These Tax Credits are Better than I Originally Thought!

No, I never get tired of promoting these tax credits -- both the old one that offers up to $8,000 for qualifying first-time buyers and the new one for existing homeowners (up to $6,500) who meet the right criteria. (See some of my earlier posts for additional details.)

One question that I'm often asked by my clients is whether they can use the credit for down payment assistance or for closing costs. I haven't seen any evidence that either of those scenarios will work, but I am not a tax expert; so I refer folks to the experts at the IRS or to their tax preparers. (If I learn more about that, I'll be sure to post it here.)

But what I just learned today was that even if you close on a new home by June 30, 2010, AND you qualify for one of the credits, you can get that credit this year -- without having to wait until you next year when you file your 2010 taxes.

In an article published in an online real estate trade magazine, the authors (Maria Patterson and Stephanie Andre) explain it like this: "-Tax Facts: Provided the home-owner stays in the home for three or more years, the tax credit is a true credit and does not need to be repaid. The tax credit is fully refundable, meaning the credit will be paid out to eligible taxpayers, even if you owe no tax or the credit is more than the tax owed. The credit is claimed using Form 5405, which you file with your original or amended tax return. Buyers can claim the credit on their 2009 taxes, even if the home is purchased in 2010, by filing an amended tax return."

That's good news for many folks, who may need that money for repairs or improvements to their newly purchased home and don't want to wait a year to complete them.

If you'd like, you can read the entire article here: http://rismedia.com/2010-01-04/18-5-billion-reasons-to-make-the-home-buyer-tax-credit-work-2/