First-time homebuyers can claim a $7,500 tax break. A new $15,000 tax credit may replace it if the 2009 economic stimulus package passes. Learn tax credit details.
A homebuyer’s tax credit is intended to stimulate, or rather, resuscitate the flailing housing industry. Currently appearing on the instructions to IRS Form 1040, U.S. Individual Income Tax Return, are instructions on how to claim a tax credit of $7,500 related to the purchase of a homebuyer’s first home. This may be replaced by a $15,000 tax credit if the 2009 economic stimulus package ultimately passes.
Individual Income Tax Returns: $7,500 First-Time Homebuyers Tax Credit Details
According to the instructions to Form 1040, taxpayers must meet the following requirements to claim the credit:
Bought a main home in the U.S. after April 8, 2008
Did not own any other main home within 3 years of this purchase
Made less than $95,000 (for individuals) or $170,000 ( for married couples) in 2008
Currently, the taxpayer claims $7,500 on the tax return, but is required to pay back that amount over a 15-year period.
As part of the negotiations behind the American Recovery and Reinvestment Act of 2009, otherwise known as the 2009 economic stimulus package, a $15,000 non-repayable tax credit has been slated to replace the original $7,500 tax break if the plan is ultimately passed.
Senator Johnny Isakson, a Republican from Georgia, is the driving force behind both the $7,500 and $15,000 tax credits. He believes the homebuyer tax credit measure that revived the housing market in 1975 can work again today. Read more about the $15,000 Homebuyer Tax Credit and Isakson’s efforts to stimulate the housing market.
Misconceptions about the $15,000 Proposed Tax Credit, Economic Stimulus Package Details
Amidst the debate over the economic stimulus package details, many Americans are bound to be confused as to what the $15,000 homebuyer tax credit would entail. Here’s what it is not – a tax rebate. Americans will not get a check for $15,000. The tax credit would be tied to a home purchase, and the details of the proposed credit would be explained in the text of the American Recovery and Reinvestment Act of 2009, if it ultimately passes. Instructions on how to claim the credit would appear in IRS guidance, presumably the instructions to the 2009 Form 1040 and equivalent returns.
Senate OKs $15,000 tax break for homebuyers by David Espo, Associated Press
Senate Unanimously Approves Isakson Amendment to Stimulate Housing Market on Johnny Isakson’s Georgia senatorial website
The copyright of the article $15,000 or $7,500 Tax Credit for Home Buyers? in Personal Tax Planning is owned by Lena Gott. Permission to republish $15,000 or $7,500 Tax Credit for Home Buyers? in print or online must be granted by the author in writing.
We need people to get back in the market. I think it's a great idea, good
for the new home buyer, good for the country and yes great for real estate
agents.
www.SunsetStripRealty.cm
Feb 5, 2009 8:27 AM
Guest :
Will the $15,000 tax credit be subject to the same income limitations as
the original $7,500? I believe the income limitations either need to be
raisted (doubled) or eliminated for this tax credit to have the intended
impact to the housing market.
Feb 5, 2009 9:25 AM
Guest :
So if you purchased a home in Oct 08 you will get 15k rather then 7500? Am
I getting this right?
Feb 5, 2009 10:22 AM
Guest :
What about buying a new home that is being built? Does it have to be
completed by the end of 2009? If no then how could you claim it as a
primary residence?
Feb 5, 2009 11:24 AM
Guest :
I already filed my taxes and am getting $7,500 back for the home I
purchased May 30. Do I now get $15,000? Do I need to do a 1040x change
form now? Or is this only for people that are buying starting now? Too
many questions and not enough info out now about it!!!
Feb 5, 2009 12:08 PM
Guest :
what if you claimed the 7500 initial tax credit? Can you claim the second
as well?
Feb 5, 2009 12:36 PM
Guest :
This is not fair, i got a smaller credit, and I have to pay mine back...
Feb 5, 2009 1:48 PM
Guest :
I'm very confused. So now the $7,500 credit that we had to pay back is
gone, and we have a $15,000 credit that we don't have to pay back. I just
bought my house January 6th, so does that mean that since the $7,500 credit
is gone I can't get that anymore? Since I bought my house before the actual
date that the bill was enacted (today) does that mean I can't get the
$15,000 either!?
SO confused!! - and about to be tearful... I
was going to pay off my truck to AFFORD my house!!
Feb 5, 2009 2:44 PM
Guest :
I bought my house Oct 2008 I would hope that they would modify the IRS tax
form 5405 if this bill does pass so I can get the 15,000 credit. On a side
note to help the guy that is pay off his truck to buy a house. This bill
hasn't passed through the senate yet they only voted to add it to the bill.
We will, hopefully, know whether we will get the 7,500 repayable or the
15,000 non-repayable amount. More details will follow if the bill does
pass.
Good luck to everyone this may help :)
Feb 5, 2009 2:57 PM
Guest :
We bought a 2nd house and hung onto our 1st throughout the last year,
making less than $50k/year. Where's our credit?
Feb 5, 2009 3:59 PM
Guest :
im so confused too! i found out last week on my taxes that the 7500 dollars
is cash back not a credit . i was floored. but now there's news that it's
15k but a credit not cash back- what the heck should i do!
Feb 5, 2009 7:12 PM
Guest :
Can someone explain how the $15,000 tax credit would work. If I do not
receive a check for $15,000 what will I receive and how would it work. I
am so confused... I bought my house from my bro on 12/16/08 so I suppose
since he is a close relative I would not be eligible for the $7500 tax
credit?
Feb 5, 2009 8:12 PM
Guest :
I think the most confusing aspect is the non-refundable nature of the
$15,000 proposal. I agree that there should be no income limitations.
However, I think a true stimulus would be a $7500 refundable tax break that
did not have to be paid back.
Feb 6, 2009 9:05 AM
Guest :
How does this work? Its not a rebate. No one will get a check for $15000.
How does this help anything, unless you owe money one your taxes?
Feb 6, 2009 9:20 AM
Guest :
If I have already claimed the 7,500 tax credit and the ammendment passes on
the new stimulus package where it is actually a grant do I still need to
pay this back?
Feb 6, 2009 10:20 AM
Guest :
If you go to the link on the 15,000 Homebuyer Tax Credit it tells you.
It's going to be that you have to make the purchase within one year of the
legislation and not have to be repaid. I'm not sure how they're going to
work it if you've already filed, but you could probably simply file an
amended return.
Feb 6, 2009 10:49 AM
Guest :
"The proposal would let anyone who buys a new or existing home within
one year of the enactment of the economic stimulus bill get a credit on his
or her tax return of $15,000 or 10 percent of the home’s purchase price,
whichever is less. It would only apply to the buyer’s principal residence,
and the buyer would have to stay in the home for a minimum of two years.
The credit would replace a $7,500 tax break that’s now available only to
first-time home buyers."
source -
http://www.ajc.com/services/content/printedition/2009/02/05/stimulus0205.ht
ml
Feb 6, 2009 12:19 PM
Guest :
Instead of a Tax credit they should allow the buyers to use the 15K towards
the down payment of a new or used home. This would allow the buyers better
leverage on purchasing a home. This will also eliminates the buyer from
filing taxes with the government. Let the bank deal with the government on
getting the money, it not like they don't have some already from the
previous bailout.
Feb 6, 2009 1:30 PM
Guest :
The new tax credit would not be retroactive. Only homes that were purchased
after the bill has been passed will be eligible for the new tax credit.
Once the bill is passed, the old 7,500 refundable credit would be sunseted
(no longer available) and any new purchases would then fall under the
15,000 non-refundable credit rule. Of course this is how the bill has
currently been written by the Senate (the support was so strong for this
change that there was not even a vote on it on the Senate floor).
Feb 7, 2009 1:05 AM
Guest :
the new $15k tax credit SSSUUUUUUUUUUUUUCKS! unlike the previous $7500 tax
credit, you do not get the difference in the form of a refund. those
of you getting the $7500 are better off.
had i purchased a home
last month; i could claim the $7500, minus the whopping $63 i owed in taxes
and recieve the $7437 in a refund. (taken directly from irs.gov) to be paid
back over 15 years. however, this new plan states that you will only
recieve a tax credit up to $15,000 equal to the amt. you paid into taxes
spread over two years. so, since i paid $2300 in taxes this year,
that's how much i'd be credited and then again next year. BIG DEAL! what
the hell is a $2300 refund on my taxes going to help with purchasing a
home. this helps the people who can already afford to buy a home anyway. none of you will get a giant check....do the research. if you're buying a
home....close now and take the $7500 plan.
Feb 7, 2009 9:31 AM
Guest :
So does this mean that first time buyers who qualify for the $7500 tax
credit will no longer be able to claim this if the new bill passes? I
bought in May 2008 but have not yet filed my 2008 taxes. I was going to
claim the $7500. Should I hurry and do this before the new bill passes?
Feb 7, 2009 9:58 AM
Guest :
I'm a Realtor of 15 years selling 100+ homes per year (except last year!!)
I can tell you first hand, that if this is a 'pay back' deal, it won't
fly. The only way it will help pull the US out of the nose dive is a true
'credit', like the solar credits of the 70s. Take $15,000 off the top of
tax payment, and get a check back, or carry the balance of the credit
forward to next year. Otherwise, forget it.
Feb 7, 2009 12:13 PM
Guest :
This new bill is designed (as it seems to me) to aid the people who don't
need it, like so many other government programs! How does this help the
middle class $50K or less? They still have to come up with the down
payment. I'm with the guy that says lets have the $15K as down payment
assistance.
Feb 7, 2009 4:01 PM
Guest :
yes but i can file taxes right now, WHEN will they decide on the 15,000
credit, because I dont want to wait 3 months to file taxes. Are they
voting soon? Thanks
Feb 8, 2009 9:16 AM
Guest :
I agree that this new $15k tax credit will only benefit those who can
already afford a house. I am a single woman making $35k a year and the way
the $15k tax credit is laid out, I would be much better (like many other
middle class families) to take the $7500 refund vs the $15k credit because
with the $15K tax credit you only get back the amount of your tax liability
for two years (for me that would be around $4100 this year and $4100 next
year). I was going to use the $7500 to help fix some things around the
house I found but if the $15k bill passes, then from my understanding I
won't even qualify because you also have to put 5% down on the house - I
was going FHA which only requires 3.5% and I do not have another $2k to
bump up my down payment to that 5%. Also, I do not think using this $15k as
down payment would help because my fear would be that a lot of people would
think of it as being able to afford a house that costs $15k MORE than they
anticipated to spend. I think it would encourage some people to live above
their means. Whatever is decided it is not going to be fair to everyone so
at this point I just hope that the economy makes some vast improvements. I
will be more than happy to wait and buy a house as long as the bill that is
put in place truly helps our economy and the people on the verge of losing
everything or those who have already done so. At this point I feel blessed
just to have my job and to be able to afford my rent each month.
Feb 8, 2009 9:46 AM
Guest :
FILE NOW IF YOU QUALIFY FOR THE OLD CREDIT
IF YOU QUALIFY
FOR THE OLD TAX CREDIT YOU MUST FILE NOW, BEFORE OBAMA SIGNS NEW LAW!!!
Isakson's press release reads: "The amendment would sunset the
current $7,500 housing tax credit on the date of enactment." What does
the term "sunset" mean there? In this context, the term
"sunset" means that the $7,500 new home buyer tax credit would be
supplanted by the proposed $15,000 credit, which applies to all home
purchases--not just new homes. "If you are operating under the $7,500
[credit], that's the one you [have]," says Joan Kirchner, Sen.
Isakson's Deputy Chief of Staff. "Then, from the date of enactment
forward, the new one takes over and nobody else gets the old $7,500
[credit]."
That last sentence makes it official as far as I
read it.
I can't believe the entitlement sentiment I'm reading on this rediculous
thread. I pay over 80k/year in federal income taxes, have never owned a
home (they we're and still are too damn expensive when compared to
available rents), and now I'm subjected to this mindless commie blather
about how we should take my tax dollars and write checks to the lazy
entitled Americans (who didn't bother to avail themselves of the unlimited
opportunity this county affords). They market this sentiment by claiming
the money just isn't being used to assist the unfortunate low income home
buyer who really 'deserves' it.
Let's ditch the tax incentives
for real estate all together - it's the most tax favored industry in the
country. Overemphasis on home ownership is what got us into this problem in
the first place; redirection of our resources to productive industry will
get us out of this recession.
Feb 8, 2009 12:32 PM
Guest :
The idea of this is to stimulate some reaction. IE.. for you to make a
capital purchase at this particulat point in time. If home prices werent
still vastly expensive as to their cost taken from our quality of life, it
might not have to be stimulated. Proping up home prices artificially might
help the finance industry maintain a better valuation of security assets.
Will it help the average person on the street? Will this stimulate us to
buy into a suckers market of current real estate prices that could adjust
20% lower? Maybe renting now could be a smarter choice, One size doesn't
fit all without some sacrifice. Renting might allow you to watch the market
longer. Better to make a very important buying decision and save more for
an emergency instead of taking on more debt during troubled times for an
asset of uncertain value. Sometimes a buying decision is to not
buy.Patience and study. Have a pleasant day. Cliff
Feb 8, 2009 2:58 PM
Guest :
The guy that said the $15,000 Tax Credit - Sucks. Speak for yourself, some
of us need all the help we can get
Feb 9, 2009 9:01 AM
Guest :
I bought my house in May 08, I am recieving the 7500.00 credit that i will
have to pay back. Will i recieve the 15K?? And how does it work??
Feb 9, 2009 3:24 PM
Guest :
2 comments above - Cliff. Cliff must work for an apartment complex b/c
that is an insane comment. Yeah, let's rent a 800sq.ft. apartment for
$1200 per month for the next two years. Let's do the math, 1200 x 24 =
$28000 or insane if you ask me. They (govt.) are trying to give you $15000
to purchase a home...the $15000 will be paid over the course of 2 years,
giving buyers motivaton/nest egg to stay in the home and allow the property
values to stabalize vs. spend $30k in rent and wait to purchase when prices
are $20k higher in 2 years. It's called supply and demand...decrease the
supply and the housing market will self adjust.
Feb 9, 2009 7:59 PM
Guest :
To those that received the $7,500 credit. You will no longer be required to
pay it back if the new Act goes into affect.
Feb 9, 2009 8:22 PM
Guest :
I had a house built and it will be finished soon. I am closing 03/06/09.
I wouldn't have had the house built if I wasn't getting the $7,500 interest
free loan. I have been operating around the provisions of this
"credit". It is what stimulated me to have the house built in
the first place. I think the original expiration date of June 30, 2009
should remain as to avoid any animosity.
Feb 9, 2009 8:42 PM
Guest :
I don't see anything wrong with the government putting forth a new version
of this stimulus. I just think the old provisions should stay in effect
until the expiration date of June 30, 2009. A lot of people have been
operating under the assumption that they would be getting that $7,500 to
put towards certain expenses. The new amendment should be enacted July 1,
2009.
Feb 9, 2009 9:53 PM
Guest :
Judging from these posts it is sadly no surprise we are in this sort of
financial predicament. Before you even consider purchasing a home you MUST
understand the simple concept of a tax deduction versus a tax credit (note
the current $7500 credit is not a true credit but a 15 year deferred
payment on your liabiliy or as some have put it an interest free loan).
All things must return to a natural balance. Artifical stimulus
will not stop but just delay the inevitable FULL correction of home prices
to their long term natural balance. The true value of a home is a function
of employment, salaries and cost to build/replace, among others. With
unemployment figures increasing substantially and salaries going down, we
are nowhere near a bottom yet. A 7500 or even 15000 credit doesn't mean
much if your real estate goes down another 50K or 100K after you purchase
it.
Feb 10, 2009 9:49 AM
Guest :
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'S 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 2 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 HEARD AND CONTACT YOUR SENATORS
AND HOUSE REPRESENTATIVE. THIS IS AMERICA SO YOUR VOICE IS YOUR POWER.
E-MAIL THEM OR CALL THEM. HERE IS A CONVENIENT NUMBER. CALL AND ENTER YOU
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)
Feb 10, 2009 10:38 PM
Guest :
LET'SEE. THE GOVERNMENT NOW OWNS A CHUNK OF THE BANKS, INSURANCE COMPANIES,
INVESTMENT FIRMS, AUTO MAKERS, AND IF YOU TAKE THE CREDIT, A CHUNK OF YOUR
HOUSE! THIS IS AN INTEREST FREE LOAN! NOT A TAX CREDIT! YOU HAVE TO PAY IT
BACK! MORE SMOKE AND MIRRORS. SO YOUR NOW A HAPPY HOMEOWNER, AND YOU TAKE
THE CREDIT (LOAN). GO OUT AND BUY YOURSELF A USED GM GAS GUZZLING SUV.THE
GOVERNMENT IS COUNTING ON IT. A FEW YEARS LATER YOU DECIDE TO USE THE
EQUITY IN YOUR HOUSE TO MOVE ON UP. OH YEAH, YOU HAVE TO PAY BACK UNCLE
SAM, AND YOU HAVE A BROKEN DOWN WORTHLESS SUV. WAKE UP AMERICA, IT,S
THINKING LIKE THIS THAT HAS GOT US INTO THIS MESS. HANG ON FOR THE RIDE ,
WE'RE GOING DOWN! HEY IS THAT THE HUDSON
Feb 11, 2009 6:16 AM
Guest :
The tax credit was doubled after 8 months only. Shows the sorry state of
the housing market. With median home price in the USA aroun $160K, the
government is essentially paying the downpayment. Yet people don’t have the
confidence to buy. On another note in a recent article (
http://www.savingtoinvest.com/2009/02/15000-first-home-buyer-tax-credit-in.
html ) on this topic, it was cleat the tax treatment is going to confuse a
lot of people.
Feb 11, 2009 8:32 AM
Guest :
I am sooo confused! Okay, maybe someone can clear this up for me....My
husband and I purchased a new home, all the while we were unaware of the
new 7500 tax credit for first time home buyers.....We are actually not
first time home buyers because my husband owned the mobile home that we
lived in. Now we are looking into the newest tax credit of 15,000 for any
homebuyer....Since we are not first time homebuyers, and we bought the new
house before the President signed the new Economic Stimulus Bill...Will we
be elidgeable for either Credit???
Feb 11, 2009 12:13 PM
Guest :
I am very confused. I filed my income tax and received the $7500 today
actually. If this bill passes does this mean that it automatically changes
to the $15,000? If so, what do i have to do? If it isn't paid to me in
one lump sum how is it paid and the most important thing, if this new bill
passes and i don't take the 15,000 does this mean i still have to pay back
the $7500? I would appreciate anyones help w/ this! Reading all these
comments feels like i am reading greek. lol thanks a bunch
Feb 11, 2009 7:30 PM
Guest :
Too many people got excited too soon about this $15000 tax credit,
including myself.It’s not going to happen. This is the money I would
have spent in home depot, furniture store, etc. That’s the money that would
have stimulated the economy, because I would have spent that money buying
furniture and everything else I need for the house. $40 tax credit a month
or $500 a year will not stimulate the economy, because for that money I can
by squad. I know one thing. I’ll never vote again in my life.
Because I’m not rich, I’ll never vote again. What’s the point, really?
Politicians work only for rich people (like them selves). Because all this
bailouts and stimulus BS it’s not helping a little guy at all. It just
gives more money to the rich, billions in bonuses etc. Wow, I’ll get
an extra $20 per pay period or month. That should really stimulate the
economy, what a joke. Wow, I’ll go on a spending/shopping spree with $20.
Can’t even order a pizza for that money. I’m in a process of buying a
home and was really looking forward to $15000. They should all go to hell.
They’ll never get my vote again.
Feb 12, 2009 7:40 AM
Guest :
I purchased my home June 08 and I will be receivign the 7500 tax credit.
Should I give the 7500 back, and do the new $15,000 tax break? Isthe
15,000 tax break for first time home buyers only? I would prefer to give
this back and get the $15,000 which does not have to be paid back.
Feb 27, 2009 2:40 PM
Guest :
I am tired of looking at these websites with incomplete information. Look
at the IRS website, and I am sure you will find information about why you
don't qualify for the credit. Every first home buyer should qualify for the
tax credit, but apparently, they have stipulations. For example, you cannot
claim credit if you purchased your home from a relative. That seems a
little misleading, maybe some people purchased their home from their
parents to avoid foreclosure on the house. It seems that these should be
the people most deserving of the tax credit.
Feb 28, 2009 8:59 AM
Lena Gott :
Hi Guest -
I have written two more articles that go into more
detail about the first-time homebuyer credit here:
If you still have questions after
reading these articles, your best bet is to read the instructions to Form
5405. The second article above explains how to find that form on the IRS
website.
~Lena
Feb 28, 2009 9:29 AM
Lena Gott :
Want to learn more about the $8,000 first-time home buyer tax credit,
$7,500 tax break, and the once-discussed $15,000 version? Here is a list of
5 articles on these subjects:
We finally found our dream home and the price is great. This would be my
second home purchase and will be our primary residence. I am however afraid
to buy right now because if I buy now, will they eventually pass a bill to
allow a tax credit to second home buyers? Will I qualify or be too little
too late? It makes me want to wait and see but I might miss out on the deal
of a lifetime.
Feb 5, 2009
