If you have not owned a home in 3 years, then you might qualify for the first time home buyer tax credit. While the $8000 tax credit is great, many buyers do not want to wait until next April 15th to recoup the $8000. Our trusted CPA partners may have some solutions for obtaining the $8,000 quicker: after closing, you can amend your 2008 tax return and receive the money in a few weeks. In fact, here are 4 options provided by Amol Nirgudkar, CPA & Managing Partner at Reliance Consulting:
- File an extension for 2008.
Taxpayers who haven’t yet filed their 2008 returns but are buying a home soon can request a six-month extension to October 15. This step would be faster than waiting until next year to claim it on the 2009 tax return. Even with an extension, taxpayers could still file electronically, receiving their refund in as few as 10 days with direct deposit. - File now, amend later.
Taxpayers due a sizable refund for their 2008 tax return but who also are considering buying a house in the next few months can file their return now and claim the credit later. Taxpayers would file their 2008 tax forms as usual, then follow up with an amended return later this year to claim the homebuyer credit. - Amend the 2008 tax return.
Taxpayers buying a home in the near future who have already filed their 2008 tax return can consider filing an amended tax return. The amended tax return will allow them to claim the homebuyer credit on the 2008 return without waiting until next year to claim it on the 2009 return. - Claim the credit in 2009 rather than 2008.
For some taxpayers, it may make more financial sense to wait and claim the homebuyer credit next year when they file the 2009 tax return rather than claiming it now on the 2008 tax return. This could benefit taxpayers who might qualify for a higher credit on the 2009 tax return. This could include people who have less income in 2009 than 2008 because of factors such as a job loss or drop in investment income.
The IRS website stipulates the tax credit:
- Applies to purchases that close after April 8, 2008, and before Dec. 1, 2009.
- Applies to homes used as a taxpayer’s principal residence.
- Reduces a taxpayer’s tax bill or increases his or her refund, dollar for dollar.
- Is fully refundable, meaning the credit will be paid out to eligible taxpayers, even if they owe no tax or the credit is more than the tax owed.
The credit is claimed using IRS Form 5405. Here is a link to the Q&A from the IRS wepage on the subject:
http://www.irs.gov/newsroom/article/0,,id=206293,00.html
As always, please verify this information with your trusted tax advisor before taking action. Call Team Bohannon in Tampa Florida to take advantage of low prices, low interest rates and the tax credit today.
