Tampa Palms, Westchase, Carrollwood and Tampa Bay Real Estate News From Jeanne Prigitano

The last couple of weeks I blogged about taxes. So, I have gotten some questions about the first time homebuyer tax credit. Once again, I am not a tax professional. Every case is slightly different and there are many nuances. Please contact your tax professional for your particular circumstance. Nevertheless, if you purchased a home in 2008, 2009, or 2010 and claimed a homebuyer tax credit, there are some general guidelines that you must follow or the IRS will come after you.

If you purchased a home in 2008 and were able to take the first-time homebuyer tax credit, you must begin to repay it in the 2010 income tax year. The tax credit was really more like an interest free loan and must be repaid in 15 equal installments.

In 2009, the first-time homebuyer tax credit was increased from $7500 to $8000 and a tax credit of $6500 was added for buyers who had owned their previous home for at least 3 years. The deadline was initially established at December 1, 2009 but was later extended to qualified buyers who had a binding contract on a house on or before April 30, 2010 and closed on the house by July 1, 2010. The July deadline was later extended to September 30, 2010. For active military personnel outside the U.S, deadlines were further extended. The major difference is the credit does not have to be paid back provided that the house continues to be the homeowner’s primary residence for at least 3 years.

On the surface, it appears to be fairly clear. But what about the fine print. What happens if you bought a house in 2009 and claimed the tax credit but it is no longer your primary residence? What if you got married and now the house is in your spouse’s name, as well? What if you got divorced and you are still living there but your spouse moved out? And if you bought the house in 2008, 2009 or 2010 and claimed the credit but have sold the house, more than likely you will have to pay back the credit you received.

So, if you bought a house in 2008 and got the credit, remember that you must start paying your installments in the 2010 tax year. If you bought in 2009 and “circumstances” have changed, you may need to repay on your 2010 taxes. And if you purchased in 2010 and have not claimed the tax credit, remember to do so with your 2010 taxes.