Most people are aware of the first time home buyer’s tax credit, but aren’t really sure how to get it
Pittsfield, MA -- (SBWIRE) -- 07/05/2013 -- That’s why Real-estate-yogi.com is here, offering some insight on this subject, such as:
- Original Credit
- Repaying the 2008 Claim
- Lump Sum Payback
- Exceptions to Lump Sum Payback
First Draft of the Credit
When the initial first time home buyer’s credit was drawn up, it allowed buyers up to $7,500 in tax credit. Soon afterward, it was expanded to a new credit maximum of $8,000 for a first time buyer or $6,500 for people looking to move into a different house. However, as with any IRS item, one must follow the regulations in order to benefit from the credit. Read on to learn more.
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2008 Claim Payback
In truth, the original first time home buyer’s credit wasn’t a credit at all. It was actually a loan of sorts from the government. As everyone knows, loans have repayment terms, each year even interest free ones from Uncle Sam. In the case of the 2008 tax year claim, the credit must be repaid in 15 payments of $500 for each tax-filing period beginning in 2010. A homeowner had to fill in a Form 5405 and add the appropriate amount to his Form 1040 for the first year of repayment. He will go on repaying the credit every filing year until it’s paid off, but he probably won’t have to fill out Form 5405 each year.
Repaying in Lump Sum
Here is one of the first home buyer credit rules. Even if a buyer does not remain in his first home for 15 years or more, he still has to repay the $7,500 credit. If he leaves the home, by selling it or renting it, he has to pay the balance of the $7,500 in full when he files his tax return for the year in which his living arrangements changed. The payment is expected to be in lump-sum form; however, there may be ways around that.
The term “disposition situations” is a technical way of saying that exceptions to the lump-sum repayment exist. Under certain circumstances, the full amount can be dispersed or vacated altogether. Here is an example of such an action. When a first time home buyer credit was claimed and the parties divorce, with one person signing the house over to the other, the person who retains ownership is responsible for the repayment.
http://www.real-estate-yogi.com is a reputable, no-cost website whose goal is to provide excellent guidance to homeowners by finding answers to their questions. For a free initial conference, dial 1-800-987-1397.