The IRS released a notice recently concerning an obvious contradiction:

  • The deadline to purchase a home and potentially qualify for the 2009 first time home buyer tax credit is November 30, 2009.
  • You can claim this $8,000 refundable tax credit on your 2008 tax return.
  • Your 2008 tax return is due April 15, 2009.

You: So how can I claim a credit on my 2008 tax return if I haven’t purchased a home by April 15?

Here are your options:

  1. Extend your tax return. File Form 4868 and automatically receive a six-month extension to file.  Note, this is not an extension of time to pay your taxes if you think you’ll owe.  Then again, will you owe after factoring in that $8,000 tax credit?
  2. File now. Amend later. Another option is to file your return on time and then file an amendment (using Form 1040X) after you close on your home.  Presto: up to $8,000 back in your pockets!
  3. Claim it in 2009. You don’t have to take the first time home buyer credit in 2008. Instead, you can choose to take it in 2009. For some people, this may actually be better.

You: But what about the time value of money? Better to receive a dollar today (or 8,000 of them!) than a dollar next year, right?

Absolutely. However, for some people the choice may be $5,000 today or $8,000 in a year.

You: How come?

If your income is too high in 2008 to receive the full credit and you think you might make less money in 2009, it may pay to wait to take the credit until then.  Remember, the income limits for the full credit are $75,000 MAGI if filing as a single person and $150,000 if married, filing jointly.

You: What if I already filed my 2008 tax return, subsequently buy my first home before December 1, and want to take the credit on my 2008 tax return? Can I still do that?

Absolutely.  See option number two above: amend.

Other related reading:

Or, just ask a question or make a comment below. Good luck!

Update: Here are the new rules for those who buy their homes after November 6, 2009.

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267 Comments to “First Time Home Buyer Credit – Your options if you buy after April 15”

  1. Michael says:

    @Susan: If you inherit a home and you then live in that home, you’re not qualified for the first time home buyer tax credit. Unfortunately, I sense that’s what happened in your case. Sorry. You’re only out would be if your mobile home was actually an RV (with a motor). Then you would still qualify.

  2. Josh says:

    I am single but am over the income limits for the credit. My girlfriend is not over the income limits. We have a kid together (not sure if that is relevant) It is my understanding that she is eligible for the credit only if her name is on the title. Is that true? Does she need to be on the title for this house to be considered her ‘principal residence’? If her name is required, does it need to be on the title for 3 years in order not to have to repay the credit? I’m trying to confirm that our only option to put her name on the title to get the credit? The loan will only be in my name.

  3. Michael says:

    @Josh: Of course the person claiming to be a first time home buyer must actually buy a home. If your girlfriend isn’t on the deed, she doesn’t own a home. In addition, she must also live in the home. Yes, the three years will apply to both her living in the home and owning it.

  4. Josh says:

    As a follow up…I heard the tax credit is most likely to be extended. Contracts must be signed by April 30, 2010 and sales must close by June 30, 2010. It also looks to have changed from a limit of 75k to 125k per individual and 250k for married couples. Can you comment on this? What if I purchase a home prior to this bill being passed? Could I still file for the credit? Any thoughts? I know nothing is official yet…

  5. Michael says:

    @Josh: As you implied, nothing is official yet. No bill has passed Congress. It’s impossible to predict with accuracy how the final law will read. I’ve seen many laws passed which apply only to transactions which occur after date of passage, those which apply retroactively and those only applicable to a future date.

  6. Carmen says:

    Do i need to send my 2008 1040 form along with 1040x back to the IRS office if i want to amend my 2008 return?

  7. Michael says:

    @Carmen: Yes, include the 2008 Form 10401. However, you don’t need to send in any additional forms or schedule you originally filed.

  8. scott says:

    Me and my girlfriend bought a house back in may \’09 I owned a mobile home then. She has never owned a home before both of our name are on the the mortgage and the tax deed should this be a problem for the first time home buyer credit if we only do and amendment in her name?

  9. Michael says:

    @Scott: Since you’re not married to your girlfriend, your ownership of a mobile home is irrelevant. She can claim the credit on her return.

  10. Jeff says:

    Hey Mike, now that the first time home buyers tax credit has been extended and the income allowance has been increased, how come it doesn’t apply to those who bought under the original guidelines for that credit? I thought it was being “extended” not re-written to be exclusionary to those under the credit to begin with? Doesn’t seem fair, I assume there are many out there with a similar issue/complaint??

    Thanks

  11. Michael says:

    @Jeff: Just wait until you see my upcoming November 13 post. I think this is what happens when you try to get 535 people, each receiving hundreds or thousands of constituent contacts, each with their own opinion, each trying to get re-elected, to agree on something.

    No matter what they do someone’s going to be upset. Ironically, the larger the group they include, the more upset those excluded are likely to feel.

  12. Jeff says:

    Hey Mike! Thanks for the response, I’ll definitely be looking forward to your November 13th post!
    That’s equivalent to opening your store for BlackFriday sales to get everyone to show up 10 hours early for the best deals, but then deciding you are going to keep the store open later and offer better deals later that night for anyone else. I don’t know, perhaps I am bias on this, but logically doesn’t seem fair to make that decision after the fact.

    Thanks again!
    J

  13. Ian says:

    Mike, I was wondering if my wife will still qualify for the home buyers credit. I owned a home in the past 3 years, but we purchased the home in just my wife’s name with just her assets. Will she qualify for 1/2 of the credit?

  14. Michael says:

    @Ian: No. If you’re disqualified, then so is your wife. Sorry.

  15. Amanda says:

    My husband and I purchased our first home from my in-laws in Aug 2009. I did not see any guidelines saying that this purchase would not qualify until the updates in Nov 2009.. Does this disqualify us?

  16. Michael says:

    @Amanda: Purchases from in-laws have always been excluded so, yes, you’re disqualified. Sorry.

  17. A.J. says:

    Girlfriend, kids, and I lived in same residence for over 5 years. Mortgage and house under my name. Can girlfriend buy house off me and qualify for the $8000 first time homebuyers credit. She never owned a home? We will all stay in the same home.

  18. Michael says:

    @A.J. While clearly not the intention of the law, I don’t see any prohibitions of what you propose.

  19. sue says:

    I bought our home in 2oo4..Never got htr first time home buyer credit on taxes..would i qualify for the 8000 credit on my taxes??

  20. Megan says:

    If we bought a home from my husbands uncle in 2009 will this qualify for the credit or is an uncle considered direct family member????

  21. ray says:

    i inherited a home before marriage,and my name is on the deed, but my husband’s is not. My husband and I would like to buy a house. Can we qualify for first time home buyer since we never had a home loan in our name? Can my husband apply for the loan and qualify or do I mess things up with the inheritance?

  22. Michael says:

    @Megan: An uncle is not considered a related party for purposes of this credit, so you’ll qualify.

    @Ray: Because you own a home, both you and your husband are excluded from the first time homebuyer credit. That you acquired it by inheritance is not relevant. (I’m assuming you’re living in the home. If not, ignore previous comment, you qualify.)

  23. ray says:

    thank you! We were about to make a big mistake!

  24. Michael says:

    @Ray: Happy to help. Have you lived in your home at least five years? If so, you might qualify for the most recent version of the homebuyer credit.

  25. gary says:

    If I puchase the home all cash, do I still qualify?

  26. Michael says:

    @Gary: You’re the first Gary’s to post here besides Gary. Welcome aboard. Taking or not taking a mortgage does not affect your qualification for the credit.

  27. John says:

    Mike, 2 years ago when I was single, I purchased the house and due to the financial condition I had to forclosed that one. After I got married last year, my wife purchased the house (first time buyer), will she qualify for the first time home buyer credit? If not, can she file for married separte to qualify 1/2 of it? Thank you in advace.

  28. Michael says:

    @John: Nope, sorry, your wife won’t qualify regardless of how she files. If she had purchased the house before you got married, she would have qualified.

  29. Louis says:

    I live in a home that my mom gave as a gift to my brother and myself. I have lived in this residence for over ten years. I am planning to buy a new home soon. Will I qualify for the “first time credit” (full amount) since this will actually be the first time that I will actually purchase a home?

  30. Michael says:

    @Louis: No, as you are considered a homeowner even if you didn’t buy the home. As you properly imply, however, you may qualify for the reduced $6,500 credit.

  31. Ryan says:

    I purchased a home in 9/2008 and claimed the first time homebuyer tax credit for $7500 on my 2008 tax return. In late 2009 I put in a loan request to refinance with a different lender and add my girlfriend to the mortgage and title. According to the indenture statement, I was the seller and both her and I were the buyers. Would she be able to claim all or even part of the 2009 tax credit?

    I called the IRS directly (and waited forever) about this, and they could only tell me that if it was “considered” a purchase, then she would be fine, but if it was “considered” a refinance, she would not qualify. Unfortunately, she couldn’t help me determine what the official difference is between a refinance and a purchase for tax reasons. Imagine that.

  32. Michael says:

    @Ryan: IMO, since you’re not selling the home to her, she’s not buying it.

  33. Bridgit says:

    My husband purchased a home in 2004 and we still have the home in Tucson AZ. It is being rented out. We have relocated to Albuquerque and are using my VA to buy a home. Do I qualify as a first time home buyer since the other home was not in my name and I have never bought a home before.

  34. Michael says:

    @Bridgit: Your first time home buyer status is the same as your husband’s, since you are still married. If he converted his home to a rental property more than three years before you buy a home, you’ll be considered a first time home buyer.

  35. Jenni says:

    My mom got the credit on her 2008 tax return and in 2009 she bought another home for my sister. If my mom buys pays for the house puts her name and my sisters name on the deed can my sister claim the credit just for having her mane on the deed? Or if there is a purchase contract between my mom and sister would my sister qualify? I have heard that you can not claim the credit if you buy from a family member?

  36. Michael says:

    @Jenni: If your sister bought the house with her mother, that would have been fine – your sister could have claimed the credit if she lived in the home. But if your Mom bought the home in her own name and your sister didn’t contribute or go on the deed originally, she’s out of luck. You are correct in that your sister buying the home from her mother would not work.

  37. Kenneth Clox says:

    Hi,Me and my wife bought our first house in Sept 2008 and our combined income will not qualify for first time home buyer credit. But my wife’s income qualifies for the credit. So can we file separately and can my wife claim the credit? She is not on the mortgage loan but she is on the title and deed.

    Ken

  38. Michael says:

    @Kenneth: If your wife’s income is less than $75,000, she may qualify for half of the credit. She doesn’t need to be on the mortgage; you can argue that she contributed at least for the down payment.

  39. kate says:

    This blog is great! I have learned many by reading it. It might be a duplicate but I wanted to ask your expert advice.
    My husband of 6 months have had a house in VA and it has been rented out through a professional management company over 3 years. I never bought a house and I am about to purchase one in this month.
    It is solely under my name. Am I qualify for first home buyer’s credit? My CPA says I am not and I am very disappointed. What do you think?

  40. Michael says:

    @kate: Thanks. If neither you nor your husband has owned a home that either one of you has lived in during the last three years, you will qualify for the credit.

  41. Joan Francis says:

    Hi, both my husband and I bought a co-op apartment in 2000 which we sold in December 2008. We then bought a home which we closed in April 2009 (our primary residence). Do we qualify for the first time homebuyers credit of $8,000, or is it the long-term residency credit of $6,500.

  42. melissa says:

    Mike, my husband and I bought our first home this year from his uncle and his mother, it was a shared inherited property, do we qualify?

  43. Michael says:

    @Joan Francis: Neither. You’re clearly not first time home buyers and there was no existing home buyers credit when you purchased your home in April 2009. Sorry.

  44. Michael says:

    @Melissa: Whose mother? If you’re talking about your mother in-law, you won’t qualify. If you’re talking about your husband’s uncle’s mother, then you would.

  45. michelle says:

    My husbands’s grandmother gave him her hown via a quitclaim deed. We never occupied that home i.e. it was never our primary residence and we did not rent it out. We sold it in 2009. Are we considered first time home buyers?

  46. michelle says:

    Im sorry about the typos in the previous post. I meant my husband’s grandmother gave him her HOME via a quit claim deed.

  47. Michael says:

    @Michelle: That your husband received a home which he then sold before living in would not exclude him (or you) from being considered first time home buyers for purposes of the first time home buyer tax credit.

  48. LJ says:

    Okay…I’ve entered into binding contract before the April 30th deadline. My question is…What if for some reason the contract needs to be changed after the deadline? If the contract is amended post April 30th will I still be eligible for the tax credit. Of course I would still close before July 1st.

  49. Michael says:

    @LJ: Great question. Unfortunately, I don’t know the answer but suspect major changes could cause problems.

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