Virginia Beach Real Estate Did you know it is time to repay your 2008 home buying tax credit?
Buyers who claimed the original up to $7500 version of the home buying credit generally must repay the credit in equal installments in the next 15 years, starting with their 2010 tax return.
There are exclusions go to http://irs.gov or consultant a tax consultant.
According to the IRS:
“The first-time home buyer credit is similar to a 15-year interest-free loan. Normally, it is repaid in 15 equal annual installments beginning with the second tax year after the year the credit is claimed. The repayment amount is included as an additional tax on the taxpayer’s income tax return for that year. For example, if you properly claim a $7,500 first-time home buyer credit on your 2008 return, you will begin paying it back on your 2010 tax return. Normally, $500 will be due each year from 2010 to 2024.
You may need to adjust your withholding or make quarterly estimated tax payments to ensure you are not under-withheld.
However, some exceptions apply to the repayment rule. They include:
•If you die, any remaining annual installments are not due. If you filed a joint return and then you die, your surviving spouse would be required to repay his or her half of the remaining repayment amount.
•If you stop using the home as your main home, all remaining annual installments become due on the return for the year that happens. This includes situations where the main home becomes a vacation home or is converted to business or rental property. There are special rules for involuntary conversions. Taxpayers are urged to consult a professional to determine the tax consequences of an involuntary conversion.
•If you sell your home, all remaining annual installments become due on the return for the year of sale. The repayment is limited to the amount of gain on the sale, if the home is sold to an unrelated taxpayer. If there is no gain or if there is a loss on the sale, the remaining annual installments may be reduced or even eliminated. Taxpayers are urged to consult a professional to determine the tax consequences of a sale.
•If you transfer your home to your spouse, or, as part of a divorce settlement, to your former spouse, that person is responsible for making all subsequent installment payments.”
The tax credit was extended twice again in 2009 and a final time in 2010 with up to $8000 payouts. These amounts are not due.
Although the money was not totally free this was a great program for those who took advantage of it.
Military personnel and some federal employees serving overseas may still be able to claim the credit on home purchases made before April 30, 2011.
click here for more info from IRS
Please consult a tax professional for more info.
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