I’ve been seeing quite a few agents and lenders using the $7,500 1st Time Buyer “Credit” in their promotional materials aimed at first time buyers. Be careful out there as many people “explaining” this “credit” to first time buyers are not including the part where it has to be repaid. The first payment of $500 begins two years after you receive the “Credit” and continues for 15 years. If you sell the property at a profit before the $7,500 is paid back, the balance is due when you sell. On the bright side, it does appear that if you do not have enough “profit” to repay the interest free loan of $7,500…it is forgiven.
Excerpted from FAQ’s On the $7,500 1st Time Buyer “Credit”:
“ …Because the tax credit must be repaid, it operates like a zero-interest loan….The program is called a tax credit because it operates through the tax code and is administered by the IRS. Also like a tax credit, it provides a reduction in tax liability in the year it is claimed.”
“…the tax credit must be repaid. Home buyers will be required to repay the credit to the government, without interest, over 15 years or when they sell the house, if there is sufficient capital gain from the sale…if the tax credit is claimed on the 2008 tax return, a $500 payment is not due until the 2010 tax return is filed.”
“…this will maximize the stimulus for the housing market and the economy, will help stabilize home prices, and will increase home sales.”
It’s not that I’m against a stimulus package for increasing homes sales, but you have to wonder how many people see CREDIT and understand LOAN? They really should call it a $7,500 1st Time Buyer Interest Free LOAN. And for all you mortage and real estate professionals, maybe we understand why the government has to call it a TAX CREDIT, but to be sure your clients know the amount has to be repaid, you should call it an interest free loan when explaining it to your clients.
Is that credit really helping people around here? Are people really not buying $400k houses because they are $7500 short?
The few first-time knife catchers probably need it. Anyone who actually saved up money for a down payment is probably savvy enough to stay the hell away from buying RE right now.
It sure is a loan, and anyone positioning it otherwise, should be flogged!
Chris the implementer
I want a $7500 15 year loan with no interest… any givers?
Alan,
If they are $7,500 short then the after the fact when you file your tax return won’t help them. You can’t get the $7,500 at time of purchase.
It would “help” some people who are using their last dollar to put together 20% down and need money for immediate improvements are curtains. But as b points out, given it’s a loan and not a credit, why would someone save 20% down and then borrow from the government for new blinds?
Some will. But I bet many will not know that the “credit” has to be repaid when they elect to take the credit. But that’s why we blog…right? To help increase the odds that people have more info at their disposal to counteract short and vague descriptions of this $7,500 “thingie”. The Home Builder’s site called it “an opportunity of a lifetime!”
There are income restrictions and partial credit issues, so read the FAQs in the link carefully.
Actually, I’ve had clients who are very excited about the loan. There are expenses with home ownership and at the very least, the first time home buyer can put the $7500 (if they have that much coming back to them at tax time) in the bank for a “rainy day/emergency fund”. So what if they’re paying the government back $500 per year while they sit on $7500.
IMHO it makes a lot more sense than some of the other first time homeowner government plans that offer special financing or down payment assistance, etc. This is money that comes when they’re likely to need it, but that doesn’t help them get into something they can’t otherwise afford.
BTW, I don’t know if it’s been mentioned, but the definition of first time homeowner is pretty loose.
Kary,
It’s in the FAQ’s in the link. Pretty sure it’s anyone who hasn’t owned a property in the last 3 years.
Again, my concern is not at all about the program itself…it’s about the post cards and one line promotionals saying:
“$7,500 Tax Credit for 1st Time Buyers!” that have no fine print as to it being a loan.
Or how about a sign above an A-board that just says: “$7,500 tax credit!”
You cannot have owned a home in the past 36 months in order to be considered a “first time home buyer”. It does raise some interesting questions…I’ve done a post about this ‘benefit’ here at RCG and at Mortgage Porter. The MP post is getting more comments and questions from readers.
One question, that I can’t find an answer to (still waiting on a CPA to respond that I’ve contacted) is: what if the first time home buyer has a co-signer on title (like a parent) who owns a home? It’s quite possible that they may not qualify or may only qualify for half the credit…however I DON’T KNOW. We, real estate professionals, have to be very careful of giving advice or promoting information where we do not know all the facts.
Any CPAs out there have the answer to this question above?
I just specialize in mortgages…I leave the tax stuff to the CPAs…however I see nothing wrong with getting the FTHB tax credit info out to buyers. 🙂
Good point Ardell, I wrote a post regarding this awhile back but will write a followup reminding people that it is a loan, not a gift.
Rhonda,
It’s probably the same as who can take the interest deduction.
Riley,
Seems to me, as Kary pointed out with the A-Board reference, that misinformation is growing in the form of using “$7,500 Tax Credit” as a promotional tool. Hence the need to repeat the info every couple of months.
It serves two purposes:
1) Helps people who didn’t know about it at all
2) Helps people who didn’t know it had to be repaid.
Hey…where’s Craig offering to sue for all the people who already bought a house because someone hooked them with the $7,500 card, but didn’t explain that it was a loan 🙂
I’m HERE! Just tuning in… Ardell, you read my mind. This would appear to be an “unfair or deceptive” act and thus would give rise to a claim under the Consumer Protection Act. I think the hard part is identifying the injury to the buyer. I am not familiar with the program, but if it is interest free then the harm is minimized. I don’t think I would want to convince a jury that my client was injured because his “free money” was not free — just nearly so.
Craig,
I’m guessing no one will feel aggrieved until the first $500 payment is due 🙂
Actually the whole thing reminds me of an episode of West Wing where Charlie had to give back his credit in the following year. He said, but I already bought a new CD player with it, that I would not have bought if I knew I had to give the money back. He asked why they called it a credit if it was a loan. It is a wonderful explanation of this issue and the whole concept of “stumulus packages”.
Note: I am not a tax attorney or CPA.
Rhonda, regarding your comment about co-signers, to qualify for the First Time Homebuyer Credit/Loan the property has to be a principal residence. So a non-resident parent co-signer definitely couldn’t claim the credit.
However, I think your question was whether a child whose parent helped them buy a place still allowed the child to qualify as a first time homebuyer. I don’t know the answer to this, and the IRS hasn’t released detailed guidelines or even the forms for the program yet, but they should soon clarify the guidelines.
I do know that the first time homebuyer definition in the law points to language from existing federal first-time buyer programs (ex. mortgage revenue bond programs). In those programs, everyone on the loan had to be a first-time homebuyer, so a co-signing parent would disqualify the child. Please share what your CPA friend’s response is.
People also need to be aware that the loan is due in the next tax year if their home is no longer their residence. So people who plan to live in the home for a short period of time or convert it to a rental either need to be very financially disciplined or forgo the credit/loan.
laxtosnoco – yep, you got my question…I’ll bug the CPA again for an answer. 🙂
Rhonda,
Is any of the downpayment money coming from the parents? Are the parents going to make any of the payments? If the answer to either of those is yes, vs. no, I would think that could have some bearing.
Down payment or mortgage payments from the parents wouldn’t matter for the FTHM tax credit…it’s just boils down to who’s on title…but I’ll defer to a CPA or someone from the IRS.
I just came across this old RCG post of mine in July calling this credit a loan 😉
I remember it being buried in a post somewhere, but it wouldn’t search, so I decided it needed it’s own post from an agent perspective. Mainly because agents are using the “credit” as a means to push buyers into acting, moreso than lenders…I think.
I have clients who closed on April 1 and missed the credit by days! I think the dates they selected are a joke. Why not go retro to April 1 or Jan 1, 2008? Where on earth did the start date of April 9 come from?
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Hey Ardell, I am enjoying your blog on the tax credit! There should be an advisory addendum with signatures required with regards to the tax credit…loan. $7,500 interest free deduction of your tax return is a great incentive for first time borrowers to enter into this market. Not only do they get to buy a house without 10-15% fluff, but they get this credit/loan. We all agree that the program needs to be explained correctly. We can’t legislate how people use the credit…loan, and this becomes the problem. Many of us automatically assume that the buyer is going to use it for buying a big flat screen TV and a Lazy-Chair…but whose fault is that? This program is for helping legitimate buyers getting into their home…a long term investment! Their income typically goes up in 15 years, so paying back this money shouldn’t be a problem…but a privelage!
we bought our house in 2006,can we be qualified for 7500 tax credit?how to avail /file this?any help.
FELY,
They weren’t offering incentives to purchase back in 2006. The $7,500 tax credit on applies to purchases made after April 9th of 2008.
This credit ends the first half of 2009 btw. I did talk with our CPA earlier this month (regarding the co-signing scenario). He’s waiting for the IRS guidelines to come out…as soon as I have more info…I’ll let you know.
HELLO I WAS JUST WONDERING ON THIS LOAN.I HAVE A QUESTION TO ANY ONE WHO HAS AN ANSWER.HOW DO YOU QUALIFY FOR THIS LOAN.I KNOW YOU HAVE TO BE A FIRST TIME BUYER BUT IN ORDER TO GET THAT LOAN YOU NEED TO CLOSE A HOUSE ON THIS YEAR 2008 TO GET IT ON YOUR 2009 TAX RETURN.I JUST DONT GET IT.SO IF YOU BUY IT ON 2009 WE WILL GET THE LOAN ON 2010 OR WHAT? PLEASE CAN ANYONE HELP WITH THIS CONFUSIONS!!
I will qualify for this. We bought our home in May 2008, and put down a sizeable down payment. Now we find out we qualify for a $7500 interest free loan… I don’t consider it as a deciding factor in buying a home, because we didn’t need the $7500 back when we bought it.
We will apply for it, because the house we purchased is 35 years old. We will use the money to replace some things around the house– a new garage door opener, some new windows… Not everyone will go out and buy a new big-screen… but if they want to do, why does it matter? It’s better than putting it on a credit card at 28% interest!
I agree Jenni. In fact all agents need to send a notice to the buyers who purchased during that time, to remind them of the loan/credit, before they file their 2008 tax returns. My objection is to the big signs that promote the credit as a buyer incentive, without noting that it is actually a loan.
Jenni, I think that’s a great use of your interest free loan from Uncle Sam. If you sell your home before it’s re-paid over 15 years, you’ll just have to pay the remaining balance owed of “tax credit” when you file the following year (same thing applies if you convert the property to a rental).
I have a question, If we purchase a home and close on February 6, 2009 when will we recieve the $7,500? Right away, not until we file our 2009 taxes?
See comment #44 and items 19 and 20 in the FAQ link in this post.
I bought my house 2/08 do I qualify for the 7500 Tax Credit ?? or am I a couple of months late
Hi Trish,
Looks like you were a couple of months too early.
“To qualify for the tax credit, a home purchase must occur on or after April 9, 2008 and before July 1, 2009. For the purposes of the tax credit, the purchase date is the date when closing occurs.”
There is a link in the sentince under the first paragraph in the post at FAQs with this info.
I am one of the the buyer examples you were talking about earlier that had my dad (who is a homeowner) co-sign on my loan and was wondering if you have any more info on whether I am eligible for the $7500 loan or not. I have my accountant who says since I am the first name on the loan and the deed and it will be my primary residence and I will be making all the payments so I should be eligible. But from what I read that you posted it sound totally different. I don’t know what to think.
Brooke,
You can’t know what to think, because it’s not carved in stone…not many things are in life.
I agree with your accountant, and some other people don’t. Usually you take the deduction and if you get audited, well, then maybe the IRS rules differently. What are the odds that you will get audited and then what are the odds that the IRS will disagree with your accountant.
Do what your accountant says…end of story. Telling your accountant what to do, makes you more liable, than listening to your accountant’s advice.
Common sense says your accountant and I are correct…that’s the best anyone can do for you. Don’t second guess the professional you hire to prepare your return on this one.
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If I am in the process of buying a home, and the closing is set for April 2, 2008 or before(short sale home). Can I file my taxes in February, knowing that I will close on this house before the deadline, and claim the rebate/loan?
I think the credit would be on your 2009 taxes, not the 2008, so no.
But that’s really a question where you need professional tax advice when preparing your return, not advice from a blog.
See items 19 and 20 in the FAQ link in this post and comment #44
Actually, the details for this Rebate(loan) state that you can take the credit in either 2008 or 2009(your choice), even if the purchase is made after December 31, 2008 as long as the purchase is completed by July 1, 2009.
My question is, if I close on April 2nd, can I claim it on my taxes and efile in February, knowing I’m closing on April 2nd? Or should I hold off filing until after the close? No matter what, I will be closing on a house in the next 2-3 months…
Hi Robin,
Thanks…I’m going to quote that here and also modify comments to make sure the info is not misleading. Much appreciated!
“For a home purchase in 2009, can I choose whether to treat the purchase as occurring in 2008 or 2009, depending on in which year my credit amount is the largest?
Yes.”
I am also going to post an update at the top of this post, referencing the new post and the possibility that this credit may end up being a real credit after all, and not a loan, depending on how the current proposal turns out. Of course, when that is decided, a new post will be written and referenced as updates in the previous posts, as well.
I’ve been doing a lot of research on this, and the only question that I have not found an answer to is, “should I wait to file my income taxes until after my close”? Or can I file in February, knowing that I will be closing on this house on or before April 2, 2009…
Robin,
Some things require you to make a choice and your own personal judgment call. No matter how black and white we hope things will be…there’s often a bit of grey.
Seems to me you shouldn’t put something on the return that hasn’t happened yet. But if you do, given the oddity in this credit that allows you to take it in a year in which it did not happen (very surprising to me) as long as it does close, I doubt there will be any damage done.
So maybe it depends on where you live. A wise attorney once told me, if you live on the East Coast an attorney will tell you to follow not only the letter of the law, but the spirit and intent as well. If you life on the West Coast, a lawyer will tell you what happens to you if you break the law, so you can make an informed decision knowing the possible consequence, when you choose to break it 🙂
Maybe the answer isn’t about right or wrong, so much as what will happen if you do it wrong?
I didn’t look at the form, but if it asks you to put the day of closing and you say 3/15/09 and sign it.on 2/15/09…well then you would not be misrepresenting anything. The logical answer is “you don’t count your chickens before they hatch”.
According to the IRS website, if after filing your 2008 taxes, you make a purchase of a primary residence, you can file an amended return to your 2008 taxes, and get the 7500 credit
Thanks Justin,
That makes sense, except if they later determine that the ones taken in 2008 are repayable and the ones taken in 2009 are not, even if they base it on sale date, it could get pretty tricky.
I think the amended return issue is always the case if you want to change something, but I could be wrong.
I closed on my 1st home 4/8/08. Do I qualify?
Doesn’t look like it. Says “on or after April 9”. Not sure why they chose that date, but check with an accountant or tax preparer to see if there is any wiggle room there. If there is, be sure to come back and let us know.
I’m hoping that when the new stimulus bill is passed, that they fix the date of April 9…someone had to pull that date out of hat.
I live in Houston Texas, which was a declared a presidential disaster area in 2008 from Hurricane IKE. Correct me if I am wrong but according to this article, it appears the the Housing Act of 2008 that George Bush signed off there is an exception if you purchased a home in the year of a federally declared “disaster area”
“In general, the Act temporarily waives the First-Time Homebuyer Requirement for residences located in Presidentially declared disaster areas. In addition, residences located in such areas are temporarily treated as targeted area residences for purposes of the income and purchase price limitations. The provision applies to obligations issued after May 1, 2008 and before January 1, 2010 and is effective on the Enactment Date.”
URL – http://www.chapman.com/media/news/media.618.pdf
Also, see the site below
“Comment. Generally, a first-time homebuyer for a state or local HFA program is an individual who has not had an ownership interest in a principal residence for the past three years. However, individuals who purchase homes in “targeted areas
When completing the Qualification test for the First Time Homebuyers Tax Credit on Turbo Tax (web version), I answered all questions truthfully and was asked “Had my spouse or myself had a prior ownership in a main home in the last 3 years
Jas_n.
Sorry I can’t be of any help with this. You need to talk to an accountant or the IRS. Way too many ifs, ands or buts in there for me to wade through.
We closed on our house on April 2, 2008. However, b/c of how the house was, we were unable to live it in right away and had to do some construction work before moving into it. We didn’t occupy the house until April 16, 2008. Would we qualify for the $7500 tax credit?
That’s a shame. I think the rule is pretty tight at CLOSING on or after April 9, 2008. When someone moved in is of no consequence, as far as I can see. Check with an accoutant, but you’re splitting hairs there. On the bright side, the credit you missed vs. the new one coming, was an interest free loan, and not a true credit.
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I was married in 2002 and refinanced my (now x-husbands) home in 2003. We separated in Sept of 2005 and he refinanced in Nov 05 back in his name. I purchased my own home, with my name on the title and bank loan in June 2008. My question is: Would I be considered a “First time” home buyer?? Because I refinanced my x-husbands home- does that disqualify me?
Like Kary L. Krismer said in line #7 “BTW, I don’t know if it’s been mentioned, but the definition of first time homeowner is pretty loose
Theresa,
You will need to bring all of the paperwork to an accountant. There are too many variables. Most times you can’t refinance a home unless you are on title, so it is possible that you were added to title at the time of the refinance. Also you say you separated in September of 2005, but did you file a joint return at the end of 2005 claiming that home as your principal residence and deducting the interest on that home for the entire year on your tax return? If you were claiming ownership for tax purposes and deducting the mortgage interest, it’s hard to go back and say you didn’t own it, if you claimed you did own it for interest deduction purposes on your tax return in 2005.
You need to take that info, including your 2005 tax returns, to an accountant to get an answer that would be reliable. A blog is good for general one size fits all answers, not for specific situations that require tax professionals and a review of all documents.
Ardell,
Thank you for your reply. I looked at my 05 tax return and I filed “Married- filling seperate” and when going through the return, I remember I did allow him to have the interest and apply it to his return. When talking to my banker today, she did reconfirm that I owned the mortgage but never the house. Meaning, the title was never in my name! However, I still have the same tax guy from 05 and called him today… I’m confident he will do the right thing~! Thanks again for your help.
Theresa,
Good news! Since you filed separately in 2005 and did not deduct any of the mortgage interest on your 2005 return, I think you clearly established that you didn’t “own” a house in 2005. I would say that qualifies you, but do let us know what your tax guy comes up with.
This tax credit is so unfair, we purchased our home 3/23/08, we had to put down 20% to get our loan and now because we closed less than 2 weeks before 4/9/08 we don’t get it.
It would especially help because I got laid off when the company I was working for shut down.
Jenn:
Incentives all have rules. I don’t know that it is unfair, but it is surprising that you did not receive better advice from the professionals that you worked with.
I hope you find work again, soon.
HELP! I am buying a house and getting some money from my Step-dad for a 20% downpayment to avoid the PMI. Now if he gives me the money and is not on the loan will the money will be taxed “gift tax”??? If it is, then lets say I put him on the loan and he co-signs to avoid the gift tax, will I still have the chance to get the first time home buyer 7500 loan? (Step dad has owned houses previously)
Rhonda, I answered my own question. The answer is YES. Tax payer A who is a first time home buyer may get the credit even if tax payer B is a cosigner and is not a first time home buyer!!!!! YIPPIEEE
http://www.irs.gov/newsroom/article/0,,id=206294,00.html
Mike –
Why do you think you deserve a taxpayer subsidy for your housing if you are able to get large sums of money as gifts from family? You realize you are picking the pocket of everyone you know by gaming the system like this, right?
b,
Why do you think Mike is “gaming the system”. I was tempted to delete your comment for attacking another commenter. But maybe we should talk about this a bit and see if you are just misunderstanding something.
Where someone gets their downpayment, has nothing to do with whether or not they are eligible for the 1st Time Homebuyer Credit.
Your accusing someone of “picking your pocket” and “gaming the system” is not only rude, but appears to be wrong. Can you quote something from the IRS rules that suggests that getting a downpayment from your parents disqualifies you from the credit? I don’t think so.
The credit is to encourage people to buy homes, whether or not he can buy with gift funds is only an issue for the lender, not the credit.
The only “family” issue as to the credit is you can’t buy a family member’s house. There is nothing about parents helping their children purchase. If you find something that says otherwise, let me know.
Mike,
Back to your original comment. If you are buying in 2009 it is an $8,000 credit that you don’t have to pay back. The $7,500 interest free loan credit is for 2008 from 4/9/2008 through year end of 2008.
You are eligible for the new improved version of $8,000 that is not a loan, if you are buying in 2009, which yo useem to be.
Sure, I think this is defacto proxy-buying of properties by these parents or other family members, using their children to get a tax credit they should not get. I find it interesting that many questions on this board have come up about the tax credit and most of them revolve around how to structure their transaction so they can apply for the credit but have someone else actually be the buyer of the property. Parents or not, people with no skin in the game are a big reason we are in the current mess we are in. The tax credit as downpayment plan from the WA government is bad enough in this regard, I don’t think we need even more homeowners who were gifted into 0% down and then get 8k in taxpayer money on top. This isn’t a loan, its a subsidy. As such, it should only go to people who actually need subsidized help and it was created, in spirit at least, to do that. Working around that to get a subsidy from the taxpayer when you do not have the monetary need is dishonest at best.
b,
If you have a political hangup with the way the credit was structured, or that there is a credit at all, that’s no excuse for beating up on happy Mike because you don’t think he “should be” eligible.
The credit has absolutely nothing to do with “monetary need” and you of all people should know that, as you seem to be against it being used to help someone buy who could not buy without it. I agree with you on that.
The way I see it:
1) Your skull and crossbones avatar suggests you enter “the room” with a chip on your shoulder
2) You want prices to plummet so that you can afford to buy something you like someday, and government incentives aimed at propping up home prices make you angry that the government is interfering with a deeper market downturn that would help you.
3) You want to know why helping people who are buying and able (by any means) to buy, is more important than helping people who are not able to buy.
4) As to “skin in the game” step-dad with 20% skin in the game is going to continue to be supportive if Mike has a problem making a payment somewhere along the line. There is “skin in the game” from the lender’s perspective. 20% skin…lots of skin.
5) The $8,000 is not a subsidy for the poor, there are other programs for that, like the $10,000 downpayment assistance House Key Program. The $8,000 is not a need based credit, it is an incentive for fence sitters to buy to prop up the economy, not to aid the poor.
I think you should apologize to Mike for raining on his parade, and making him feel guilty for availing himself of an available tax credit, unless you see some legitimate reason in the tax code suggesting he shouldn’t. If you don’t like the tax code as written, go write that on some political blog.
I am empathetic with your situation and understand that “the greater good” is difficult. Is the greater good to prop up home prices and keep them from falling further? Is the greater good a steeper drop in home prices downward, to assist the next generation of home buyers, those who don’t have family assistance to purchase?
My guess is you are not in favor of the credit…period. Not because of the credit, because Bush had a credit too, and no one seemed to notice it much. I think people who are angry at the credit are angry because it is working. I think you would be happier if more homebuyers would continue to wait it out.
Let’s talk about you…not Mike. What is making you so angry generally speaking? Angry enough to present yourself as a dead man whose bones have been picked clean in your avatar. What vultures turned your human side into a skull and crossbones? What is preventing you from being a happier person?
We are listening.
Ardell –
You answered my own query in your rant about the credit. Listen, I understand you get 6% of it, so you have to defend it. But look at your point #4. What are you saying there? You are saying he is not the buyer of the property, someone else is. You are pointing out exact what my problem is, this is proxy-buying of properties to take a credit that was designed to help real first time home buyers, not second home buyers who let their kids live in it. If it isn’t need based, why is it designed only for first time home buyers within certain income limits? It is to spur new home buyers from the fence with a subsidy for their housing. If it was just to sell homes, then it would be for anyone buying a house and there would be no income limit. Why is it you have to structure the transaction in various ways to qualify for the credit? If it was just for anyone buying a home, why would they need to change how they buy it to qualify?
As to my avatar, please don’t read too much into it. It has nothing to do with this forum or a “chip on my shoulder”. Would you prefer I talk about this with a smiley face avatar? Would that make you listen to what I am actually saying? My asking people to think about why they are taking the credit is to spur their thinking. This is not just money falling from trees, it is coming from every taxpayer in the country. When people take of advantage of the system they are taking from their neighbor for their own personal greed. Would you be fine with these type of transactions if it was an anonymous investor loaning all of the money to buy the home, instead of a relative? Somehow I doubt it.
b,
Why do people think an agent gets “6% of it”? That is SO not true. You would be wise to check your facts before getting so bent out of shape about things that aren’t true. You’ll be a happier person if you do.
“It is to spur new home buyers from the fence with a subsidy for their housing.”
Mike is a first time home buyer. If the parents were going to live there, you would be correct. But if Mike is going to live there and make the monthly payments, and it will be his home as far as his parent’s are concerned, then all is well with the world. It’s obvious he is buying the house…no one would be as happy as he is if he weren’t the one buying it. No one is that happy to help their parents do anything 🙂
As to the rest of your comment, the gaming is about the gift tax due on the gift for downpayment, not the $8,000 credit issue. Last I looked parents can gift $10,000 each to Mike without gift tax. If the 20% down is more than that, then maybe they are skirting the gift tax laws, but not the $8,000 first time buyer provision. If you were harping about that…I’d be more with you.
“Would you prefer I talk about this with a smiley face avatar?”
Absolutely, yes, anything but what you are using. A dog, a cat, a big hairy monster…your avatar creeps me out and adds a negative tone before we even see what you are saying. Please, please change your avatar. I would very much appreciate it.
“an anonymous invester loaning the money…”
No problem. Who cares who is financing the purchase? Private 3rd party loans are fine. You are too hung up on how Mike is able to buy it. The fact that he is a 1st time buyer, buying a home, is the purpose of the credit.
If he meets all of the criteria set out by the IRS, and he is honest about it all, then you have to right to make him feel guilty. He’s not hiding where the downpayment is coming from, and the IRS doesn’t ask where the downpayment is coming from, to the best of my knowledge.
As long as he is honest, and qualifies, you shouldn’t be angry.
Again, the issue here that they are “skirting” is the gift tax on the gift of downpayment funds, not the homebuyer credit issue.
Well my comments are being posted that’s all that matters.
It is interesting that you thought about deleting the b comment. It shows a bias of this site.
David,
No blog that I know of permits one comenter to attack another personally. I thought it was more important in this case to figure out why b thought Mike was “gaming the system”. If you are eligible and honest, you are not “gaming the system.
You should borrow b’s avatar David. It suits you 🙂
My post are now on a moderated basis, so this will be my last. Its been fun!
How would his avatar suit me?
The guy made a legitimate point.
David,
I’d love to have a link to an IRS advisory that says getting your downpayment as a gift from a family member influences your eligibility for the credit. If you have one…please post it. If not, then it is not a “legitimate point” in response to Mike’s comment.
Perhaps there is a provision addressing this issue that I am not aware of, so please do post it if you think there is such a requirement.
Simply being angry at someone who is eligible for the credit is not “a legitimate point”. Being angry at the credit, but not the person. That is a main rule on every blog…attack the issue NOT the person.
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!!!