2008 New home tax credit

I'm buying a house with my significant other and we are looking into claiming the $7500 tax credit for 2008. We have to file separately as single individuals, so how would this work? Can only one of us file for the credit, or can both of us? Would we split the claim $3750 each as a married couple would filing separately?

Thank you in advance for your help

Rigallow

It wold be easier if you could file Jointly.

Each of you may qualify for the lesser of 10% of the purchase cost or $3,750 in the tax (sorta) credit.

You can not have owned a home in the 3 prior years, and you must use the home as your principal residence. You can not buy the home from a related person. You must make your purchase before July 1, 2009.

This credit must be repaid with equal annual payments over 15 years. If you claim the credit on your 2008 tax return, you would make your first payment on your 2010 tax retrun.

The credit has a $20,000 phase out range begining when your single filer AGI (plus items excluded for working outside of the US) reaches $75,000. At $85,000 your credit would be $1,875. The income limit only applies to the year you claim the tax credit.

If you stop using this home as your principal residence, you must repay the credit/loan balance in full with that year's tax return.

You have pay an $7500 in tax that is a big money 2008 New home tax credit?,




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clydewolf is right about having to repay the credit back. This is a nice tax credit but it really is more like an interest free loan. Of course, it still makes sense to take it!

actually, you might not have to pay it back at all. There's a provision in Obama's stimulus plan, if it passes you won't have to pay back that $7,500 credit at all.

Hi, not trying to hijack the thread, just expanding the scenario - maybe somebody will be interested in answer to this too.

This past year i've purchased a house from my mother, and 20% of the price (price was a fair market value) was a gift equity. My question is - can i take the first-time homebuyer credit based on the remaining 80% that i had to finance?

Thank you,

TS

Smersh2000,

There are 2 rules you fail for this credit in your explanation above:
- You acquire your home by gift or inheirtance.
- You acquired your home from a related person.

You can learn more in IRS Pub 530, Tax Information for Homeowners, starting on page 8:
http://www.irs.gov/pub/irs-pdf/p530.pdf

clydewolf,

Thank you. those were the two points that I was worried about. Not to get philosophical here , but does anybody know why there is such a limitation on the credit. I can see the cap on the AGI - those of us who make more than N amount, dont need the credit. I understand DC first-time home-buyer limitation. I can also understand if i got the house as a gift in entirety. Or, if i acquired it from my mother by some other means than purchasing. Here, though, i have paid, and other than 20% gift the transaction would be just like any other. Is IRS just "playing safe", as to not allow any kind of loopholes? (Not that i would do it, but to think of it, i could find a third party and let them buy the house first, only to sell it to me) Maybe i'm thinking too much - feel free to tell me to shut up. ;-)

TS