Monday, September 13, 2010

Half of homebuyer tax credit recipients owe money back to gov't

Apparently, half of the first-time homebuyer tax credit recipients are required to pay the money back, but the IRS isn't sure who they are:
Nearly half of all Americans who claimed the first-time homebuyer tax credit on their 2009 tax returns will have to repay the government.

According to a report from the Inspector General for Tax Administration, released to the public Thursday, about 950,000 of the nearly 1.8 million Americans who claimed the tax credit on their 2009 tax returns will have to return the money.

The confusion comes because homebuyers were eligible for two different credits, depending on when their homes were purchased.

Those who bought properties during 2008 were to deduct, dollar for dollar, up to 10% of the home's purchase price or $7,500, whichever was less. The catch: The money was a no-interest loan that had to be repaid within 15 years.

Had they waited to buy until 2009, they could have gotten a much sweeter deal. Congress extended the credit and made it a refund rather than a loan.

Now, the IRS is developing a strategy for separating the 2009 taxpayers who are required to repay the credit from those who are not.

A review by the Inspector General earlier this year found that the IRS could not easily distinguish between home purchases made in 2008 and 2009. That heightened concerns that some claims could be erroneous or even fraudulent, that buyers could, for example, claim their purchase came later than it actually occurred.
Even some people who purchased in 2009 or 2010 will have to repay:
Some who claimed the credit for homes purchased in 2009 and 2010 will also be required to repay it. For instance, repayment is required if the home is sold within 36 months of the date of purchase by the taxpayer claiming the credit, provided there is a gain on the sale.


  1. This is definitely a bit odd and im sure will make for some not so happy recent home buyers.

    They probably should have made the tax credit (for the 10% or $7,500) more publically known that it was actually a 15 year loan in which they would have to sure there are a ton of people out there without a clue.

    -Eric Watts

  2. How dumb is that! People can not understand what they are signing while purchasing mortgage! Banks were held liable for twisting their arms and forcing them to sign a contract!

    Now people can not understand what type of tax credit they qualify for! Yet they do not forget to
    claim one! God help all of us!

  3. I feel badly for the poor renters out there footing the bill. Those poor dummies.

  4. "I feel badly for the poor renters out there footing the bill. Those poor dummies."

    I feel bad for me too. I was born in the wrong decade. Too young to buy when prices were affordable, too old to still be renting. Now I get to pay the bill for everyone 10 years older than I am. Sucks