Pretty simple stuff. For most people it’s just A,B,C + 1,2,3
A. Address of New Home
B. Date you bought it
C. IF claiming 2009 purchase on this 2008 form, check here
+
1. Enter $7,500 or $8,000 unless married filing separately
2. Enter modified adjusted gross income
3. If 2 is not more than $75,000 ($150,000 if filing jointly), skip to line 6 and put amount on line 1 on line 6. Ta-dah!
You can get Form 5405 and Instructions here:
and it looks like this:
In hopes that you might have heard something: It seems like they aren’t going to fix the 2008 “credit” to make it not a loan, is that right? So since I bought in October, I’m out of luck? Or should I keep waiting to file for as long as possible, in hopes of them changing it?
Thanks,
OL,
If you read the instructions on the form in the link “For homes purchased in 2008 (“after 4/8/2008 and before 1/1/2009) the credit operates much like an interest free loan. You generally must repay it over a 15 year period. For homes purchased in 2009 (before 12/1/2009) you must repay the credit only if the home ceases to be your main home within the 36-month period beginning on the purchase date.
I don’t expect a change in that. Last year is a loan. This year becomes a loan if you don’t maintain it as your main home for at least 36 months from date of purchase. Last year is $7,500; this year is $8,000.
WOW. A Tax form that actually looks simple. Hopefully they’ll keep updating the eligibility to fill out the grey areas, like if someone co-signed for a family for example but didn’t actually live in the home themselves.
Most of the “grey” areas are covered in the instructions under the form, in the link I provided in the post, LVG.
“Cannot Claim the Credit…(IF) you acquired your home from a related person. A related person includes a) spouse, ancestors (parents, grandparents, etc.), or lineal descendants (children, grandchildren, etc.) b) A corporation or c) A partnership in which you directly or indirectly own more than 50% in value of the outstanding stock in the corporaton or 50% of the capital interest or profits.”
“If you die, any remaining annual installments (2008 purchase or 2009 and you didn’t live there 36 months) 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 constructed your main home, you are treated as
having purchased it on the date you first occupied it.”
“Main home. Your main home is the one you live in most
of the time. It can be a house, houseboat, housetrailer,
cooperative apartment, condominium, or other type of
residence.”
Check with an accountant, but a co-signer is not a buyer, so I dont see a grey area there. I think an attorney or the accountant can have a side agreement showing that the co-signer is not the buyer, even if the co-signer’s name must appear on the title for collateral security purposes. Whomoever bought it and lived in it is the one who takes the credit. A buyer who doesn’t live in it is not eligible for a credit, as the credit is only for people who use the property as their “MAIN HOME”.
The buyer should keep all receipts of payments made, to prove they made all payments should the credit ever be questioned in an audit. Check with your accountant and lawyer…but it doesn’t look all that grey to me.
Let me ask you this, LVG. If the same person bought a house with a co-signer in non-credit years, who would deduct the mortgage interest and RE Taxes? Same issue…no?
We can make up 1,000 what ifs…what if I stay in the house every Friday and Tuesday and sleep at my boyfriends house the other nights 🙂 There are many shades of grey, and they will never all be covered with definitive answers. That’s why God made Lawyers and Accountants 🙂
Most of the “grey” areas are covered in the instructions under the form, in the link I provided in the post, LVG.
“Cannot Claim the Credit…(IF) you acquired your home from a related person. A related person includes a) spouse, ancestors (parents, grandparents, etc.), or lineal descendants (children, grandchildren, etc.) b) A corporation or c) A partnership in which you directly or indirectly own more than 50% in value of the outstanding stock in the corporaton or 50% of the capital interest or profits.”
“If you die, any remaining annual installments (2008 purchase or 2009 and you didn’t live there 36 months) 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 constructed your main home, you are treated as
having purchased it on the date you first occupied it.”
“Main home. Your main home is the one you live in most
of the time. It can be a house, houseboat, housetrailer,
cooperative apartment, condominium, or other type of
residence.”
Check with an accountant, but a co-signer is not a buyer, so I dont see a grey area there. I think an attorney or the accountant can have a side agreement showing that the co-signer is not the buyer, even if the co-signer’s name must appear on the title for collateral security purposes. Whomoever bought it and lived in it is the one who takes the credit. A buyer who doesn’t live in it is not eligible for a credit, as the credit is only for people who use the property as their “MAIN HOME”.
The buyer should keep all receipts of payments made, to prove they made all payments should the credit ever be questioned in an audit. Check with your accountant and lawyer…but it doesn’t look all that grey to me.
Let me ask you this, LVG. If the same person bought a house with a co-signer in non-credit years, who would deduct the mortgage interest and RE Taxes? Same issue…no?
We can make up 1,000 what ifs…what if I stay in the house every Friday and Tuesday and sleep at my boyfriends house the other nights 🙂 There are many shades of grey, and they will never all be covered with definitive answers. That’s why God made Lawyers and Accountants 🙂
Elegantly presented! Fabulous! One of the all-time great postings!
Thanks Mack,
I was just thinking of you! I was thinking I might give you a call in the next couple of days to talk about the 15 year Sewer Treatment Capacity Charges and how you see them being handled. Paid by Seller at closing? OR Semi-Annual payment being transferred from seller to buyer? Is there a concensus opinion on this?
Off topic, I know, but give me a buzz at 206-910-1000 when you have a sec. I’d like to know how the folks over at Lake & Co view this generally when they write or receive offers, and how they treat it with regard to line 16, Page 1 of Form 21 for townhomes in Seattle.
Quite amazing that you commented just as I was thinking of you. You don’t comment that often, and I don’t think of you that often 🙂
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Ardell,
Your site was referred to me from a fellow blogger. The first post I saw was this one – it hit home immediately. As a loan officer I try to bring up to date info to the world as quickly as I can, so when I saw this I had to write about it. So thank you for the inspiration.
Jonas
Ardell, thanks for sharing this information that we can share with our clients in regards to the new tax credit.
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You generally must repay it over a 15 year period. For homes purchased in 2009 (before 12/1/2009) you must repay the credit only if the home ceases to be your main home within the 36-month period beginning on the purchase date. Check with an accountant, but a co-signer is not a buyer, so I dont see a grey area there. I think an attorney or the accountant can have a side agreement showing that the co-signer is not the buyer, even if the co-signer’s name must appear on the title for collateral security purposes. Whomoever bought it and lived in it is the one who takes the credit. A buyer who doesn’t live in it is not eligible for a credit, as the credit is only for people who use the property as their “MAIN HOME