$8,000 Home Buyer Tax Credit at a Glance
- The tax credit is for first-time home buyers only. For the tax credit program, the IRS defines a first-time home buyer as someone who has not owned a principal residence during the three-year period prior to the purchase.
- The tax credit does not have to be repaid.
- The tax credit is equal to 10 percent of the home’s purchase price up to a maximum of $8,000.
- The credit is available for homes purchased on or after January 1, 2009 and before December 1, 2009.
- Single taxpayers with incomes up to $75,000 and married couples with incomes up to $150,000 qualify for the full tax credit.
The FAQ document clearly states that you can NOT use the Tax Credit in the process of making the purchase. This was something considered and ruled out during the legislative process. The NAR FAQ document says;
"So I can't use the credit amount as part of my down payment?"
"No, Congress tried hard to devise a mechanism that would make the funds available for closing costs, but found that pre-funding would require cumbersome processes that would, in effect, bring the IRS into the purchase and settlement phase of the transaction."
As for the Kiddie Condo, neither document addresses this and I can't find one that does but I believe it will depend on how Title is held and how the Taxes Returns are filed. If the parent holds joint title, then the answer is probably "No", the credit won't apply. I draw this conclusion because the NAR document says for Married and filing Jointly, both parties must meet the first time buyer qualifications. If the parent is simply a co-signer for the loan but only the child / first time buyer is on the title, then my guess is that the Tax Credit will apply.
Tal Kramer
It is my understanding that the $8,000 tax credit is applicable for "owner-occupants" after you've actually "purchased a home" in 2009. (It is geared for 1st time home-buyers or any buyer who has not owned a home within the last 3 years.) I would not think any lender would make a loan...especially a mortgage.....with funds that are not "guaranteed". What if the potential "homeowner" doesn't close? Or, what if when they apply for their tax credit....the individual owes taxes (which will be deducted from the tax credit). Personally, I would not suggest that to a client. If they are that low on funds....maybe they should wait about buying a home until their financial situation improves.
