You’re not alone…
With the flurry of information flying out of both Washington and Sacramento lately, it’s very easy to get your wires crossed on what our government is offering to entice you to purchase a home. Hint: the plans offered by California and Washington are very different.
Most of the questions that I’m seeing pertain to the Federal $8,000 tax credit, since it applies to the greatest number of buyers in this area. Here are some typical questions…
- Who qualifies for the credit? Who doesn’t?
- Is there a difference if I purchased my home in 2008 versus 2009?
- Is this a loan or a credit? Do I have to pay it back?
- When does the credit expire?
First Step: Download This Form
The Internal Revenue Service has created a simple, straightforward form that allows you to claim your Federal Tax Credit as part of your 1040 return. This form does a pretty decent job outlining the terms of the program, and answers the majority of the most common questions (including those questions above.) So before you do anything else, download this form here:
Click to download–> IRS Form 5405
Second Step: Consult Your Tax Expert
Kudos to the IRS for attempting to make this credit as simple as possible. I think they solve 80-90% of all questions with this form. But there will always be situations that fall outside these parameters (we call these “corner cases” in the semiconductor industry) that may complicate matters exponentially. One question that came up recently pertained to a parent who was considering co-signing on a loan to help their son purchase his first home — would this negate the tax credit? Unfortunately, these types of scenarios are NOT covered in the form, and are very specific to the particular home buyer.
So if Form 5405 does not answer your question, you’re next stop is your CPA or Tax Attorney. Note that your Realtor is NOT qualified to give this type of tax advice; they can only point you in the direction to get your questions answered, as I have hopefully done so above.
“For First-Time Home Buyers” is a new category on the site that’s a resource for first-time home buyers in San Carlos, and for those who have general real estate questions.
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