When must I close on a house to qualify for the “First-Time Homebuyer Credit”?

Gregory S. Simpson is a Certified Public Accountant (CPA) who is the founder of Gregory S. Simpson and Associates P.C., a CPA firm located in the suburbs of Fort Worth in North Richland Hills, TX. Gregory S. Simpson and Associates specialize in accounting work, tax planning and consulting and preparation of business and individual tax returns.  Greg has over 40 years of accounting experience and over 30 years as a professional CPA. He answers questions from time to time for the residents of Fort Worth on tax related issues.  

Question: When must I close on a house to qualify for the “first-time homebuyer credit”?

Answer: The deadline to receive a tax credit for purchasing a house in or around the Fort Worth area is fast approaching. First time homebuyers (Please check the IRS definition of a first-time homebuyer) must close on November 30, 2009 or before December 1, 2009 to qualify for the tax credit.  In order to stimulate the economy the government enacted The Housing and Economic Recovery Act of 2009; a tax credit for citizens who purchased a house between April 8, 2008 through December 1, 2009.

The Housing and Economic Recovery Act of 2008 and the Housing and Economic Recovery Act of 2009 are two different acts enacted by the government.

If you purchased a house in 2008 and took the credit in 2008 you fall under “The Housing and Economic Recovery Act of 2008” in which you can get a tax credit up to 10% of the purchase price of the home capped at $7,500. However, you must pay this credit amount back over 15 equal annual installments starting in 2010. This serves much like a non-interest bearing loan payable to the government.   If you purchased your house in 2009; you can qualify for “The Housing and Economic Recovery Act of 2009”, which allows you to get a possible tax credit up to 10% of the purchase price of the home capped at  $8,000. This credit is not required to be paid back to the government as long as you reside in and do not sell this primary residence before 3 years. If you purchased the house in 2009, you can take your credit on your 2008 tax return or your 2009 tax return (2009 tax returns are due in 2010). Of course, an extension or amendment to your 2008 tax return may be required to claim the credit on your 2008 return if it is later in 2009 when you close on your home.  

According to some newspapers and experts, they believe a deal will be made to extend and expand the popular first-time home buyer tax credit. This extension of the first-time homebuyer law is not a passed bill or law as of this posting.

The IRS website is stating that First-Time Homebuyer credit enacted by “The Housing and Economic Recovery Act of 2009” will expire on December 1, 2009.

For more information on if you qualify for the First-Time Homebuyer credit visit our website www. Gregoryssimpson.com and then go to “Latest News” or go to the IRS website at www. IRS.com. You can also contact us at 817-656-3397 or by e-mail at admin@gregoryssimpson.com