiance and I own our house but only I am claiming it and therefore am getting the full 7500. I already filed and money is due to be direct deposited by the 17th. He isn’t claiming the house at all on his tax return. I make more money and therefore benefitted more by using itemized deductions.


  307. Kelly, thanks for your msg. After going direct to the IRS website I was able to determine that the previous article I read that stated the “$3,750 for single homeowners” was inaccurate information. Good thing for me!

  308. With the $7,500 tax credit i read that it is refundable but this $15,000 tax credit it’s non-refundable. Can anyone elaborate on that for me please?

  309. QUESTION: I am buying a home within the next 6 weeks- I already claimed the $7,500 on my ’08 tax return. But my friend is closing on her first home this next week- she already submitted her ’08 tax return without knowing about the $7,500. I know she can claim it for ’09 but is there anyway for her to get it this year???

  310. For those who bought in January:
    The House passed the bill for a $7500 tax credit that doesn’t need to be repaid and is affective for purchases of homes after 01/01/09.
    The Senate changed it to a $15,000 tax credit but it is only affective for people who purchases after it is signed.
    If the Senate passes there’s today, then there will be a meeting between members of the Senate and members of the House to work out the differences between the two bills.
    I bought in January, so I obviously want the $15,000 tax credit the Senate proposed but with the start date the House proposed.
    You need to make your voice hear and contact your Senators and House Representative. This is America, so you voice is your popwer. E-mail them or call them. Here is a convenient number. CAll and enter your Zip code and it will get you in contact with all of your Congressmen. Decisions are being made, do it now. 1-866-924-NAHB (6242)

  311. How about this scenario. My husband purchased a home on April 9, 2008 (never owned a home before). At the time of purchase we were not married, but got married later on in the year. I cosigned on a house that my parents purchased back in 2005. Do my husband and I qualify for this credit????

  312. Hi guys I myself was pissed at the dates the government chose to qualify for the credit. I missed the date by a couple of hours, we closed on April 8th@3:30 PM. I called the IRS and the rep told me to keep my eyes and ears opened because they are still making tweaks in congress because this has been a big issue

  313. KB-

    Once you get married you are considered to have been married for the whole entire year. If you got married on Dec 31, 2008 you might as well have been married on January 1st, 2008. And since you purchased a home from a related person, you don’t qualify.

    You could try filing as MFS and maybe he will qualify for $3,750 but I doubt it would be worth it.

  314. Sarah-

    It’s easy, she just needs to file a 2008 amended return (Form 1040X) and add the credit. In fact, if anyone else did the same thing than that is all you have to do. Amended returns are not red flags to the IRS they’re a fact of life. And I highly recomend people wait until mid Feb to do their taxes because that is when things are most likely to be finalized. More often than not it is a waste of time to do your taxes in January.

  315. Tom-

    From what I have read is that the only way you can claim the $15000 credit is if you owe income taxes. Which means it won’t help low income home buyers. That’s why it’s non-refundable.

  316. My wife and I are closing on our first home March 2nd, 2009 with a purchase price of $93k. We have not done our taxes yet becasue we are waiting to see what happens with the new package. My question is if the bill passes for the $15,000… can we still claim it on our 2008 tax return for our purchase in 2009?

  317. Joseph,

    From what I have read the only way you will qualify for the $15000 is if you owe income taxes. If you are low wage buyers and don’t owe taxes, then you won’t qualify. I just read on another site that the $15k credit has been wiped out of the bill to keep it under $800 billion. Here’s the link.


  318. Agreement has been reached on the stimulus package. Bad news for the $15K credit:

    “Working to accommodate the new, lower overall limit of the bill, negotiators effectively wiped out a Senate-passed provision for a new $15,000 tax credit to defray the cost of buying a home, these officials said.”

    Refer to: http://news.yahoo.com/s/ap/congress_stimulus

  319. I wonder if they will keep the limit of $7500 but but still allow it to not be paid back. Any news on that?

  320. RE a $15,000 non refundable tax credit.

    Most people that work have taxable income and ‘owe taxes’ on their 1040 before any payment’s are taken out, this credit would just ensure that you get all of the taxes you paid to the government back up to $15,000.

    It also sounds like it would roll forward if you don’t use it all this year so depending on your tax liability and how much you usually owe at the end of the year taxpayers could potentially withhold $0 for the year which can be a lot of extra money every pay period.

    But I don’t think that it would serve the purpose of stimulating the housing market at all.

  321. Here’s the latest agreement on the stimulus plan: “A $15,000 tax credit for anybody buying a home over the next year was dropped; instead, first-time homebuyers could claim an $8,000 credit for homes bought by the end of August.”


  322. From the AP:

    “A proposed $15,000 tax credit for homebuyers was reduced to $8,000, Democratic Senator Max Baucus said, a decrease that may hurt U.S. homebuilders such as Centex and D.R. Horton Inc. “

  323. Just to make sure I am understanding this correcty… we make $55k yr, closing on house 3/2/09 for $93k. We qualify for the full $8000 true credit that does not need to be repaid. We have broke even on our 2008 taxes so we don’t owe or get a refund. Since we haven’t filed our taxes, we can still apply our 2009 purchase to our 2008 taxes and take advantage of the credit and receive a check for $8000 that does not need to be repaid if the house remains in our possession for 3 years. Is this correct?

  324. Hi everyone,

    Do the people who already qualified (the people who bought from April 9, 2008 to when the law passed) still get the $7500 and have to pay it back? Or are we increased to $8000 as well. Do the future people have to pay it back? I already filed my taxes and money is due to arrive by next Tuesday and I claimed the $7500 and agreed to the payback terms. I’d love to not have to file an amendment, but $500 more dollars is $500 more dollars and to not have to pay it back would be nice!

    Thanks all!


  325. Wanda Gaines says

    Please tell me that they made it retroactive back to Jan 1, 2008. It continues to piss me off that My brand new home isn’t even 1 year old and being a first time homebuyer I could not qualify for the credit under the old provision.

  326. It is retroactive back to August 1, 2008 to August 31, 2009. That’s for $8000 for first home buyer. You don’t have to pay it back.

  327. David Pinner says

    I closed on my first house in the middle of April. I thought, at first, that I would qualify for this, but I had a cosigner. I pay for this house on my own, but would I not qualify anymore because I had a cosigner?

  328. I don’t think the “non-payback” provision is retroactive to 2008. I believe the no-repayment provision is good for those people who bought as 1st timers after Jan 1, 2009. So anyone who bought in 2008 will have to pay it back, it appears.

  329. Joseph- YES

  330. I closed on my first home on june 4th 2008, now people that buy this yr dont have to pay it back…bullshit!
    I lost my job last aug and now make 20k less, would be a big help to me if i didnt have to pay it back.

  331. WOOHOO!!!! God has truely blessed my family! = )

  332. Will Wade’s information is incorrect. The $8000 credit is applicable to first time homebuyers that close from Jan. 1, 2009 to Aug. 31, 2009. It does not need to be paid back as long as you live in the home for at least three years.

    The $7500 credit still applies to those (including me) who closed between April 8, 2008 and December 31, 2008. It has to be paid back, which I find unfair.

  333. And to be fair, what I just said may be wrong, too. From yesterday’s Wall Street Journal, for what it’s worth:

    “Home buyers who hoped for a $15,000 tax credit to buy a new home, as promised by the Senate, will be disappointed. A proposed $35 billion credit to support home sales was jettisoned in favor of a more modest $2 billion to $3 billion provision.

    The proposal would eliminate the repayment requirement in an existing tax credit for first-time home buyers, and raise the credit to $8,000 from $7,500. Congressional aides cautioned Wednesday that the credit’s size was still subject to negotiation.”

    So, perhaps that 2008, $7500 credit is changing to $8000, but more importantly, it may not have to be paid back.

  334. Hopefully this bill will be signed on Monday by Obama. I’m not filing my taxes until it’s written in stone. As a first-time homeowner, I closed in Oct 2008, so I qualify for the credit, just waiting to see how much and if it has to be repaid or not.

  335. I agree with everyone who is saying it isn’t fair, but enough is enough! I bought my house and closed on June 27th, 2008. I am very thankful I even qualify for this credit at all. I think the reason they are making the “new” people not have to pay it back is the original credit was offered to stimulate the economy (meaning get people to spend the money out in the stores), the new plan is to stimulate the housing market (meaning to get people to buy homes) because it’s crashing big time. People aren’t buying now because they can’t afford to. But I do think they should either make everyone pay it back or make everyone not pay it back. But if they decided to still make everyone pay it back, big deal. It’s $500 off the top of your tax return people! BIG DEAL! If you are like the rest of the world and claim zero or one and not try and claim 10 kids, you get a nice fat return at the end of the year so you really aren’t going to miss that $500! Quit your complaining, you’re lucky the government is giving you anything! Be happy we live in a country where the government is even willing to “bail you out”. It’s not like you have to physically pay a $500 bill right after Christmas out of your pocket. It comes of your return, you just never see it. Get over it!!!

  336. This I cut and paste from irs.gov, per my understanding that prior to below date if you have not own a primary home, you can qualify for the $7500 tax credit, guys let me know if my understanding is correct.

    Q. Which home purchases qualify for the first-time homebuyer credit?

    A. Only the purchase of a main home located in the United States qualifies. You must buy the home after April 8, 2008, and before July 1, 2009. For a home that you construct, the purchase date is the first date you occupy the home.

    Taxpayers who owned a main home at any time during the three years prior to the date of purchase are not eligible for the credit. This means that first-time homebuyers and those who have not owned a home in the three years prior to a purchase can qualify for the credit. If you make an eligible purchase in 2008, you claim the first-time homebuyer credit on your 2008 tax return. For an eligible purchase in 2009, you can choose to claim the credit on either your 2008 (or amended 2008 return) or 2009 return.

  337. Due to the failing economy, i had no business today and have sat here reading everyone’s “poor me” comments for the last hour. Let me say that ya’ll are some WINERS. Please…someone tell me that the bought a house due to the $7500 Tax Credit…please. Cause if you did, it is a miracle that you can type an email. Ya’ll are acting like you’re getting the shaft when in reality someone is powdering your butt with gold dust. If you get a credit, whether or not you have to pay it back, it is a gift that should be held up high and gazed upon like your first “A” in grade school. If you purchased before April 9th, take your finger off the trigger ’cause when you purchased the house you knew nothing of this credit so nothing has changed.

    By the way, i just bought my first home and will be spending all my “thanks for buying a house, here’s a check for $8000 that i don’t want back” money on perfecting my golf swing.

  338. Dude,

    AMEN! I am getting the $7500 and have to pay it back but who cares? It’s not like I’d see it, it’s off the top of my tax return. And I too bought a house before they even came out with this credit. I did not buy a house for this, but I’m thankful now. I’m having a kick-ass wedding in July with it!

  339. I think the bottom line in all of this is what our Mothers’ (well, my Mom) taught us – life is not fair. I think everyone has a right to express his/her opinion without invoking anyone’s wrath. It’s always hard to see someone else (who you think is similarly-situated) receiving a “benefit” that you aren’t. I assume most of us are taxpayers and care about the future of this country. It’s difficult to see your tax dollars being spent on things and people who, we might believe, don’t deserve or have no business receiving that money. It stings – for a little while at least. While we cannot change this legislation, we can speak loudly when we vote or when we engage the process for future legislation. That is the beauty of our system – we have the power to effect change – little by little through our freedom of speech and our ability to “whine” or as I say, protest and discuss our grievances. Happy Valentine’s Day everyone!

  340. Hi all,
    I just wanted to chime in on some comments. First of all, I am a professional tax preparer. I chose the profession for two reasons. The first is job security, the only job more secure is a mortician. the second reason is self-protection.

    There’s an old saying that goes something like… “the rich don’t get rich by making money, they get rich by not paying taxes” Meaning you can make all the money in the world but if the government takes 45% of it then your not going to become very rich. If you think this is an unrealistic tax number then try dropping $95k onto a Schedule C and you’ll see a $30k tax bill. An employee pays the same amount as a self-employed… you just don’t see it all coming out of your checking account.

    With that said, I have very little sympathy for someone who doesn’t do any tax planning and then cries about not getting to take that tax deduction that every other “undeserving” person gets to take. My advice is to pay a tax adviser $200 to do some tax planning and I’ll bet you save at least $400 in taxes… year after year.

    I would be truly interested to find out how many first time home buyers consulted their tax adviser BEFORE they purchased their home. I’ll bet that almost 1/2 of those first time home buyers do their own tax returns the first year too. This is truly sad because EVERY return I review that was self-prepared I find over $500 of additional tax refunds and I charge less than that…not much …but less. Most of the time I review self-prepared returns I find over $1,500 of additional tax refunds.

    I have a few first time home buyers that are purchasing their first house because of the credit. They couldn’t come up with the down payment money but that doesn’t mean they can’t afford a mortgage payment… they already pay rent. The key is to buy a house that they can afford….period. If only the home buyers that buy houses they couldn’t afford meet with a financial adviser that wasn’t trying to sell them a mortgage or a house or some other commissioned product.

    P.S. There are four more tax credits/spiffs for first time home buyers…. can you find them? Call a professional tax adviser if you can’t… and that does not include H&R Crock, or some chain of 2 week trained data entry employees making $10/hr.

    There, now I’ll get off my soap box and let someone else take a turn.
    My best wishes for everyone …

  341. If they make the people pay back the $7500 and not the $8000 then i wont bother using it, few yr’s my kids will not be able to be claimed anymore and i’ll have to pay more taxes and that $500 will make the diffrence if i pay or get a refund.

  342. I think that this date April 9-th is an absolute joke!Does anybody know how it was determined to start on that date?When the government give credits like this they should do it for the whole year.
    I purchased my first home on March 31-st and I feel cheated.
    Anybody who thinks like me can send me an e-mail.I feel strongly that if we get a lot of people to complain about it we can change that date to Jan 1-st.blita@abv.bg

  343. Whatever happens with the stimulus bill today, doesn’t it make sense to take the $7500 or $8000 and invest it to earn the interest. Even if it has to be paid back, you will be earning interest income on it for 2 years and then you can just make the payments as they come. My only concern was that it would be considered taxable income. Does anyone know if I will have to pay taxes on this money next year? If so, there is no way I can get a greater than 7.1% (the income tax rate for my income bracket) return, so it would not make any sense to take the credit.

  344. you know what stinks, I dont qualify because I owned a Condo 2 1/2 years ago, and we sold during a buyers market and took a $7,000.00 loss on the condo. How is this fair?? I think if you dont net a profit on the sale of your previous home, then you should qualify for this LOAN. The Government wording is a joke, and there will be a ton of people claiming this in hopes not to get caught or audited.

  345. Bought a home within the time frame for the 7500.00 loan but after a trial useing turbo tax also H and R online tax file, I found no 7500.00 credit/loan of any sort in addition to my normal refund. I owed no taxes.
    Dosnt seem to me the ink is dry yet so Im going to wait until the Pres.signs off on it.

    Has Anyone got there loan of 7500.? How and with who?

  346. Ben, you’re to use IRS Form 5405 to file the credit/loan.

  347. We have a complicated situation and I am concerned about the date and “no relatives” restrictions.

    1. My mother passed away 12/24/2007 and the home was in a trust. I am the executor and I do my brother’s taxes. It is a very small estate (house plus a few savings accounts.

    2. There was an apparisal done and my brother purchased the home FROM THE TRUST at fair market value. He now owns 60% and I own 40%. I only did this because he couldn’t afford 100%.

    3. The date on the deed is April 7, 2008, but as he had to give notice at his apartment, he moved in June 1, 2008.

    4. My brother is a first time home buyer. He lives in the home. I own my own home.

    5. He had to take a large IRA distribution to buy the house, so has a large tax bill for 2008. Can he take $4500 first time home buyer credit (60% of the $7500). I, of course, would not claim the $3000.

    Thanks for the help.

  348. This is the stupidest thing I’ve ever heard…. isn’t the point of appreciation on a house so you can use the profit to upgrade to a bigger and better house….. now how is that going to work if you have to give the profit to the government? You’re back to square one…WTF? Don’t take the money!

  349. Would you know if there are any details regarding paying back the “credit” faster without having to sell or rent our home?
    I wanted to know if there would be a way for me to pay it in 5 or 10 years instead of equal payments over 15 years.
    Thanks ..

  350. Hi Judy: I think the purchase date makes your brother ineligible for the credit. I believe that he would have had to CLOSE on the house April 9, 2008 or later. It doesn’t matter when he occupied it (unless it was a home he was constructing). So if he CLOSED on April 8, 2008, I believe he is out of luck. Also, I’m no tax attorney, but it seems to me that the IRS would consider buying a house from your/his mother’s trust to be buying from a “close relative.” I would talk to an IRS/tax expert, but it appears he is out of luck.

  351. daylatedollarshort says

    Another example of a governmental “one size fits all” fix… I purchased feb 23 2008 and consider myself somewhat informed and never heard anything about a proposed tax credit/loan, nor did my real estate agent say anything about it, or else I would have waited to buy my home another 6 weeks. If I had of waited I would have saved an additional 5k also but that’s neither here nor there.

    The problem with our society is that we are too big for our britches, the masses (who are uninformed and illiterte when it comes to finance i.e. I don’t want 7500 interest free loan..duh) are represented by a small percentage who are much wealthier than the rest and care less about us. You’d be wasting your time calling your representative about this. But I guarantee as the masses go to file their taxes and (27%) find out that they are missing out on 8k (money they could spend on rims and plasma tv’s – before they file bankruptcy) there will be a backlash. End the end I’ll have to pay more taxes to give the guy next door to me who bought his house 6 weeks later $8000 he never has to pay back. What a country. Canada is looking better and better.

  352. Hi Cynthia, I was very much afraid of that, but was hoping, since a trust is not a relative, but an entity. Also, there have been several posts that say it is the move in date, and not the date on the deed. With a little more research, I think you are right. Thanks.


  353. I have questions and would appreciate any correct answers, thankyou. My boyfreind purchased a house on dec 22, 2008 he claimed the 7500. Is he now eligable to get an additional 500 and not have to pay it back, or does the previous version apply to him where 7500 is it and he has to pay back over 15 yrs. thanks for any insight. Karin

  354. In my opinion, I think this is a good idea. My husband and I bought our first house in August. We have a couple outstanding credit card bills with 14-20% interest. If we can get this tax credit, even though it has to be repaid, it’s no interest. We would be able to pay off our credit card bills with this, and pay no interest. I am wondering if this can be repaid early?

  355. I’m in the process of closing on my first home. and I have two questions…

    First – Is there any way I can get the 8,000 on this years income tax?

    Second- I bought a time share in Dec. this won’t disqualify me will it?

  356. Karin,

    Your boyfriend is not eligible for the new plan. If he had closed on or after January 1, 2009, assuming he qualifies as a first time home buyer, he would get $8000 and not have to pay any of it back.

    Since he closed before that date but after April 9, 2008, he can claim $7500 but must pay it back over 15 years, without interest. That is still a good deal, as you cannot usually get a loan with no interest.

    I fall into the $7500 bracket, and will be claiming it, even though I have to pay it back. I can make a huge dent in my mortgage balance with that money and eliminate PMI payments as well as save a schload of mortgage interest in the future. I don’t think it is fair that others will be claiming $8000 that they don’t have to pay back at all, but I will have to work with what I have.

  357. karin,
    I’m in the same boat (Closed on Dec. 22). As of right now, we don’t get the 500 and we have to pay back our 7,500. Sucks!!

  358. Karin,
    Call and write to your Reps!!!! This law needs to be retroactive to the dates of the original law (April 9 2008) not Jan. 1 2009. I have a feeling this can be changed with enough of an uproar.

  359. Karin,
    Call and write to your Rep. The revisions in the tax credit need to apply to the original dates on the tax law (April 9-July 2009). ALL home buyers in the original time frame need to be grandfathed (not just Jan. 1-Present). I have a feeling that this will change with enough of an uproar.

  360. I purchased my home in Oct of 2008 and I am in the process of drafting a letter to our Congressman. It seem ridiculous that those of use who purchased a home in that 8 month period have to pay it back. The original home buyers credit was issued for the same purpose of stimulating the housing market; why should those of us who participated in this in 2008 have to be subject to different conditions of repayment? All this does is sends a message that if you hold off and wait a better benefit will be implemented…and isn’t instilling a sense of hesistation in consumers that worst thing to do at this time. All benefits should be retroactive, so that people don’t end up feeling cheated as we do and don’t encourage others to wait…it will only make things worse. I hate the fact that 10 years from now, those of us in this eight month window will still be paying off this loan, while other who waited just a few months get better benefit free and clear. PLEASE WRITE TO YOUR REP!!!

  361. First off….Has the new legislation been passed yet….if so…..I recently filed taxes under the impression that I would qualify for the first time buyer credit with 0%. Now, with the new 8000 credit, will I automatically have to not pay back the loan or will I have to amend my tax return?

  362. Legistlation has passed and since no one seems to want to READ IT themselves here you go:

    The $8,000 fully refundable true credit applies to qualified buyers who purchase their house between Jan 1, 2009 and Nov 30, 2009.

    SO, only amend your return IF YOU BOUGHT YOUR HOME W/IN THIS TIME PERIOD as you DO NOT qualify for THE ABOVE MENTIONED CREDIT if you purchased your house in 2008.

    People, don’t post questions that are easy to figure out on your own. I also happen to know that a lot of your questions have been answered before, sometimes one or two posts BEFORE you post your question, so you could try reading before you ask.

    If anyone has the balls to ask this question again then I give up, this stuff isn’t rocket science. If you have purchaed a house you should be keeping up on this yourself anyways.

  363. Aimee, you could try reading a couple posts above your question.

  364. Aimee,

    It depends on your “date of close”; if you closed between April to December of 08 then you qualify for the 7500 which has to be repaid over the next 15 years. If you purchased after January 1st 2009 then you qualify for the new $8000 which does not have to be repaid.


  365. What is the exact definition of “date you first occupied the home” ?

    I was issued the certificate of occupancy at the end of December – which basically certifies that the building meets all the code requirements. However, I did not physically move into the building / make the final payment to the contractor until the end of January (the house was still basically unlivable until that time despite passing the building code).

  366. For those of us that don’t write their Congress person on a regular basis. Could you post a draft letter to be used and we can send to our respective state?

    My wife and I purchased our first home in Nov 2008. We have waited later than most people so we could truly afford a house with the proper debt to income ratio, etc. 0% loan is great as my money can interest in the bank, but I am not excited about having another line of debt. This should be retro active.

    Thanks for all the great info!

  367. Please write all your congressmen (House of Reps & Senators) and you can also go on the White House website and ask them to go retroactive with the credit. I bought my house the end of October and I think it is ridiculous that I have to pay it back and someone who bought their house 2 months later does not. The housing market was just as bad then as it is how. Maybe if we get enough people to write about this they will retroactive the no-payback credit.

  368. I bought my home in July of 2008. I am very thankful we will be receiving the $7500 tax credit. However, due to the fact that this is the first year you can claim the credit and noone has begun to repay the credit…the government should have lifted the requirement of repayment for everyone. First of all, people who bought houses on our just after April of 2008 bought when the housing market was crashing as well. We took a huge risk in purchasing in the real estate market…just like someone would during 2009. I would like to reiterate what was mentioned above. The fact that the government will now be offering a large sum of FREE money will only entice unqualified buyers to enter the real estate market. I would love to receive free money, however, I think it would be much more beneficial to all of us if we all had to repay it vs. all of us receiving the money without repayment.

  369. I’m not sure how this tax credit will benefit the housing market, but do intend to take advantage of it when my husband and I close on a house next month.

    I’ve heard a lot people say this tax credit will encourage people who can’t afford homes to buy them. I can’t see where this tax credit will help anyone qualify for a mortgage. Nor can I see where it will help someone’s income/credit history, or any other criteria needed to qualify for a home loan. The credit comes AFTER the purchase, not before!

  370. It will help them becuase it will provide an easy means of coming up with a downpayment which they otherwise would not have had. The only way this will help is if these buyers put the money into savings and use it to ensure their loans don’t go into default. However, a loan that doesnt required anything for a downpayment is absolutely silly to me and detrmental to our housing market in the first place. Those who do not have the financial stability to save for a down payment of atleast 5% on their own have no business owning residential property.

  371. I’m a first-time homebuyer, but my wife is not, we are closing on a home in March. Woud the following scenario make us eligible?

    1. Hypothetically, If we divorce December 31st, 2009, and marry again in January 1st, 2010, would that make me eligible for the $8000 credit?

  372. I definitely agree that if you don’t have the capital to support a home purchase then you’re not ready to buy.

    But, I haven’t read anywhere that states the credit can be used for a downpayment. Doesn’t the home purchase have to happen first? In my case, we have to put 3.5% down at closing. It’s not until after we close that we would file for our credit. So, in my case it wouldn’t help us in terms of a downpayment.

  373. Diane, thanks for the reply , I got hole enchilada of 7500. thru H and R block. It has to be repaid starting the 2nd year @ 500 per year.

    Im very happy for the interst free loan but now have to cancell my pool service to pay for it, or other. Just another way to funnel money thru there machine.

  374. Wayne, I have to agree with your concept in that we are all involved in this housing crash and should be intilted to a non repayable credit.

    I wonder if the 500.00 anually repayment will be tax deductable.

    Should it be?


  375. Cris, know any loan sharks?

    Who would extend you the $8000.00 gift until you recive it from the Government.?

    Its a sure bet you”ll get that money, a year from now.

  376. Vic. Yes it would, first Ive ever heard of a marriage loop hole. You have to get a divorce ( hypothectical) before you finance, or fill out loan application. Be sure to consult with a tax lawer first.

  377. Fair? What’s wrong with you people? I bought my first home in May 08 and get the 7500 credit I need to pay back. I’m not writing my congressman to beg and get the money free retroactively just because the credit changed after I made my purchase and agreement, it’s my responsibility and I accept that. But now buyers are getting 8000 they don’t need to pay back. So what? Of course in hindsight it would be better if I bought this year, but that’s the chance you take. If you already bought your home, forgiving the $7500 loans or just giving $8000 to people who bought prior to that will not increase home sales, that sale was already made. Logically it makes no sense for them to do that.

    If you bought a new car, and 6 months later the dealership offers an additional $1000 rebate you didn’t have access to when you purchased, do you go back to them and seriously expect they will give you $1000 after you’ve signed the agreement? Things aren’t improving in housing like they hoped in the past year, and that’s why Obama included it in the stimulus as something that is more attractive than the 7500 loan to try to spur more sales. Deal with it.

  378. If I had my choice…it would definately be that EVERYONE had to repay the credit vs. EVERYONE receiving it for free. I am much more concerned with keeping unqualified buyers out of the market than receiving the free money. I would much rather see my equity increase…

  379. why can someone who received money from revenue bonds not qualify in 2008 but they can in 2009. do you think they will amend this and allow all people who received loans from revenue bonds collect the $7500 or $8000

  380. If you purchased your house between April 30,2008 and December 31, 2008, you will have to repay this $7500 tax credit. But if you purchased your house from January 1, 2009 and on, you will not have to repay this credit. This discrepancy doesn’t seem right. Please voice this to your Senators and Congressmen. If enough people voice their concern, the homebuyers from 2008 may be grandfathered into this tax credit and will not have to repay the $7500 credit.

  381. We purchased are home in June of 2008 and can’t take this credit due to us financing the home through mortgage revenue bond financing but people who buy a home in 2009 this way can claim the credit which is unfair. We should be able to claim the credit also. I have no problem paying it back but just think its not fair that we can not claim the credit but someone who waits to this year can even though they finance through a mortgage revenue bond program.

  382. How would they know when you bought your home?

  383. I am also upset with the way the tax credit is being handled. I can not claim the credit because my financing came from tax exempt bonds. However, those taking the credit can in 2009. This is totally unfair. I have contacted my local tax advocate office and sent emails to my state senators. The more complaints they recieve I believe a “real change” will come . We can’t sit here and complain we have to take action!!!!!!!!!!!!!!!!!!!!!!!1

  384. Wow…. I bought my house April 7th 2008 less than 36 hours prior to the deadline. Now my property taxs double over the course of the year and my payment nearly doubled to pay back the difference. I never would have qualified for a loan payment this high, and may lose my house less than a year after purchase. The credit loan would have fixed my problem. Why did the gov. choose a time frame instead of the whole year. My friend gets the credit after only one loan payment. i just dont get it. the gov. will ruin me for buying my house 36 hours too soon.

  385. Sorry Everyone says

    Sorry everyone but writing your Senator/Representative won’t change anything so I wouldn’t waste the time or get stressed over it. The Obama administration had to strip billions of dollars out of the original stimulus legislation so that three Republican senators would support it. Without them, it would not have passed. And they certainly don’t want to run the deficit up any higher. So basically, it was like pulling teeth just to get the 2009 buyers an $8000 tax credit, so there is NO way people who bought in 2008 aren’t going to have to repay the $7500. I know it sucks but that is just reality. I bought in 2008 and am happy to be getting the $7500. I’m doubly sorry to the people who bought before April 2008.

  386. Jason:

    Better question: why did you choose to purchase a house and, hence, a lifestyle that you cannot afford? How is it that the government ruined you? You DO know that there are other facets of the housing stimulus act OTHER THAN the credit? Like refinancing options? Or NOT GETTING IN OVER YOUR HEAD? Or, perhaps, you just that stupid. I have no sympathy for you, what so every. You, in fact, make me sick.

    Unfortunately folks, the government can’t compensate for the fact that you purchased a home and a lifestyle (i.e. property taxes, repairs & maintenance) that you CANNOT afford.

    Holy Christ you people are absolutely helpless! I am officially becoming a republican after reading and attempting to help people on this blog. I can see why you people should be left to your own accord. You are all ungrateful, slovenly, poor excuses for human beings.

  387. John, I agree 100% with what you said in you first paragraph. People really need to start taking responsibility for their own actions. It isn’t that hard to sit down and figure out what you can and can’t afford.

  388. Ok, I really feel bad for everyone here that has bought a house in the year 2008 and that has not received the credit. I will give you the credit myself. I am a millionaire and I will give you the money that your not getting from the government. There is a few rules though.

    1. You have to prove to me that you bought your house prior to April 9th. (That tell me your not getting it twice and you didn’t get it from the govt..)

    2. It has to be the START of the year. Not the last day in December of 2007.

    3. You have to stop this whining. Its not good to whine and complain.

    4. You have to say in the email that I am beautiful and you want the money.

    If you do this I will send you the money and I hope you pay your bills and get this economy working again.

    Send me the info to myztifide@yahoo.com .

  389. Ed'regina says

    myztifide this is not funny

  390. joninray says

    Well, I just got back from my CPA and I will take that “credit”! Seems that many people are misinformed…YOU DON’T PAY BACK EVERY DIME!!! My wife and I were told that anyone who akes the “loan” will only pay back the percentage of your tax bracket…if you are in the 15% tax bracket, then you will pack back (over 15 years) 15% of $7500. In other words…my wife and I will only be paying back about $1125!!!

    Who wouldn’t take a loan where you don’t pay ALL of the loan back and on top of that…at 0% interest!?!?!? I will take that…have’nt ever said this before but I will now…”Thanks, Bush!” It may not be as good as Obama (don’t have to pay ANYTHING back, BUT this is better than nothing. Good thing I waited to close after the first of May!!!

  391. Only pay back the percentage of your tax bracket!?!? That is definitely something I have not heard. Can your CPA direct you to the source of this information? I’d love to see the offical wording. My taxes are filed and expect my $7500 refund in approx. 10 days.

  392. Sorry joninray, but I think your CPA was mistaken. Here is the official wording from the IRS website: http://www.irs.gov/newsroom/article/0,,id=186831,00.html

    Q. How and when is the credit repaid?

    A. The first-time homebuyer credit is similar to a 15-year interest-free loan. Normally, it is repaid in 15 equal annual installments beginning with the second tax year after the year the credit is claimed. The repayment amount is included as an additional tax on the taxpayer’s income tax return for that year. For example, if you properly claim a $7,500 first-time homebuyer credit on your 2008 return, you will begin paying it back on your 2010 tax return. Normally, $500 will be due each year from 2010 to 2024.

    You may need to adjust your withholding or make quarterly estimated tax payments to ensure you are not under-withheld.

    However, some exceptions apply to the repayment rule. They include:

    * 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.
    * If you stop using the home as your main home, all remaining annual installments become due on the return for the year that happens. This includes situations where the main home becomes a vacation home or is converted to business or rental property. There are special rules for involuntary conversions. Taxpayers are urged to consult a professional to determine the tax consequences of an involuntary conversion.
    * If you sell your home, all remaining annual installments become due on the return for the year of sale. The repayment is limited to the amount of gain on the sale, if the home is sold to an unrelated taxpayer. If there is no gain or if there is a loss on the sale, the remaining annual installments may be reduced or even eliminated. Taxpayers are urged to consult a professional to determine the tax consequences of a sale.
    * If you transfer your home to your spouse, or, as part of a divorce settlement, to your former spouse, that person is responsible for making all subsequent installment payments.

    I would make sure that your CPA was not confused.

  393. Honestly i’d rather see them lift the min requirements for PMI, 20% isnt low enough for a lot of people, i’d say more like 10% or less
    that should of been discussed by the senate, PMI benefits no-one!!
    I’m paying for it $85 a month!!

  394. joninray says


    I have went also to Jackson Hewitt and the lady there told me the same thing. I am going to go and make sure with H&R Block as well. If this is the case, then I will definitely take the loan…if not, then I ahve to think about it. I wouldn’t want to be laid off and still owe the government anything.

  395. joninray:

    It doesn’t matter what anyone says, there is nothing in writing anywhere (that I have found) that states the payback terms that you are talking about. Also, it has to be something written by the IRS, otherwise it doesn’t mean anything. You should ask your CPA to show you these payback terms in writing. And if that happens, please feel free to share with the rest of us.

    Just out of curiosity why are you going around to different CPA firms and paying each of them for this information? You should be able to find this stuff out on your own. Also, I wouldn’t trust H&R Block with giving you any sort of acurate information.

  396. I just found some great info. if you purchased a new home in 2009 you get better terms on this tax credit. YOU DO NOT HAVE TO PAY BACK THE CREDIT if you purchased in 2009, not 2008 and also you can claim up to $8000 or 10% of the value. This is outlined on the TurboTax website

    Good Luck and don’t buy without all of the info.!

  397. Really? I had no idea… Thank you Turbo Tax!!

  398. Update: See here for more information about the new $8,000 Tax Credit for First-Time Buyers.

  399. I agree with the comments. My husband and I purchased our home in January 2008. We were real excited about this “loan.” We could sure use the money as his salary has been cut back. What’s up with the date? April 9??? I thought the tax year was from January – December??? Why do things have to be so difficult!????

  400. HOpe, sorry your too ealry, has to be after Apr 9th 2008 as of the 2008 peop,e this is old news…please read before you post!!

  401. HOpe, sorry your too early, has to be after Apr 9th 2008………… as TOM say’s for the 2009 people this is old news…please read before you post!!

  402. The many stages of the Home Buyer “Credit”. I purchased in the Summer of ’08.

    Excited – When I read the initial headlines that Congress was changing the rules with the new housing stimulus that the home buyer “credit” would not have to be paid back.

    Anger – When the details came out and I learned that this only applied to those who buy in the first 11 months of 2009.

    Acceptance – When I rationalized that those who purchased 4/8/2008 and earlier get nothing. How do you pick a date where home buyers knew they were purchasing in falling market? It would seem that all these buyers would “deserve” some price protection because they were helping in stabilizing the housing market. After all, that is all these “credits” really are.

    In my opinion what they could have done is given EVERY American and once in a lifetime $7500 credit (not loan) the next time they bought or sold a home. This certainly would stimulate the housing market and if you got rid of the junk in the stimulus bill probably would have cost less in the long run. 100 million homeowners times $7500 equals 750 billion. Sounds like one of the numbers they are tossing around. Of course not all of this amount of this would paid out in 2009.

  403. We bought a home in May of 2008 and claimed the 7500 on our taxes. My husband has since been promoted to a new town, if we were to sell the house now and NOT make a profit from the sale (be lucky to break even) Would we still have to pay back the 7500 or is it only if you make a profit? We’d be buying a new home.

  404. We bought a home in May of 2008 and claimed the 7500 on our taxes. My husband has since been promoted to a new town, if we were to sell the house now and NOT make a profit from the sale (be lucky to break even) Would we still have to pay back the 7500 or is it only if you make a profit? We’d be buying a new home.

  405. Ashley – Congradulations!!! You get to use the loop hole. You bought a house in ’08 and you don’t have to repay the tax money! You only pay it back if you make a profit! But you can not sell it to a relative!!!

  406. Ashley-

    If you bought in 2008 and claimed the 7500 tax credit and are planning to sell your home this year DO NOT amend your tax return to claim the $8,000 credit! Because you are selling your house anyways it would be a waste of time and money.

    The rule for the 7500 credit is this, if you sell your home w/in the 15 year pay back period any amount of profit you get up to the amount that you still owe the government goes directly to the IRS on tax day. If you have a LOSS or ZERO PROFIT than the loan is forgiven which means you no longer owe the governement any money.

    I am not sure of the exact rule of the 8,000 credit except that you cannot sell the home w/in three years of your purchase date. If you do sell w/in those three year than you have to pay the money back. That is why I do not recommend amending your return to get the 8,000 because you would have to pay back more money in case you do end up having a profit on your home.

    You will need to give your CPA all purchase and closing documents pertaining to the purchase and sale of your home when the time comes (I believe it is 2010) to pay back the loan. Hope this helps and I hope you have a good CPA where every you end up! Best of luck. 🙂

  407. Wait a sec…..back up. I haven’t been following along because I bought in 2008, claimed the $7500 before any decisions were finalized so I thought I was done. I got my money in mid-Feb. I thought the “new” plan was just for 2009 buyers and they get $8000 and don’t have to pay it back. 2008 stayed at $7500 and we do pay it back. I’m fine with that. But now Lauren are you saying that 2008ers can get the full $8000? I plan on staying in my house forever at this point so I don’t care about the 3 year rule. So I can amend my tax return and get another $500? Should I bother? I did it online with TaxAct. Can I amend a return with an online program or would I have to go to someone? Would it be worth it? Some CPAs charge a lot. What do you think?

  408. My mistake, if you bought in 2008 you do not qualify for the $8,000 credit, I’m sorry. I have been doing so many tax returns lately I have my years messed up. So please disregard what I said about that. Thanks, and sorry again!

  409. We bought a house last Aug. 2008. I already filed my tax return but did not apply for the tax credit. Can I still amend my tax return and get the tax credit this year?

  410. You can amend your 2008 return at any time during the next three years (that is true for all tax returns). The last day you can file an amended return for 2008 is 4/15/2012 (or the 2011 tax due date).

    Just keep in mind that the pay back period for the 2008 credit starts in 2010.

  411. Can my state tax me on this money as income?

  412. Certain states might make you include the money in household income which could cause you to not qualify for certain credits and property tax rebates, etc. Including the amount as household income is not making it taxable but merely providing the state with information.

    But, no, I don’t think that they can tax you on the amount. I am not possitive though, you should check with your state.

  413. Well some things in life do suck. I closed in October 2008 and qualify for the $7500 but do have to pay it back if I take it when I file next week. Just sucks that had I been able to wait just a bit over 3 months to purchase I might well have been able to afford my dream home rather than my second choice, still recieve a financial boost and not have to give it back! The only thing I can see to do with the $7500 is pay down the high credit card bills (it will pay about 1/2 what I owe) but will save some money. If I fall victom to job loss I will most likely loose everything anyway so even the government can’t collect $500 a month from the unemployed and homeless.

  414. Lauren–
    Thank you for all the great info you’ve provided–I’ve read the whole thread and learned a lot.

    What I don’t know is whether my loan is funded by tax-exempt mortgage revenue bonds. I’ve gone through all the steps on Turbo Tax to file this year, and it says I qualify for the $7500 credit, but it did NOT ask me any questions about where my loan came from.

    I got it via a bank, but the bank was selling me my state’s first-time homebuyer program which, I believe, is a mortage revenue bond program (doesn’t say “tax-exempt,” however.)

    I’m confused now about whether I qualify. Would you happen to know?

    Also, any tips on finding a good CPA this late in the game?

  415. Leana McCann says

    My house closed March 12, 2008, talk about frustrated. I am still trying to find a petition or legal loophole so I can get the $7500. Any suggestions?

  416. Okay…after going to several places (and no, Lauren…I didn’t pay a dime for talking to them)…I have found out that I will be paying back the money I will be getting. I am accepting this even if 2009 do not have to pay thiers back.

    I just pray that I don’t end up jobless and then the stupid government will try to collect all of it at once. So what I am going to do is start saving on my own out of each paycheck…and let it sit in a bank account (drawing interest) and when it coomes timie to pay…I will have it to pay back each year.

  417. Hello,

    I bought the Bank owned house in April 2008 , i am first time house buyer.
    Can I will be eligble to get any type of credit ?

    I know it is April 8th 2008 onvwards it qualifies but I am just five day
    and also there is any law about the Bank owned house buyer tax credit.
    Also moved into house after april 13 th since I got the key on the April 8th.

    Any help or idea how to get this first time hosue credit or forclosed home buy

    Thanks in advance.

  418. Leana McCann says

    Yes, you qualify, it is after April 8th. As long as your loan is dated on or after April 8th all you have to do is claim it on your taxes.

  419. Amanda-

    Sorry this reply is so late. Turbo Tax is not designed to help you figure out whether or not you qualify. You have to know if you purchased with an MRB or not and then claim the credit based on that information. It is important that you figure that out in case you get audited but the IRS.

    Regarding finding a good CPA firm, I would just go with a firm that has more CPAs than not. You can find this out by looking at their website. My firm has all of the accountants and their credentials listed on their website.

    But you should also be looking for a firm that is w/in your budget and is the right size. If all you have is a 1040, than you probably don’t need to find the biggest firm in town. When it comes to taxes you pay for what you get, you shouldn’t pay too much but cheaper is not better.

    The only other thing you should be looking for is a “public CPA firm.” That means that they follow the rules and guidlines of the AICPA so you know that they are dotting all of their i’s and crossing all of their t’s. If the firm has ‘CPA’ somewhere in their name than it is a qualified CPA firm, otherwise they are breaking the law.

    You have probably already filed but if not, you could extend your return and have a CPA firm file your 1040 for you after April 8th, it’s up to you.

    Best 🙂

  420. Peter-

    I can’t really understand what you said but I think you are saying that you bought 5 days before April 8th. In that case you DO NOT qualify. If you bought your house BEFORE April 8th you do not qualify, plain and simple. It doesn’t matter when you got your key it doesn’t matter when you spent your first night there, it matters what your closing documents say.

    If you think about it: what do you think the IRS is going to look at when they come knocking on your door for an audit? I will tell you that aren’t going to ask you when you moved in. What they will ask for are your closing documents, and if the date does not say April 8, 2008 or later, than you will be giving them $7,500 plus interest plus penalties. Don’t be that guy.

  421. I am still trying to decide if I should take the &7500 credit or not. I am an older first time home buyer and will be retired before the 15 year pay off is over. Can I pay the balance at any time? Say in 7 years I still owe $5000 can I just pay it off and not have tax debt? We having this “loan” effect my credit?

  422. My wife and I just purchased a home in October and received the $7500 tax credit (loan). My question is if we refinance do we have to pay the credit back immediately?

  423. I am planning to do this. Start taking 20 a week out of my paycheck and put it into a saving account and just it build up…when it comes time in two years to pay back the “credit”, I will be getting interest and don’t have to worry about the irs at all.

  424. just spoke to the IRS regarding this $7500 interest free loan, because that is what it is. a loan. it must be paid back starting in 2010, $500 per year. the dates are as follows 4/9/2008 to 12/31/2008 and after that you get free money! how unfair is that! it should be $5 write off across the board but that is another story.

    the only way around getting the loan before april 8, 2008 is if you built a new home from the ground up. meaning that there was a pile of trees or dirt before you lived there. the closing date can be 4/1/2008 as long as you did not occupy the property until after 4/9/2008, meaning move in. you must have proof of all this mind you, moving bill, electricity turned on, appliance delivery etc.

    we are in this situation and just found out we can get it but why owe the government anything? at the end of the day you will still owe the owe $7500. and for 15 years. yikes.

    i just do not understand the logic in all of this! this world is loopy.

  425. Joininray, that’s the best thing to do! I hope that more people choose to do that instead of asking if they can pay the money back all at once. You are taking full advantage of that credit!

    Doug, refinancing should have nothing to do with the credit.

  426. I purchased a bank owned property for 58,000 cash on March 30, 2009. It is my first home and no loans involved. Does anyone know if I can qualify for a tax credit?

  427. Lisa, I’m not sure what the limits of the 2008 credit are but I think you can only claim a credit for the lesser of 10% of your property’s value or $8,000. So, I think you can only claim a credit of $5,800 but you will want to look in to that to be sure.

    FYI, it is really easy to find these things out by going to irs.gov.

  428. Michele you could have read the blog before you posted, I think at least 50 people have said the same thing as you. You also would have noticed that many people have written about the advantages of an interest free loan. Wouldn’t you rather owe the gov’t $500 a year, interest free, for 15 years than owe the bank that same $7,500 plus interest imbedded in a 30 year mortgage?

    I guess I don’t see why it is so bad to owe the goverment? I don’t get why you would rather owe the banks that caused this issue in the first place? Or credit card companies that scam people via interest rates on a regular basis? Maybe you should go back and read some of the posts and get an idea of the things you could do with the government’s money while you pay the loan back slowly over time.

    Ultimately you don’t have to take the loan, that is completely up to you, but don’t be ignorant about it.

  429. My Son and his girlfriend are first time home buyers and my husband and I are helping the get into their first house. Will they be egible for the credit if my husband and I are also on the loan? We make to much to qualify.

  430. It has nothing to do with how much you make (geesch!) – it is whether or not you are a first time homebuyer.

  431. My son and his girlfriend are first time home buyers but my husband and I own our home. Is my son egible for the credit if we are also on the loan?

  432. Carol – Don’t listen to Vicki there is a cap on the money you can make. Hopefully Lauren can answer your question- she seems pretty informed on the subject.

  433. I am qualify for this money, I closed August 2008. My question is why do I have to pay it back? What about those people buying a house this year getting $8,000 and don’t have to pay it back….Uhm!

  434. Carol-

    As long as you and your husband do not own interests in the house than they qualify for the full amount of the credit assuming they pass all the other requirements.

    Rosellie- The reason why it is that way is becuase that is how it worked out. Sometimes life isn’t fair. But if the government were offering me a $7,500 interest fee loan, just for buying a house that I already was going to buy in the first place, and all I had to do was it pay back $500/ year, the last thing I would do is whine about it. But that’s just me.

  435. Michele your an IDIOT.

    Lets say you took out a loan from a money hungry greedy banker at your favorite neighborhood bank of $7500 and had to pay it back over 15 years with an interst of 6% (which is good) because you have perfect credit. Your estimated monthly payments to the bank are $63.29 , and you will pay $3,892 in interest over the life (15 years) of the loan which the total of loan and interest is approx $11,392.00 to the greedy banker who pays himself 1 million dollars a year bonus.

    Now lets do it the way of the interest free loan that the govt is offering.

    $7500 over 15 years at $500 a year taken out of taxes ($41 a month) with no interest accuring. Total payment = $7500 – but if you think about it over a long period $7500 over 15 years is even worth less than that because it was paid back over 15 years and money in the future is not worth as much as if it was paid back today.

    You must be a banker Michelle because you dont like this scenario.
    I think your loopy!!

  436. I just bought my first home and I closed on…..yep: 12/31/2008. I had until mid January to close but I closed on the 31st because my lease on my apartment was ending and it was easy. Now, by one day, I have to pay back my $7500 tax credit. ONE DAY!!!!!! Is there a way to appeal this. If I had a crystal ball I would have just closed one day later!!!!!

  437. I purchased a low income house in Feb of 09 for 107,000. I already filed my taxes. So I have 2 questions.
    1. So do i get 10% of the 107?
    2. Do i have to pay it back?
    3. What do i have to do to get this since i already sent in my taxes?

  438. jordan, you get 8000 that’s it. you don’t have to pay it back. file an amended return, form 1040x.

  439. I purchased my home on April 1 2008, which means that I missed out hte 7500 credit by one week -:(

    It is good that the credit is being given out…but the sad part….is that folks who buy homes this year will already be getting the house at a very good price.
    It is the folks who bought 1st half of last year and around that time…that have paid a high price….
    Eg. I bought a place for around 600k, today the same place is being sold for 500k…

    the person who buys today gets another 8k…so effectively 492k…-:(

    the ones who paid around 600k (there are definately millions of folks like me.) are under water and are not getting any help…making home affordable will not help enough….as it is only 105% LTV

  440. Yes, the 2008 homebuyers have it tougher then the 2009 homebuyers but it’s still better then nothing! Maybe, just maybe, if the markets continue to tank and the housing market continues to flounder, maybe Congress in their infinite wisdom (sarcasm) will ammend the 2008 credit and forgive those who took it.

    If you look at the history of the 2009 version which was embedded in the Recovery legistlation – it roller-coastered from the “loan situation” to free-money and from 5 figures down to the existing $8k. So for those who took the “loan”, hold out some hope that maybe it will be forgiven and similar to the 2009 version. But you can’t keep it if you don’t take it.

  441. Naresh-

    I have no sympathy for you and your $600,000 home.

    First of all is another $7,500 really going to help you that much?

    Second of all, and most importantly as far as I’m concerned, you didn’t “miss out” you would not have qualified for the loan to begin with. Your income would have to be over the phase-out limit in order to afford a $600,000 mortgage. You can’t tell me that your AGI is less than $175,000 b/c if it is than you can’t afford your home and you should not have bought it in the first place and $7,500 is not going to help you out of that hole.

    THIRD of all- I have to know: how is it that your home depreciated $100,000 in one year????

  442. Sorry for my ignorance on tax laws but my question is that I already filed my tax return but did not avail that $ 7,500 credit because I do not know about it before. Now that the April 15 tax filing has already expired can I still file a tax amendment for my 2008 return and get the $7,500 credit or do I have to wait for the filing of the 2009 tax return. Also, do I only need a 1040X tax amendment form to do that. Thanks.

  443. My Rep is appealing in congress so we dont have to pay the $7500 back and extending the $8000 another year…fingers crossed!!


  444. I sure am praying about that…

  445. Chris – Thank you
    Joniray – Do more than pray….
    Contact your representatives and urged them to support Rep. Joe Courtney from Connecticut in his efforts. FOLLOW CHRIS’s LINK ABOVE AND GET THIS INFOMATION TO YOUR CONGRESSMEN!
    Yes – I am shouting,

  446. This is copy of the letter I am sending to all of Michigan’s congressmen/women. Feel free to use this as a base for yours.

    April 23, 2009

    The Honorable (full name)
    United States Representative

    Dear Congressman/woman (last name)

    I am writing you to urge you to support Congressman Joe Courtney in his efforts to extend the first-time homebuyer tax credit included in the American Recovery and Reinvestment Act (ARRA) through 2010 and to repeal the “payback” for use of the 2008 tax credit.

    I believe that this legislation will encourage families to purchase a house and realize the American Dream of home ownership. I believe this will help the economy and raise the hopes of the American people. I think this is especially important for Michigan residents and representing Michigan as you do, I am sure you will agree.

    I was a first time home buyer in May 2008. Although the economy was in bad shape, I chose to purchase a home in Flint, Michigan rather than continue to rent. Before buying, I did some research and talked to a realtor, a financial advisor, and my tax preparer. All encouraged me to buy. I took a risk and I feel that I deserve the same tax advantage as first-time home buyers in 2009.

    I have included a link (below) to Representative Courtney’s legislation and again, I ask that you support him.

    Thank you for your continued commitment to Michigan and this great country of ours.


  447. Thanks for the format letter! I will use it!!

  448. I sent one to all mine and the senotrs and even the president…all of you need to do the same!

  449. I used the format of the letter on this forum and look at the reply…proving that my senator didn’t even bother to read the email…nor anyone in his staff. Sorry to see this happen….proves that the government isn’t listening to the people, but what else is new?? Here is the letter…and remember that I only change the name of the state in the email that I sent out….

    Thank you for contacting me about the federal housing tax-credit for first-time home buyers. It is good to hear from you on such an important issue, and I greatly apologize for this delayed response.

    As you may know, in its efforts to stimulate the economy and revive the housing market, Congress included a provision in the recently passed Stimulus bill which established a tax credit of up to $8,000 for first-time home buyers. In the past, I have supported tax credits as one strategy in reviving the ailing housing market. I believe that allowing families and individuals to retain control over more of their tax dollars is the most direct way to spur the housing market and return our nation to economic prosperity.

    The $15,000 tax credit you mention in your email was reduced to the current $8000 level in the final version of the stimulus bill. In addition, the credit, which originally worked like an interest-free loan repaid over a 15-year period, no longer requires repayment. The credit is now available for qualified first-time home buyers purchasing a principal residence on or after January 1, 2009 and before December 1, 2009. You may also be interested to know of another first-time home buyer tax credit which was enacted last year with the passage of the Housing and Economic Recovery Act of 2008 (H.R. 3221). It was a similar credit worth $7500, the amount of which must be repaid over a 15-year period. This credit applies to qualified first-time home buyers who purchased a home between April 9, 2008 and January 1, 2009. The limited window for eligibility is arbitrary, and was designed to target the current housing downswing.

    As I previously stated, in the past, I have supported tax credits as one strategy toward reviving our ailing housing market. I do, however, recognize the limitations and the narrowness in scope that a “first-time” home buyer tax credit creates. It singles out a select portion of potential home buyers, and provides them with a special advantage over the millions of other non-first-time home buyers who will not qualify.

    Congress must recognize that its own intrusive interventionalist policies toward the housing market are the primary cause for this crisis. The expansion in risky mortgages to under-qualified borrowers was encouraged by the federal government. The rapid increase in sub-prime lending followed Congress’s strengthening of the Community Reinvestment Act, the Federal Housing Administration’s loosening of down-payment standards, and the Department of Housing and Urban Development’s pressuring lenders to extend mortgages to borrowers who previously would not have qualified.

    Meanwhile, Freddie Mac and Fannie Mae grew to own or guarantee about half of the United States’ $12 trillion mortgage market. Congressional leaders have pointedly refused to moderate the moral hazard problem of implicit guarantees, and instead push them to promote “affordable housing” through expanded purchases of sub-prime loans to low-income applicants.

    In many areas of the country housing prices rose too fast for too long and were not indicative of the true value they represented. This was due to the fact that mortgages were underwritten for borrowers who often were not credit worthy, often on terms even credit-worthy borrowers could not afford for long, and for properties that were often overvalued. Thus, the economic healing process underway is one of price discovery. Housing and credit markets are discovering the new, proper price levels for their troubled assets. Once these proper levels are found, this will enable both lenders and borrowers to responsibly enter into contracts that can be kept as it would reflect their true position within the market as whole.

    Congressional attempts to intrude into the housing market will only serve to prolong and ultimately accentuate the pain by further distorting and delaying the realities of the markets. The result would likely be a quick halt to the ongoing private corrective actions that seek to increase liquidity and return the markets to their accurate price level. The sole role of government in this process is to ensure that markets are functioning, that full and accurate information is available, and that contracts are honored. Mortgage brokers, real estate agents and other lenders should be transparent with their lending conditions and must be accountable for full disclosure to borrowers. Lenders must then take responsibility for their loans, including disclosure and the possibility of default, and borrowers must be responsible for the agreement into which they enter.

    I strongly advocate for individuals to live within their means. You may be aware I spend most of my time in Congress offering amendments to strike spending that our nation cannot afford. As the Senate finalizes consideration of this legislation, please know that I will keep your concerns in mind.

    Thank you again for contacting me on this important issue. Best wishes.

  450. I think that makes sense. He/she is explaining why it is a bad idea to prolong the inevitable with the $8,000 credit. So in a round about way he/she is saying ‘no’ to extending the credit to the 2008 buyers and beyond the 12/01/09 cuttoff date – without actually saying it, which is what politicians do.

    I can’t argue with his/her response, I feel that it is wise (for a politician). But I also think that the $8,000 credit should have to be paid back by the people who claim it, so I’m a little bias.

    In any case, props to you Joininray for sending that letter out and getting involved in your cause. Sorry it didn’t work out the way you intended 🙂

  451. Joninray- Don’t give up! That is one person and you’re right they didn’t even read your letter. They only skimmed it to find out what it was about, without reading your concerns and suggestions. I haven’t had any response from my reps yet but I used snail-mail.
    If I were you I would answer that letter stressing your concerns again.

    Lauren is right. It is a typical “politician” letter!

  452. But what I can’t understand is that I never said anything about the 15K rebate and to me that shows that no one even truly read the letter. I just think taht they should make it where either everyone pays it back or no one pays it back. Well, I will see if the others do anything….

  453. RICH MANZARI says


  454. My fiance’ and I purchased a house in May 2008. We had different CPA’s. She received a $3750 credit, while my CPA reported the full credit and I received $7500. Is it likely that we will be audited for this? At this point, it seems like the Fed’s are happy to give out $8,000 in free cash to first homebuyers so will the IRS really track down a $3750 loan?

  455. So, I took this $7500 loan…and now my house has depreciated in value and I’m about to get laid off because my company is shutting our entire facility down…there are no other jobs for engineers within driving distance. I can’t sell my house, because I’ll lose money AND be stuck with having to repay that $7500 immediately, and I can’t keep it because I can’t afford it unless I’m working as an engineer, and I can’t do that unless I move.

    CAN YOU SAY SCREWED?????!!!!!!!

  456. JR

    You should return the $3,750- it was your responsibility to inform your CPA about the credit and how you wanted to split it up. Beyond that it is also your responsibility to look over your tax returns before you filed them. It doesn’t matter who signed your return, you could even be accused of fraud. In any case, you will be royally screwed if you get audited.


    If you sell the house at a loss or for 0 profit you do not have to pay the $7,500 back.

  457. P L E A S E —–

    Everybody contact your legislators. Every one in your state. We must get the repayment repealed.
    We must keep contacting them!
    They need to be B O M B A R D E D with letters.

    See above for a SAMPLE letter.

  458. We bought a house in October 2008 when i filed taxes they didn’t say anything to us about the credit does anyone know what we will have to do?And also what does immediate family mean on this cause we bought the house under contract from my husbands cousin can we get this?

  459. I closed on my house in Sep 08 and now have about $86k left to pay. I will go through a job transfer soon and have to pay back the $7500 also. I also bought a cabin in my back yard and owe $5700
    Left (or $300 a month for 2 more years as I have been paying now for the last few months). I used the $7500 to fully finish off the cabin (insulation, heating/cooling, laminate flooring, drop ceiling, electricity, sattelite and cable lines run, etc). With that and the $6k in real estate fees, I need to make $105k to break even. I am listing it for $109.9k. My questions are: when do I pay this $7.5k back and are there instructions on where to send the money? Do I still have to pay
    It if I break even at $105k? Comments please.

  460. Joanna-

    You will have to research what immediate family means, go to IRS.gov. In this case I do think cousins count, meaning you will not qualify for the credit, but I am not positive.

    If you do happen qualify you will do so on your tax return. So you have a choice: you can either amend your 2008 tax return OR if you haven’t filed your 2008 tax return you can claim it when you do file it. Form 5405 is the attachment you will fill out and the credit amount will then show up in the ‘payments’ section of the tax return, page 2 of Form 1040.


    Good use of the credit, hopefully you will get some money back from the improvements you made so that you can pay back the $7,500 and still have some left over.

    You have actually asked a very loaded question. The payback period for that credit does not start until 2010 so I don’t know what you should do if you sell your home in 2009. I do know that you will be paying the credit back via your tax return but I am unsure of how they will be setting the returns up, meaning I don’t know what line the amount you owe will go on. You will have to consult with your CPA when you sell your home or try researching online when the 2009 returns come out.

    I’m sorry I’m not much more help but it’s hard tellin not knowin 🙂

    What I do know is that if you sell at $0 profit or a loss you will NOT have to pay anything back. However, the first $1 – $7,500 of profit you make on your home will have to go towards paying the credit back. So you might want to think about your pricing strategy, is it worth it to price at $0 profit and essentially make $7,500 or try to pay the $7,500 and then some with the sale of your home? Best of luck as you think about these things!

  461. Thanks for your reply. However, I checked out a couple more sites online and it appears to me, that nothing needs to be done until I file my 2010 taxes before April 15th, 2011. Does this sound right? What mechanism would there be to send them money if not from a tax form that may not be released to the public until 2011?

    The market is not great for selling now but I don’t have much choice for this job transfer. I have the house listed as of last night.

    I owe $86K on the house, $6K in real estate fees at closing (I am assuming this is NOT considered “profit”), $5700 on the original cabin cost (which “may” be considered a “loss”??? – because I am not really making a profit on this). So with these minimal figures in place, I need to make almost $98K to break even (with no profit). Looking at it like this would certainly help my cause in the sale of the house as I have it listed for $109.9K but do not expect to get this or even close. So it sounds like I can go as low as $98K (not including the $7.5K because no profit would be made).

    What do you think about the $5700 (which is $314 monthly payments)? Can that be considered a “loss” or “no profit” towards the house as not to have to pay back the $7.5K?

  462. My wife and I bought a house on December 25th 2008. 6 days short of the new 8000 credit that doesn’t need to paid back. I actually bought earlier because of the tax credit. Kicking myself for not waiting those 5 days. The “no pay back” amendment should really be retroactive.

  463. Joninray says

    Has anyone heard anything about the bill to have the 7500 payback repealed???

  464. No, I haven’t. Is there a bill? I wrote to all my congresspeople about this. Did everbody else??????
    They need to hear from ALL OF US!!

  465. I wrote mine, but never received a response of course. I’m from Phoenix, AZ.

  466. Joninray says

    Has anyone heard anything yet????

  467. Bought a house in Feb (1st time home buyer), filed $8000 tax credit in April, have not yet received any $$$$. Do you know of any one who actually received the money?

  468. Do you know of any one who actually received the money?
    I thought the purpose was to boost economy. How that can work if IRS is sitting on the money?

  469. Linda, you should had receieved the money along with your tax refund.

  470. I had already filed my 2008 tax – before I bought the hous. Then I sent 1040X (amended Individual Income Tax) I know they have received it, but have not received the money yet.

  471. If you filed a 1040 and claimed the credit it should have been part of your taxes. Any taxes that you owed on 4/15/09 above and beyond what you had already paid would have been taken out of the amount of your credit.

    So if your taxable income was:
    x 10% tax rate
    = 1,000 tax owed
    and you paid in $ 900 during the year
    then your tax credit would have been reduced by the leftover $100. So if you owed an S load of money then you might have had quite a bit taken out of your 1st time homebuyer credit.

    If you filed a form 1040X: they take 8 to 12 weeks to process, in a good year. This year they are probably overloaded with 1040Xs not to mention extended tax returns coming in until 10/15/09, so they will probably take longer than this to process. If it has been longer than 8 weeks you can call 800-829-1040 for more info.

    Good luck kids!

  472. I have a question:
    I’m a little bummed about having to pay the 2008 money back (unlike those who are claiming this years 2009 benefit). My husband and I are weighing if it is worth filing for it (we have an extension on our taxes and have actually not filed yet for 2008).

    Here’s my question:
    Is is financially savvy to take the “loan” and put it directly on our mortgage so that we are at least “making” money on it by saving on interest? When I calculate the savings, it basically saves us $510 a year in interest, but we will be paying $500 a year for the next 15 years to pay it back. So, for 15 years, it will feel like a wash.

    Can anyone convince me either way if this is a wise financial decision or not?

  473. I think I’ve already answered my own question. I remembered that this blogger said that the loan is due in full once you sell… I don’t imagine that we will be in this place for 15 years. So we will actually sell, before the $7500 starts saving us real money. Since we purchased low-income housing, we will make very little on our sale of the home. Having to pay this loan back upon that time may very likely take a very big chunk of our profit.

    I think we may have to pass.

  474. OK, sorry about multiple posts… but my mind is running with this…

    What happens if you do not make $7,500 in profit on your place and you cannot pay the IRS back in full??

    Do they consider “profit” the ammount left over once you pay all fees and taxes and people involved in the sale of your home??

  475. My wife and I already filed our 2008 taxes back in May and had to pay some money back because we didn’t take enough out of our paychecks. We just bought a house and will be closing on it on October 15 of this year. Can we still receive the $8,000? We filed jointly and our combined income is less than $150,000.

  476. Nick917

    Yes when you purchase is compele you may either amend your 2008 tax (file 1040X) or claim it in your 2009 tax. 1040X takes very long 4-6 months. I would suggest that you save yourself time and just calim it in your 2009 tax.

  477. So basically, my wife and I can amend our 2008 joint filing in October (October 2009 is when we close) and get the $8,000? Is there a deadline to amend? I don’t want to wait and try to get the $8,000 for 2009 because I am taking money out of my 401K to help pay for a down payment, and that amount, plus our combined income, would put us over the $170,000 max threshold and eliminate us from the $8,000 totally. I believe they start deducting from the $8,000 for anything over $150,000, and at $170,000 you’re totally phased out (this is for married filing jointly). If I’m able to do that, that is amend our 2008 joint filing, then our combined income would be less than $150,000 which would make us eligible for the $8,000. If I wait until 2010 and claim the $8,000 in my 2009 tax return, then I need to add the 401k withdrawal amount to our combined income which would put us over $170,000 and be totally phased out of the $8,000. I hope I’m getting this right. I will of course speak to my accountant.

  478. I bought a house in August of 2008 and I filed my 2008 taxes with out claiming the $7500 tax credit. My question is can I claim the credit on my 2009 taxes?

  479. 1040Xs should not take 4 – 6 months, as I said before if it has taken more than 8 weeks you should call 800-829-1040. However there is a high volume right now so it might take that long… But keep in mind the earliest you can really do your taxes is Feb, and if the IRS decides to change any forms you could end up having to wait to file until April. I had to extend a couple of returns last year b/c we didn’t have a form to file for certain credits. Yes, 1040Xs can take a long time but you might end up waiting even longer to claim the credit on your 2009 return, just a word to the wise.

    Nick, you’re smart I think you should definitely file an Amended return b/c you probably would be phased out for 2009. You have three years from the date you filed a return to amend it, so you could wait until 2009 to see what happens… But probably best to do it now.


  480. Anthony – Why not just amend your 2008 tax return now?

  481. lauren,

    Wouldn’t we have had to purchase and close on a home in 2008 in order for us to try and get the 8,000 credit when amending our 2008 tax return? In other words, I’m trying to avoid including my 401k withdrawal that I just took out in 2009 as part of my income (or else I’d be over 170k combined income with my wife) in order for us to get the 8,000. In order for us to do that, we would have to use our 2008 combined income (which would not include my 401k withdrawal since that would be part of the 2009 taxes). Our combined income in 2008 was under 150k so we would qualify and get the full 8k. But, my question is, if we bought a home in 2009, how can we amend our 2008 tax return to claim the 8k as a first time homeowner if we purchased/closed in 2009? I thought you had to claim the credit in the same calendar year the house was purchased/closed? I’m just trying to make sure we can still claim the 8k credit if I amend my 2008 taxes even though we bought the house in 2009 – we close in October.

  482. I purchased a condo in February 09 and filed for the credit the next day via an amendment. My address has an apt # even though it is a condo…..well the IRS thought I was cheating since you rent apartments not buy them, so I was notified in June that I could not recieve the credit w/o add’l info clarifying my address. Mid June I submitted additional info as requested….I recieved my credit yesterday…9/15. It took a while to come, but it came with over a $100 in interest…nice bonus for having to wait so long!

  483. Nick-

    This credit is an exception to the calendar year rule. The IRS allowed taxpayers to claim the credit for a 2009 purchase on their 2008 tax return. That is why everyone is amending their 2008 tax return. I assume the point was to create more incentive for first time homebuyers to purchase their homes sooner than later.

  484. Lauren, thank you. Looks like I will be amending my 2008 tax return. I can sure use the money to help pay closing costs.

  485. I am still so angry that the $7,500 we got in 2008 has to be paid back! But those that purchase in 2009 get $8,000 free. I missed it by months! Some missed it by days.
    So when I read these posts from 2009 people, I get very jealous.
    Please go to your own web site and quit rubbing it in!!!!
    (sorry for venting)

  486. I totally agree. I’m still kicking myself in the A$$ for closing on Christmas eve. I figured, in my stupid fantasy head, that it would be a nice Christmas gift to ourselves and a nice start to the new year. If i had waited 5 DAYS!!!,I would have 8k that I would not have to pay back. RIDICULOUS! The people that actually took a chance in the market when it was so bad get screwed more….how does that work???

  487. Seriously guys…I am in the same boat, but truly think about a guy who closed ONE day before the 7,500 was in place? And he was supposed to close the NEXT day?? How do you think he feels?? I got the $7,500 and am still waiting to hear if they are going to extend it…because in that bill is the repeal of the payback of the first “tax-credit”! Is anything going on wiht that? Does anyone know????

  488. Has anyone heard anything on that yet?? I have been trying to keep watch on it but seem to have lost track of it….if anyone can let me know something, I would appriciate it very much!!

  489. Hey Joininray-

    I haven’t heard anything about that as of yet. I would assume that it will not be repealed and the money will still have to be paid back. There is no reason for the IRS to make anything retroactive as they seldom do. If anything, they will up the credit this December and leave it at that.

    I know that it really sucks that some have to pay the credit back and some don’t. But at the same time you are still getting a great value. It’s a $7,500 interest free loan- there are many ways that you can make that work for you without feeling the sting of paying back $500 every year for the next 15 years. You can make it work for you, you just need to think about it. Be creative. If you really needed the $7,500 to buy the house than you should not have purchased a house in the first place.

    I do feel for you though- I think that for the sake of our economy EVERYONE should have to pay the credit back. But that is not how it worked out. So make it work for you, you’re in the boat you have to work with it. I hate to be harsh but bitching and being bitter is not going to get you anywhere- you need to do something with the money that will make it worth more than the $7,500 the government originally gave you.

    I am sure that most of you are spending the money wisely, and if you are , than paying back $500/year should not be a big deal. On top of that you are helping the economy in the process.

    Sorry if you hate me for saying that but I just had to do it.

  490. Lauren – you are very judgmental to say “if you really needed the $7,500…you should not have purchased a house in the first place” Everyone NEEDs a place to live. Everyone doesn’t NEED the extra money – it was a plus.
    I, too, feel that EVERYONE should pay the money back but barring that why some and others not?
    I certainly don’t “hate” you for saying it but I feel that people can state their opinion without being accused of being bitchy and bitter!

  491. I just found out that Amended returns are taking 12-16 weeks. It is probably still better to file an amended return now unless you want to wait and get your money in 2010. Either way, it is taking a long time as does anything that involves the government and refunds. 🙂


    When you say “go to your own website” that is being bitchy and bitter.

  492. Thank you for clarifying.

  493. Dana—

    Take the $7,500 and put the money in a penalty free CD or money market account with Ally Bank and earn 2% interest. Earn $150 yr 1, and on and on you’ll earn interest on your balance that remains to be paid back to the IRS. You will always have the $7,500 to pay back the government if you move out of the residence early plus you’ll earn a little interest on the side. Simple math. Hope this helps.

  494. I don’t feel bitter or upset and just to let some know…I bought my house before I even found out about the 7500…so could have bought it in the end anyway.

    I just didn’t stretch my liimit when buying the house…8^)

  495. I bought April 7, 2009. Too bad this wasnt advertised like it is now, I would have waited 2 days to close. Retro for the entire 2008 would seem more logical, but I forget that isnt in DC these days!

  496. I closed Dec 31 2008. So I was one day short of $8000 and not having to repay the credit. I am not ungrateful for the credit even though it has to be repaid. But the fact that I have friends who bought in january with the same understanding of getting 7500 that had to be repaid and then getting the great news that after they closed and filed for the credit that the new 8000 credit that doesnt have to be repaid is retroactive for some and not all that claimed the 7500 is a little upsetting.

  497. Unhappy "New Home Owner" says

    Does anyone know who or where i can write to in regards to the 2008 “Tax Credit” or interest free loan of $7500. I don’t fell that it is fair that in 2009 people would get $8000 “Tax Credit” that they DON’T have to pay back. I feel that we should be allowed to keed the money without paying it back, or that those in 2009 should have to pay thiers back as well. Those of us who purchased a home last year helped the economy as much as those who purchased in 2009. Thank you!!!

  498. Probably your congressman.
    I feel the same way. I also got the 7,500 Tax Credit and must pay it back. I heard that there is some consideration being done about not asking us to pay it back now. Let’s keep hope alive about this!

  499. Any information you need about writing to your Senator, etc. can be found in this thread. In fact, if you look, you will even be able to find a sample letter. Best of luck.

  500. I doubt now theres any hope on us having not to pay it back, just think for the next 15 yrs you’ll get $500 less in your return, or have to pay $500 or more yearly….really wasnt worth it in the long run.

  501. This really ticks me off. We closed on our house Feb 8, 08 – why in the hell can’t we get the damn credit??? I c/really use it right now!

  502. how does this tax credit work if you are buying your house on contract/seller financial agreement? I entered the agreement in October 2000. I am thinking about satisfying the balance of the contract by going thru my local credit union and paying the seller off before the end of the year. Would I be considered a first time buyer once I satisfy the contract? Any input would be greatly appreciated!!!

  503. Yolanda, I’m guessing no. You had to purchase your house b/t 4/1?/08 and 12/1/2009. So, you had to have the closing during that time. It doesn’t sound like you did that.

  504. Chandler AZ CPA says

    Each and every day more and more folks are losing their homes. This tax credit was needed. Without the support that it provides, who knows where the market would be.

  505. went to close on December 16 08, which one is it, never wait or hesitate or patience is a virtue, well the latter in this case. Too bad we didn’t know it then. But i also feel we did our part in helping the economy during hard times, but also consider this was the end of the Bush term and we may be penalized for that. Lets be fair, thats all we want, well that and the $8000.00

  506. “Does anyone know who or where i can write to in regards to the 2008 “Tax Credit” or interest free loan of $7500. I don’t fell that it is fair that in 2009 people would get $8000 “Tax Credit” that they DON’T have to pay back. I feel that we should be allowed to keed the money without paying it back, or that those in 2009 should have to pay thiers back as well. Those of us who purchased a home last year helped the economy as much as those who purchased in 2009. Thank you!!!”

    The $15,000 tax creadit will most likely pass very soon and when it does the people who got the 8,000 are now going to complain about not getting the 15,000? I filed to get my 8,000 so I should be happy about that, but I’m not going to complain about the 15,000. I do feel your pain though, it is unfair that you have to pay the 7500 back. Let’s see, you’re getting the least amount of the of the 3 tax credits and it’s the only one you have to pay BACK. Yes, I agree with you, they should change that so as to not pay the 7,500 back. Who knows, maybe they will if more paople write to their congressman. Good luck to you, I hope it changes. By the way, I will be using some of the 8,000 to install new windows – currently have 50 year old windows and are VERY drafty – There, I’ll be contributing to saving energy and on top of that I think I would also be getting an addition $1,500 back (or 30% of the overall cost of the windows). Keep these home improvement/energy saving tax credits coming.


  508. MakingItWorkNJ says

    Listen, I did my —–ing about the $7500 tax credit. Remember to add $19.25 extra on your W-4 on January 4th, 2010 and give it to your payroll department if you took the Bush interest-free loan like I did and claimed it on your 2008 return. 19.25 X 26=$500.50 (assuming you get paid biweekly like I do). This should help with any pain when you have to file for 2010. Don’t say you were never told. 🙂

  509. 1. There’s a movement to radically change California government, by getting rid of career politicians and chopping their salaries in half. A group known as Citizens for California Reform wants to make the California legislature a part time time job, just like it was until 1966.


  510. MakingItWorkNJ, I’m a bit slow. I think you are reminding all us 2008 buyers to ask for additional money to be withheld from our paychecks so that it can go towards our IOU to the government. Right? Hey, I’ll do anything to make stuff easier! Thanks!

  511. Lauren,
    or anyone else considered an expert on the subject..

    I am a true first-time home buyer. I purchased a home in March 09. I should fully qualify for the 8K credit. We haven’t filled for our credit yet – we were waiting to do it on this years taxes. Now we are thinking we may end up relocating to another city in May.

    I’m thinking that we need to file for the 7500 that we will have to repay, because we may not be staying the required 3 years for the 8000 credit. And from what I understand we could keep the 7500 and not have to pay it back if we sell our home and make no profit.

    Is this what you would suggest I should do? Any other suggestions? I didn’t know if there were any other stipulations I didn’t know about that might need to be considered.


  512. KC-

    Unfortunately it is not an issue of picking the credit that you want, it is an issue of timing. The $8,000 credit was in effect as of the beginning of January 2009 through the beginning of December 2009 (give or take a few days). So your home purchase coincides with the $8,000 credit not the $7,500 credit. Therefore I do not believe you qualify to claim the $7,500 credit.


  513. Beerly slone says

    Any chance this 2008 $7,500 tax credit will be waived since all aother credits don’t have to be paid back?

  514. I don’t think the IRS knows the meaning of ‘retroactive’. The $7,500 credit is still the only one that has to be paid back, even with all the changes and extensions they’ve made. I was reading about it today, I think the whole thing is totally ridiculous.

    Sorry to all that got stuck with the first credit! But PLEASE at least make it worth your while!!

  515. Look…it helped pay all the closing costs for my home…and it wasn’t a new house either. Just a simple first home for me and my wife. But we didn’t have a lost of money for a home to start and this did help get us in one…thank God we got out of the apartment life! But I am going to do the math and contribute more to the tax thing, BUT congress needs to live in my shoes for a bit and see what it is like living paycheck to paycheck and then having to have a job that makes a profit year but STILL lays off workers and downsizes everytime you turn around! I am about to do some drastics thing in my lifestyle but it will help in the longrun!

  516. Beerly…I have written to ALL my congress people and they ALL send back a “pre-made” letter! NONE of them have read (or they don’t care to read) my letter…just like the government!!

  517. This is a good deal for a wise consumer. Even with the credit, I purchased I house I can AFFORD. The problem is people don’t get a house they can afford. Why get a $250K house and you can only afford a $150K house. If you start small, you can always upgrade in a few years if you start making enough money to get a better home. I got the tax credit knowing that you had to pay it back. Research is everything. People all too often agree to things before the read the fine print. That is what happened to the housing market.

  518. I think everyone receiving this “loan” understood that it would have to be paid back. BUT little did we know that the following year FREE money would be given. When I bought my house I was told that it would help the economy, right time to purchase, blah, blah, blah. The first assessment I received, I had already lost $7,000 on a $85K house. Now I understand that no one know what the future holds but had I known………
    So why can’t the government help me out and not demand the pay back?

  519. I bought a house well below my former rent (pray that my job doesn’t have a layoff now)!! But I now have to payback that (so-called) “tax credit”…I just wisht that government would make it like the others…but they don’t care about the common person anyway. That is why they are fighting amongst themselves…

  520. I at first did NOT know that this loan would have to be paid back (due to an over zealous accountant that just wanted my business for the tax season…she kept on explaing it as a tax credit and that what had me going…

  521. Consider the $7500 as an interest free 15 years loan. If Bank of America had not mess up with my loan application, my closing would have been in Dec 2008 ($7500 tax credit) not Feb 2009 ($8000 tax gift). If that makes any one to feel any better, let me tell you this: If I loose my job and forced to sell or rent my home, I have to return the entire $8000 immidiately (not in $500 a year). So practically I cannot touch the money for three years because the worse thing is to become unemployed and owe $8000 to the goverment! Now what is better? Having an interest free loan or $8000 that you cannot send?

  522. “IF” I die, my loan does not have to be paid back. That is the worse thing.

  523. Lose the job and then you cannot payback the loan…???Either way, it is sorry.

  524. It is absolutely ridiculous that they did not retroactive the tax credit.

    To Linda – for those of us that did receive the $7,500 credit – if we sell (or are forced to sell) – we also have to pay the balance back immediately. We do not get to continue the payments.

    I was grateful when I first heard about and received the credit but now I just feel like I got screwed by the government (again).

  525. I am glad I read the fine print when I did my 2008 taxes…I seen that it was not a credit, but instead a intrest free loan…. So I decided against it…now under the new law under the right timeframe it doesnt have to be paid back…but because I bought my house in November of 2008… I am stuck with the old law…. pisses me off… they could have made it retro for the old law as well… Well for those under the new law, I hope you enjoy your true credit… I am happy for all of you! Oh well…our government at work!

  526. I’m right there with alot of you. I am a first time home buyer and closed Match 15th 2008. I went and had my taxes done yesterday and was told I missed by 15 days. I was really upset but I don’t think there is anything I can do anyways.

  527. I received the $7500 thinking that I finally got a little break. A free loan! Then of course the $8,000 came that you don’t have to pay back. I thought that was a slap in the face to all the people that have to pay back the $7,500. Now they have wound up and kicked me squarely between the legs with this $6,500. A guy I work with has 12 rental properties and he just bought a $540,000 house……..yeah he gets the $6,500 of free taxpayer money. There is 10% unemployment in this country and they are giving $6,500 to people that can afford up to an $800,000 house? You can’t get it more wrong than that.

  528. I am as pi$$ed as anyone else.
    We need to quit moaning and unite and get orgainized.

    We could start a blog ( I think this one is exhausted) that will catch the attention of everyone who took this “loan”. Write our reps and Obama.

    All the commercials that are on TV now are driving me crazy. Maybe someone would listen to us and help.

    Any Ideas????

  529. Well, I got a CALL from my senator (since in my email I put do not send me a FORM letter)…his assistant understood what I was talking about and said that he would tell the senator…interesting??

  530. I am once again writing to my Senators and Representative. I am going to continue to write them until they listen. I will NOT accept a form letter.

    I URGE ALL OF YOU READING THIS TO DO THE SAME. I will paste a copy of my letter here BUT USE YOUR OWN WORDS. They don’t want to receive a “form” letter either.


    Dear Senator or Congressman (last name),

    I am writing to urge you to support legislation that would repeal the “payback” for use of the first Time Home Buyers Tax Credit of 2008.

    I was a first time home buyer in May 2008. Although the economy was in bad shape, I chose to purchase a home rather than continue to rent. Before buying, I did some research and talked to a realtor, a financial advisor, and my tax preparer. All convinced me that it was the right time to buy; that I would be helping our economy and helping to get the housing market turned around. I was convinced that the Federal Government also felt it was the right time to buy since they were offering a $7,500 tax credit to first time home buyers.

    I knew the tax credit required repayment. I did not know that first time home buyers in 2009 and 2010 would be offered even more money and that it would not have to be repaid.

    I believe that the first-time homebuyer tax credit included in the American Recovery and Reinvestment Act (ARRA) will encourage families to purchase a house and realize the American Dream of home ownership. I believe this legislation will help the economy and raise the hopes of the American people. I also believe that I should be offered the same advantage as buyers in 2009 and 2010. The economy was in tough shape in 2008 and I took a risk to make a home purchase. I feel I deserve the same tax advantage as other first-time homebuyers.

    Thank you for your continued commitment to Michigan and this great country of ours.


  531. I sent a letter to my congressman and got a “form” type letter back but at least it addressed the issue I wrote about. This is what I received.

    I am always pleased to hear from constituents, such as you, who take the time to communicate with me. I want to thank you for sharing your thoughts?”staying on top of the issues that matter to you, by opening a dialogue with your elected officials, is one of the most important aspects of our Democracy.

    As your Congressman, I value your thoughts and opinions regarding the first time home buyers tax credit. I assure you that your voice is heard here in Congress and that I will keep your thoughts in mind as this issue continues to develop.

    Again, thank you for your active participation as a concerned citizen. I hope you will continue to keep in touch on the issues that matter to you.

  532. Typical response…I think my call from one of my senators aides really went well, although I doubt he will pass along my concerns…

  533. Beerly slone says

    Sent letters today to my Senators and Congressman urging repeal of the payback of the 2008 first time home buyers tax credit.
    Hoping you all will also send letters. Maybe if enought of us do we can saveourselfs $7,500.

  534. Is it this year we have to start paying back or is it on next years forms???

  535. Joninray – 2011 is when the pay back starts so we still have one year to try to change the minds of those who put this in to place. It makes no sense that if I would have waited three months, I would have gotten more money and not had to pay it back.

    If there is a group that anyone knows of to sign a petition, please post.

    Thank you!

  536. Well after NICE raise at my job, I adjusted my taxes so that the $19.25 will be taken out and it didn’t make that much dfference, so it will work out if the stupid government doesn’t repeal it.

  537. Make sure you do not owe for any child support because this tax credit will go straight to paying off child support.

    My deal is I purchase the home and filed for the credit but because my spouse owed child support and I did not know he lag back on it. They took part of my home tax credit and gave it to his ex. I did not even file him on my tax return at the end of the year.

  538. Jen Jinks –

    Refunds are always subject to paying off certain debts (including child support). However, it sounds like the child support is not considered your debt so you might want to look in to filing Form 8379 Injured Spouse Allocation. You will need to read the instructions and/or obtain a CPA to figure out if you are eligible to file the form, etc. Best!!

    It is important that people understand the ‘consequences’ of filing a joint return before they do so. This is just an example of how someone else’s irresponsibility can affect your bottom line.

  539. Jen- Or you could just ask the guy to pay you back. But, I would still look in to filing that form, you may need it for next year’s taxes…

  540. I think that it is very unfair that the people who got the $7500 has to pay that money back but the next year people got $500 more and they don’t have to pay it back. NOT FAIR AT ALL AS WELL AS IT DOESN’T MAKE SENSE!!!!

  541. we bought our house in 2008 and recieved the loan in 2009. We had to move and rent our house out in Aug of 2009 because there was absolutely no work, and now the IRS is demanding payment in full this year because it wasn’t our main residence as of 12/31/2009. We are losing money on the house, but we would love to move back if there was work. Does anyone know of any exception of loop hole? Our tax preparer from 2009 told us we would only have to pay it back in full if we sold the house, never mentioned anything about it not being our main residence. Should I contact the office we had our taxes done at last year? would it even help? We are a 1 income family with 3 children, it’s not easy for us to just come up with 7500. I am so upset about this. I just wish our government was actually for the people by the people, maybe then they wouldn’t get away with screwing all us people over….

  542. From what I understood, if there was no profit on the sale, then the “loan”
    is forgiven. Contact the office that did your taxes last year and see what they did…

  543. we didn’t sell though, just rented it out…we intend to move back someday.. we are losing money renting it out…does that make a difference?

  544. Sarah, looks like you’re going through the same thing I went through yesterday. Yup we were “misinformed” I called the irs directly and they told me that if we bought our house in 08 we are not entitled to any waivers unless one of the owners dies. We cannot RENT or SELL our home for the entire 15 years of the loan and if we do we are in default and the 7500 have to be paid back immediately. My husband and I were definitely not informed of this when the 7500 “credit” was offered to us
    We are military and of course we would have had to sell or rent our home sometime before the 15 years. I don’t even think the tax preparers were aware of this little fact. The irs told me that if I wasnt happy with this, id have to call my congressman. Basically we got screwed because we bought our home in 08. As of November 09, anyone that purchased their home in 09 only has a 3 year rule and doesnt even have to pay the money back plus there’s a military waiver. Of course it was not backdated to 08 so were basically tricked into buying a home. Good luck and let me know how it goes. luci915@yahoo.com


  546. I find it extremely hard to sympathize with you and Sarah. You were not informed because you chose to be ignorant. You should have looked into this before you claimed the tax credit. I’d be willing to bet that your tax preparer would have been more than happy to give you more information had you requested it.

    Here’s an even better word to the wise than your recent all caps statement:



  547. Oh and, you’re right, the IRS doesn’t give a shit about your situation.

  548. Lucia and Sarah – Please do not take Laren to heart. She called me bitchy and bitter back on September 21 (above). Now she is calling you ignorant. I am apologizing for her because I am sure she won’t.

    I am also sorry that you were misinformed. It is hard to understand laws and tax codes-they are not written for the everyday person. You only know what you know and can’t ask what you don’t know. I hope you know what I mean by that – I am sure Lauren doesn’t.

  549. Vicki – you were being bitchy and bitter. Move on.

    I am not sorry, as you have already figured out. The credit is not a ‘tax code’ it’s a credit, plain and simple. The rules were very clearly outlined from the get go and if you were still unclear it was very easy to get answers from those who don’t have a hard time with words and reading.

    I should know, I claimed the credit and I know exactly what I can and can’t do in order to KEEP it. Athankyouverymuch.

  550. It takes all kinds to make up the world and I thank God everyday that there are people who know everything!

    Makes up for us dummies!

  551. Vicki that’s great for you!

    One last thing, I never said that I know everything (I know a lot about taxes but certainly not everything). But the last thing I would do is blame someone else for my own ignorance. The IRS isn’t ‘out to get anyone’ (unless you have a foreign bank account that you haven’t told them about of course- that’s a big red flag this year).

    The point is, this credit was supposed to help people, and it did. They certainly weren’t trying to screw Sarah or Lucia over, that would be rediculous. They are certainly not the best at what they do, but it was a great thing they did- the IRS gave you (us) a lot of money.

    But some things are just never good enough for some people.

  552. Lauren – I wondered where you were today!

    Vicki leave her alone! Many people on this site would have had no direction without her.

  553. I closed my house on December 24th 2008. Can you believe it? Only a week from getting $8000 with no payback clause.

    This loan is a lot like that Ally Bank commercial, where the spokesman asks the little girl if she wants a pony and gives her a pony doll. He then asks the second girl if she wants a pony and then calls over a real pony to give to her. The first girl asks “You didn’t tell me I could get a real pony?” and the spokesman says, “You didn’t ask”. The moral of the story- “Even kids know its wrong to hold out on somebody” so why doesn’t Lauren????

  554. G-

    Don’t get me wrong, having to pay back the $7,500 and not the $8,000 was not a smooth on the part of the IRS. I totally agree. I do still think that the $7,500 was generous and I also think that is fair to have to pay back the credit, I just think that EVERYONE should have to pay back the credit. Due to the fact that some still have to pay back and some don’t, even after all the hoop-la, I think that’s totally lame, G.


  555. No its cool Lauren. No hard feelings, I just thought it would be funny to take a jab at you with that commercial. The current situation is definitely lame and shows no common sense on behalf of the government. They had no plan when it came to creating or implementing these incentives. It’s apparent they winged the whole thing. Bastards. And you can hope that some idealistic congressman makes a stand for us (doubt that will happen) but the sad truth…it is what it is…

  556. Lauren, first of all we did ask questions. Alot of them. I asked the person preparing my taxes. Yes, I was wrong to have trusted a professional. Second of all, the paperwork that was given to us did NOT in any way, shape, or form, say that if we RENTED the house we’d have to pay the 7500 immediately. I knew we had to pay back the 7500. That is not what I was complaining about. I had to pay the entire amount up front because I trusted a tax professional instead of calling the irs directly. I have looked up the 7500.00 tax credit on several different websites and read up on the repayment rules and again nothing on renting the house. The ONLY site that I found gave me this info was the irs site itself. I agree that I definitely should have looked there first. Unfortunately the credit was OFFERED to us by the person doing our taxes, the “information” was given and we agreed we would not be selling our house in 15 years so we took it. I don’t mind paying back the government for money that was “given” to me. I also agree EVERYONE should have to pay it back. I just wish I hadnt had to fork it over all at once because of some misinformation that was given to me. The only reason I wrote that last statement in bold is because there is some info given here that is totally wrong and I want to make sure no one else goes through what I went through yesterday. Forgive me for caring. I want to make it totally clear that the 7500.00 credit will have to be paid back in full if you rent your house anytime within the 15 year period. For military this is some extremely important information and if it doesnt pertain to you, I suggest you mind your own business.

  557. Lucia, I swear you are reading my mind. I did those same things, trusted the same people, and now I have to come up with $4100 to pay the IRS before April 15th, or we can set up a payment plan with interest. I went to many sites and did research and I couldn’t find any other site but the IRS that said anything about renting the house out. But I am with you. I want people to know this so they don’t make the same mistake. It’s sad that you pay people who are suppose to know the law to do your taxes, and they make a mistake you have to pay for. I hope all goes well for you.

    Lauren-if you don’t have anything nice to say then why say anything at all? I didn’t ask for YOUR sympathy, just someones expertise. Sounds to me like you try to make people feel stupid, so they think you’re smarter. Who are you to accuse me of chosing to be ignorant. You know nothing about me. I find that very offensive.

  558. Sarah,
    You didnt get the tax credit for your 3 kids? Thats how I paid the 7500. Im sorry you’re having to go through this.

  559. Lauren, just so you know…I AKSED MANY CPAs, so-called tax professionals and ALL of them told em that this was a “credit” BUT I didn’t trust them because of my WIFE who said she didn’t feel right. So guess what?? I went with feelings instead of “so-called” professionals…shows what they know, doesn’t it?? Glad I am preparing for the payback each year…

  560. Joininray – Not really sure where you’re going with that. It was a credit on your tax return so that’s what it was called. If your tax professional called the money a credit then that is because that’s what it was. If you were misinformed about having to pay the money back then that’s pretty shitty and I feel for you. A lot of times you get what you pay for. If you’re paying less then $300 to get your 1040 prepared for you then you should either be doing it yourself or checking the preparer’s credentials. And, as in your case, if you feel you know more than your tax preparer then you should not pay them to prepare your return. It sounds to me like you did the right thing…? Also, I’m not really sure where I fall in your train of thought but, whatever.

    To the others: what part of ‘the property has to be your primary residence’ didn’t you understand? Do you really think the government was hoping to finance your first income property? I guess ignorance is bliss, until you get caught.

  561. Just so all of you know, no one was trying to sell you a line of bullshit. That is what really gets me, the government gave us all a lot of money and all you people want to do is complain about it. You are all so miserable. It literally disgusts me the amount of animosity some of you seem to have. And who are you pointing your fingers at? The IRS, tax professionals? What about the roll you played in all of this. After all that $7,500 is in YOUR bank account (or was anyways).

    Furthermore, you all do realize that no matter WHO prepares your tax return YOU sign it and YOU are responsible for it. What is being reported to the IRS is your information and the money that goes to them is yours, so make sure you know what the FUCK is going on BEFORE you give them that information.

    Maybe you should all think about taking that responsibility a bit more seriously in the future.

  562. Lucia, what did you mean with you said:

    You didnt get the tax credit for your 3 kids? Thats how I paid the 7500. Im sorry you’re having to go through this.

  563. Okay…put it like this…say someone gave you $1K and said you had to pay it back by midnight? Then the next day, you friend gets that same deal, but doesn’t have to pay it pay it back at all…all you would have to do is wait a few more hours to get teh same deal…but they didn’t tell you that, did they? That is how some of us feel. I PERSONALLY will pay it back but I Do wish they would make it fair and across the board for everyone…either all pay it back OR no one pays it back at all. That would help out alot of us.

  564. Yeah, I got it Ray and I agree. I am talking about something completely different: I think it’s rediculous that Sarah and Lucia are pissed that the government doesn’t want to fund their rental property. The outlines of the credit CLEARLY stated that you have to live in the home for the next 15 years. And instead of saying, ‘my bad’ they’re acting like someone did this to them. It’s sickening.

  565. Lauren, you are a bitch. I never said anyone “did this to me”….as for my comment about the government, I am aggrevated at alot of the things going on right now, and suppose I just used the forum to vent a little. I came here looking for advice, not sympathy, I can admit that we should have researched more. But when you pay people to do your taxes, you assume that they know what they are doing, and are going to do their best to help you. We were NEVER told that if we rented the house out we would have to pay it back. I repeat NEVER. AND that 7500 did little to fund my “rental property”, which I will remind you we are losing money on. I suppose we should have just done a short sale and stiffed all the tax payers whose money it really was. But we chose to keep the home, AT A LOSS TO US, and hope that eventually we’d be able to move back. What is sickening is people like you who have nothing better to do all day then sit back and talk bad about other people. You don’t know me, and you have said some very offensive things about me. YOU are the bitter bitch.

  566. Lucia, thank you for your support. I hope all goes well with you. All we can do is spread the word so other people know not to make the same mistake we did. Good Luck.

  567. Good luck with that Sarah. Hopefully you have learned to take a closer look at the fine print before you make a decision that has a large impact on your future. I think that would be a good lesson to pass along.

  568. Wow, looks like Lauren needs a life!!!

  569. Yeah, I’ll say!! What a bitch.

  570. I get you Lauren…we are cool. I did see that about rental property, I plan to stay in my home forever…unless I win publishers clearing house! 8^)
    Anyway…I still think that the column helped alot of people out…

  571. Okay, let’s keep things civil here.

  572. I’m sorry for my language, I was just sooooooo angry!!!! I’m glad that I am not the only one who sees what kind of person Lauren is. I’m glad other people found help here, but all I received from her was insults. She did not have to be so rude. Not all of us know all the answers, thats the way life is. To be accused of chosing to be ignorant and looking for sympathy was just unfair. We chose to move to be together. To me thats worth more than anything. I was just looking for some advice, I thought maybe someone out there had the same problem and might be able to help me. I did not need her nastiness. Lauren obdviously has some issues with herself and tries to make others feel inferior. As for me, I have 3 kids, a husband and a life to get back to, so Lauren, a word to the wise, if you don’t have anything nice (or helpful) to say, don’t say anything at all.

  573. Sarah, if you don’t want people to disagree with what you say then you shouldn’t say anything at all. I called you out, deal with it. If you felt stupid that’s your deal.

    Like I said, good luck with your quest to inform. I would like to hope that you will not be telling anyone anything that they don’t already know. Unfortunately I am smart enough to understand that there are a lot of people like you out there that need to be told what to do so you will probably actually end up helping people. (I cringe!)

    I am ok with myself, but thanks for trying to figure me out. I’m just a gal who is pushing 12 hours a day on a good day and could use a break every now and then, it’s called tax season sweetheart. Plus, if I had a life when would I have time to post on this blog? Duh.

  574. Lauren honey, maybe you should find yourself another line of work. Looks like you’re having a hard time dealing with what you’re doing. It has made you a bitter, hateful person. People visit this site for information and to share their experiences. They don’t, however, come here to be ridiculed and insulted by an insensitive person like yourself. If you have important information you want to share, fine. Just do us all a favor and just keep your negative comments and opinions to yourself.

  575. Beverly Slone says

    I totally agree with Margaret – this is a site for imformation, not insults, etc.

  576. Ok Sarah… I mean Margaret- you guys are really killing my ‘make everyone feel stupid’ buzz. I’m just going to go back to my horrible job and miserable life (oh wait, I don’t have one!) and you guys can go back to the rocks you live under. How bout that?

    For those who have real questions and need real advice and are also not in denial about who is in charge of their own future, I’m happy to help as always. (Also, you can’t be offended by overly excessive sarcasm, you’re feelings WILL get hurt).

    Best 🙂

  577. haha well turns out I just spoke to an irs agent and again I was given different information. They said I don’t have to repay the 7500 since I rented my home due to government orders. So who else should I go to? Who else should I trust to give me the right information? Obviously no one knows shit.

  578. http://www.irs.gov/taxtopics/tc611.html

    This is a page from irs.gov it had multiple topics. You need to look for the topic called ‘recapture of credit’ then the bullet point called ‘acceleration of recapture’.

    You know what, forget it. I will just copy and paste the information below this paragraph. If this doesn’t clear things up for you, then I don’t know what will. (Sarah, if you are really going to inform people you might want to copy and paste this too.)

    PER IRS.GOV Websiste- Please follow the link posted at the begining of this post to see the entire page:

    Recapture of credit
    If a first-time homebuyer credit is allowed to a taxpayer, the taxpayer’s income tax is increased by 6 2/3% of the amount of such credit for each taxable year in the 15-year “recapture period.” The recapture period begins with the second taxable year following the year of purchase for which the credit is taken.

    For example, if a taxpayer is allowed a $7,500 first-time homebuyer credit in 2008, the taxpayer must recapture the credit amount by adding $500 (which is 6 2/3% of $7,500) to his income tax liability each year for 15 years, beginning in 2010.

    Acceleration of recapture – If a taxpayer disposes of the principal residence for which a first-time homebuyers credit was allowed (or ceases using it as taxpayer’s and spouse’s principal residence) before the end of the 15-year recapture period, the remaining credit repayment amount is added to the income tax liability of the taxpayer for the year of sale or cessation of use.

  579. You want to know what else? That took about 5 minutes. Just saying.

  580. Lucia, it is entirely possible that you don’t have to pay the credit back due to government orders. Having said that, I would get whatever you have been told in writing. This is because the IRS has no obligation to you EVEN IF they give you the information upon which you are relying. It sucks but it’s true. Also, usually the people you speak to on the phone are a little less than informed when it comes to tax law. Also sucky, but true.

    FURTHERMORE, if the IRS has not actually written you a ‘love letter’ telling you that you have to repay the credit then you don’t actually have to repay it. If you are relying upon a phone call with the IRS but have not received an ‘additional tax due’ letter, then I wouldn’t sweat it for the moment. If you did receive a letter and you want to fight it you can sure do it on your own, but (as usual) I would suggest having someone else look into this situation further for you. A professional that either is informed, or has the best resources in order to be informed would be your best weapon. This is especially true because government workers do fall into a different ‘tax category’ in certain situations. Of which I know nothing. Good luck!

  581. No, Lauren, I haven’t even finished filing because I keep getting such conflicting information. The actual 5405 form thats filled out for repayment line 12 states if part of military and rented due to government orders, repayment not necessary (STOP HERE). It doesnt specify my homes year of purchase or anything. Problem was that when I had my taxes done, the tax consultant didnt “stop” and continued on with the rest of the questions because I told him that waiver didnt apply to me because I purchased the home in 08. This is VERY confusing!

  582. Look at the instructions for Form 5405 on irs.gov. Go to page 4. See heading “Part IV Repayment of Credit” and also the corresponding instructions for Line 12 on the same page.

    Based on that information, if you and/or your spouse qualify as uniformed service people and you have government orders to go somewhere which causes you to cease occupying your home OR sell it, then you do not have to repay the credit. You have to look at the explaination of qualified offical extended duty also to make sure that it describes what you are doing. This is true for both 2008 and post 2008 first time homebuyers (i.e. you can do this no matter what credit you claimed).

    Filing forms is usually just a matter of reading the instructions and most times you will find the instructions will tell you everything you need to know. It can get complicated but when you are dealing with the issue of one credit, it is pretty easy to get the information you need right from the form instructions.

  583. Lauren, Hi, I finally finished my taxes and no, I did not have to pay back the 7500.00 because of the waiver. Atleast not all at once. I am confused however about whether or not I have to pay it back at all because according to the new 5405 form, no repayment is required. Now I know this probably covers the 3 year rule which would have only required payback if you rented or sold your home before the 3 years but what about the 7500 that `has to be paid back in payments beginning in ’10? WIll there be a new 5405 in 2010 tax year when payment is required?

  584. Lucia, there are two credits. The one you received was for $7,500 and had to be paid back. The other one is for $8,000 and only has to be paid back if you move out of your house in the next 3 years. Anything that has to do with the 3 year payback has nothing to do with you. And it seems that no matter which credit you claimed, if you pass the tests we talked about earlier, you do not have to pay the credit back no matter which credit you claimed (underline that last part)

    I do understand that it can be confusing but my advice to you would be- don’t sweat the small stuff- meaning don’t get bogged down in the language of the instructions. You can decide what pertains to you and what does not.

    It sounds like you’re on the right track now! But like I said, don’t sweat the small stuff you ARE smart enough to get to figure this out!!

  585. Lucia – I think I misread your post. I am not sure what is happening with the annual payments, that is a really good question. I don’t know if your situation means that you no longer have to pay the credit back at all, or just all at once and you still have to make annual payments.

    I wish I could offer you some knowledge on this matter but I’ve got nothing. If you do figure it out, please let us all know!

  586. Does anyone know if refinancing a mortgage would equate to the sale of a home in regards to the repayment of the first-time home buyer credit from 2008? I took that credit and I will probably need to sell my home the next few years, likely at a loss or very small profit given the current market. I would be looking at $6000 to $6500 to keep as an “exception to recapture” of the $500 per year since the “accelerated capture is limited to the gain on the sale of a home”.

    I could save $1-2000 in the next couple of years with a refinance, but it wouldn’t be worth it if it will affect my tax credit payback. Has anyone been in this situation or know where to find the answer to this on IRS.gov?

  587. How long does it take to get the $7500 loan? I refiled my 2008 taxes in feb and am still waiting.

  588. I ammended my tax last year for the $8000 credit. The form says some thing like 6-10 weeks. but it took much longer After about 3 months I received a letter from IRS for a bunch of closing documents. and it tool another 3 month before they sent me the check. It seems that there have been many false claims and therefore review of the cases take much longer. The nice thing about the wait was that they paid me a good interest (about $140).

  589. Will government has any plan for making 7500 as non refundable, In 2009 they paid 8000 complete credit, don’t have to pay back. Why is that?
    I guess people have to protest?

  590. The government did WHAT?!

  591. Mitch – A refi will not affect your repayment.

    If you sell your home at a time that puts you into accelerated recapture you will have to pay back the entire amount you owe on the credit. If you owe $1,000 then the first $1,000 of your profit will go towards repayment of the credit. BUT if you sell at $0 profit OR a loss then you do not have to repay. But just because you do not have to repay does not mean you do not have a filing requirement.

    Go to IRS.gov and/or speak to a CPA.

  592. I purchased a home in 08 now must sell the home. After Realtor fees I’ll be lucky to sell the house for what I owe on it. Will the IRS look at the money paid to the real estate agents as profit, thus requiring me to pay back the $7500?

    I asked my tax guy but he didn’t know. I think next year I’ll use somebody else to prepare my taxes. 🙂

  593. Selling expenses (ie.s closing costs) that you pay get tacked onto your cost basis whether you are buying or selling your home. Your cost basis = purchase price + costs to buy + costs to sell. Your profit/(loss) are your proceeds – cost basis.

    Selling & buying expenses that get tacked on to your cost basis are expenses that cannot be deducted on your Schedule A or Schedule E (rental property) in the next 12 months (i.e. escrowed property tax & insurance costs- not that you can deduct insurance costs on a Schedule A but you could on a Schedule E).

    Your HUD statement from the purchase of your home should have all of that information, same for when you sell it. But I would imagine that you know what you paid to buy your home and you will know what you pay to sell it so use the HUD statement to make sure your figures are correct as they can be confusing to read. In fact, have the lawyer point out the pertinant expenses when you go to sell. He/she should be able to show you what is deductible for you as well.

    Keep in mind that the amounts in the left column of a HUD statement pertain to the BORROWER listed on the document and the right column pertains to the SELLER listed on the document. The ‘selling expenses’ are totalled up on the first page of the HUD statement from amounts listed on the 2nd page. Make sense? It should be easy if you remember what you paid in closing costs (or didn’t pay for that matter).

    Any accountant that doesn’t know that is not worth your time or money. Best 🙂

  594. Marc – After all that I didn’t even answer your question. Your realtor fees are part of your selling costs so they will get added to your cost basis thus reducing any potential profit and increasing any potential loss.

  595. Joninray says

    FINALLY!!! I actually got a REAL response from one of my congess people…here is what Sen. Tom Cobrun said:

    Thank you for contacting me about the federal housing tax-credit for first-time home buyers. It is good to hear from you on such an important issue, and I greatly apologize for this delayed response.

    I do understand your frustration that the more recent $8000 dollar tax-credit does not have to be repaid. In the past, I have supported tax credits such as the first-time homebuyers tax-credit as one strategy toward reviving our ailing housing market. The limited window designated for eligibility is arbitrary, and was designed to target the immediate housing downswing.

    I have heard from several Oklahomans who expressed this similar frustration with regard to the unfairness between these two separate tax-credits. I have heard from even more who were generally upset with their tax dollars going to either of the programs. Many people wrote in to express their frustration about the limited scope (eligibility and time frame) of the programs which would exclude them, or their family. At this time, no bills are before Congress to retroactively change the tax credits. It is unfortunate that you did not receive the better of the two deals, but you did get the generous interest-free loan that the majority of other tax-paying Americans did not benefit from.

    I am continuing to work with my colleagues in Senate on a new direction for housing policy in America – one that will not punish responsible borrowers for the mistakes of a few. Hardworking families and individuals that make their mortgage payments should not have to make their neighbor’s mortgage payment as well. I greatly sympathize with many families in our country who have fallen on hard times due to job loss, healthcare expenses, and other hardships. It breaks my heart to hear the stories of many of my constituents who are being greatly affected by our current economic conditions. Therefore, any housing plan that I help craft or support must bring fairness to the current process of assisting troubled borrowers.

    Again, thank you for contacting me on such an important issue. As our economy and the housing industry continues to face significant challenges, please know that I stand for real solutions that will get our economy back on its feet and create more jobs. Best wishes!

    …even though it is kinda sorry and “well, your’e stuck” kinda letter, I at least thank him for given me a real response.

  596. Just an interesting tid bit:


    This article states that about $28 million was doled out to fraudulent filers but that only makes up about 3,500 people so I would be willing to bet that the number is much, much higher. I hope no one from this site was engaged in such fraudulent activities!!

    Also, keep your eyes peeled for more housing stiumlus packages as the market is currently at an ALL TIME low.



  597. My husband and I just received a notice from the IRS saying that we didn’t qualify in 2008 to receive the credit. We bought our house in Feb of 2008 and filed our taxes in Feb that year using H&R Block’s TaxCut software. We didn’t know about the time frame on it at the time. The TaxCut software approved the tax credit, we filed e-file to the IRS and evidently they approved it, because they sent us the money. Now though since we didn’t fall into the correct time frame, we do not get the option of 15 annual installments, we get penalized, plus will have to pay interest on the $7500. I wonder how many of the fraudulant cases are the same as ours. TaxCut seems to think they hold no responsibility since we had a computer crash and lost the data file, even though I have a hard copy of all the work up sheets and emails showing I used their software to file a return. Isn’t there something we can do about this?

  598. Judith – you can write a letter to the IRS stating that you acted in good faith and ask them to get rid of any penalty and maybe interest. Then you can try to work out an installment plan for payment. Other than that your only option is to pay back the money as you did not qualify for the credit in the first place.

    Be careful if you decide to use the software as an excuse, it may backfire as the IRS doesn’t really allow tax software malfunctions or inadequacies as an excuse for improper filing. As a tax preparer, if my software were to incorrectly calculate an amount on a tax return that I prepared, then I am ultimately responsible for that miscalculation, not the software company. And the same goes for taxpayers that file their own returns.

    Always review your return before it is filed and double check that you are qualified to take all of the items you have either deducted or claimed as a credit.

  599. Received my Repaying your First-Time Homebuyer Credit notification from the IRS today to complete Form 5405 with my 2011 return. Awesome.

  600. I don’t get it. Are you surprised? Did said letter come as a shock?

  601. Not shocked at all…what don’t you get? I got the notification and am not thrilled about having to pay back.

  602. I got the 2008 version of the tax credit. I think it’s interesting that people in 2009 and 2010 get a similar credit and they don’t have to pay back. It was discussed that 2008 recipeints may be rolled over into the 2009 and 2010 version. However, the other day I did receive my notice about having to start to pay back. It’s situations like this that leads me to have less faith in our government. What differentiates a 2008 buyer vs a 2009 buyer? As they say, hindsight is 20/20. If I sat on the sidelines and waited a year, i would have gotten the better deal.

    Maybe next year we’ll get a better healthcare reform policy

  603. Hi, I’m a second time homeowner, I was told as a second time homeowner, I was to receive 4500..is this true. Also, how does this come? In the mail? I have yet to receive it. I was supposed to use this as a down payment, but I’ve been here 6 months, the deadline I believe was at the end of April of 2010…I receive NOTHING? I am currently not working due to an ato accident, in 08. Trying to get back on my feet I hope this doesn’t hinder my chances as well. I did all forms and handed them in, I did a homestead transfer to receive my homestead credit check. Which I haven’t received as of yet, what is the long wait? Also, am I understanding that I have to pay it back? Also, last question who do I call to check on when my check is coming. Thanks, please help.

  604. JennE –

    I’m not sure I understand your questions, you say that you don’t know if the $4,500 credit ‘is true’ yet you filed the forms to receive it? What would getting in an accident have to do with anything? What do you mean you did all the forms and handed them in? Did you make sure you qualified for the credit? I’m not sure about the repayment issue but didn’t it say something on the Forms you filled out? I’m not trying to be mean but your post if very confusing.

    I can’t tell from your post whether you claimed the credit or qualify for it so you need to speak with someone at the IRS: 800-829-1040. I’m sure they will be extremely helpful. Best,

  605. Chris – Houseing prices and interest rates went up over the next year because of the $8,000 credit so I’m not sure you would have been better off… Either way a $7,500 interest free loan of which you pay back a nominal amount each year aint bad.

  606. Lauren,

    Just make sure you factor in that $500 amount in your withholding or the IRS could hit you with a penalty. Rinse, lather repeat for the next 15 years. When it comes time to sell make sure you have all your paperwork in order.

    Interest free, sure, but pain free certainly not. I’m wondering if it can be paid back early to avoid these hassles. I will not be moving soon.

    (can you tell I am irritated with the $500 payback needing to be including to avoid the under-withholding penalty?) 🙂 That is my big beef.

    BTW – Does anyway else have the feeling that scrubbling this whole payback requirement over 15 years (with all the forms, verification and tracking required) would end up actually saving the government money?

  607. Rob – I hear you, every word. It is extremely irritating. You are right about the payback- the IRS would bank more if they had the money up front but that would be a logistical nightmare and the $500/year works better for the people who claimed the credit. But still…

    I just went to a tax seminar for upcoming changes and the IRS has proposed initiating an additional 0.9% Medicare tax (on top of the 1.45% we already pay) for those people who MJF make over $250,000 and single people who make over $150,000. The devil is in the details: MFJ people combine their wages to see if they need to pay in so accountants/tax preparers would have to keep tabs on all of that not to mention the IRS. First of all, the amount of additional Medicare money is potentially immaterial and the paperwork on top of all that? Just talking about some of the ‘changes’ the IRS/Congress are concocting makes me mad!

    These changes are nothing but job security.

    Anyways, that’s how I feel about it 🙂

  608. I just got a letter from the IRS saying that I only owe them $3500 instead of $7K. If that is the case, I am keeping the letter and only repaying what they say I owe!!

  609. Quote ” “RE: Received my Repaying your First-Time Homebuyer Credit notification from the IRS today to complete Form 5405 with my 2011 return.” ”

    I am not receiving any notices or letters. Should I be concerned?

  610. I have not recieved anything in the mail either, if i dont, i know nothing!!

  611. Most people are happy never to receive a letter from the IRS 🙂

    Just make sure you fill out Form 5405 (just follow the instructions) and also make sure you are paying $500 + (taxable income * tax rate) and you should be all set.

    Happy Thanksgiving everyone!

  612. Yeah what a load of crap. Me and my wife did the 1st Time Homebuyers Credit in 2008 thinking that the government was giving money to people to encourage them to buy. We didn’t know we had to pay the friggin thing back. Now I just recently got a letter in the mail saying how it was pretty much a loan and everything else that you just stated in this article. Now I’m gonna be $500 shorter every year in taxes. We really didn’t need the money at the time so if we had known it was like that we probably wouldn’t have done it. It just helped get stuff done sooner than we originally planned.

  613. hmmmmm…. should have read the fine print, eh? Or, the instructions to the Form 5405 (?) you filed to claim the credit would have done the trick.

    In any case, employee Social Security taxes are going down 2% on the first $50,000 you make in 2010 (I’m not sure if there is a phase out or not). So, if you do the math that’s an extra $1,000 in your pocket. That should help, no?

  614. hi,
    I have been searching the internet for answers regarding the 2008 tax credit. My husband and I bought our first home June 2008 and took the credit and began repayment last year.
    During 2011 we were relocated for work and have had to rent out our home. Does this mean we will have to repay the remainder $7000 balance or do we fall under “involuntary conversion”?

  615. what happend when theygive you the fisrt time home buyer loan and your house goes for foreclose do the irs stay with your taxes???

  616. Ok……here we go..

    i got this down payment assistance when i bought my home in july,08.

    Long story short, i had surgery that went wrong, lost my job and had to go on disabilty.
    Since i had no income for a while, i nowam in the process of bankruptcy. Can this be included?

  617. What is this about??
    Please send info!!

    $7,500 Credit For First-Time Homebuyers May Not Have To Be Paid Back » My Money Blog says:

    January 30, 2009 at 8:29 am

    […] my post on the $7,500 tax credit for first-time home buyers has over 225 comments and growing, I thought I should point out that both the current House and […]


  618. What happens if you have to file bankruptcy?

    • Kim,

      I would imagine that the original $7,500 less repayments made to date will be one of the liabilities that you will argue cannot be repaid when you file for bankruptcy. I am not sure if that remaining liability will be treated like a student loan or if it will treated like any other loan. If the loan cannot be forgiven then I would start working with the IRS on a payment plan, or a reduction of taxes owed based on current financial standing (make a deal). Remember you cannot work out a deal with the IRS unless you file your tax return, even if you cannot pay a tax liability at the time of filing. Penalties for not filing a tax return are much greater than filing a tax return without payment. (Though I would not recommend either it is a good idea to understand which option puts you at the most risk). Best,

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