Ask Kim
Repaying the 2008 Home-Buyer Credit
People who accepted the tax credit to buy a first home in 2008 will have to start paying it back next year.
By Kimberly Lankford, Contributing Editor, Kiplinger's Personal Finance
March 15, 2010
My daughter bought a condominium in 2008. Does she still need to pay back the 2008 first-time home-buyer credit? I heard that she does, but that doesn’t seem fair.
Sometimes life isn’t fair -- she does need to pay back the credit. The 2008 first-time home-buyer credit wasn’t nearly as generous as the current credit.
People who bought first homes from April 9, 2008, through December 31, 2008, could receive a tax credit of up to $7,500 if they hadn’t owned a home in the three years leading up to the purchase of their new home. But that credit must be repaid over 15 years, starting two years after they claim the credit.
Your daughter doesn’t need to do anything this year, but she must start repaying the credit when she files her 2010 tax return next spring. If she got the maximum $7,500 credit, she must add $500 to her income tax bill each year for the next 15 years. And, if she stops using the condo as her primary residence, any remaining balance of the credit must be repaid when she files her tax return for the year she sold the home or moved. The payback amount, however, can’t exceed the amount of profit made on the sale.
The newer version of the first-time home-buyer tax credit is different. People who close on a new home from January 1, 2009, to June 30, 2010 (and sign a binding contract by April 30, 2010), can qualify for a first-time home-buyer credit of up to $8,000. This credit doesn’t need to be repaid, as long as they live in the home for at least three years. For more information about the rules for the 2009 and 2010 credit, see FAQs on the New Home Buyer Tax Credits. For details about the 2008, 2009 and 2010 credits, see the IRS’s First-Time Home Buyer Credit: Answers.
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Reader Comments (11)
Posted by: Ashley Trailrunner at 03/15/2010 01:06:10 PM
This is my situation as well; I wonder if there's been any agitation in Congress to revise the 2008 homebuyer loan and make it into a true credit. Anyone have updates on this?
Posted by: clark at 03/15/2010 03:25:18 PM
Nice comment, life isn't fair. Yep, we're stuck with those idiots in Washington. How could they do that to those people who took the credit in 2008, and then gave 8,000 virtually free & clear several months later. Totally unconscionable...The tax system needs to be blown up and start all over again. They are setting up a trap for 2010 for those Roth conversions, beware.
Posted by: Aloha at 03/15/2010 04:39:40 PM
Hi Kim, This is regarding the longtime homeowner credit. Assuming a person meets all the qualifications, they do not have to sell their current residence to qualify for the $6,500 credit. Is this true?
Posted by: Nathan at 03/16/2010 08:20:30 AM
Ashley and other ones in our situation, with all my research I have yet to find anything to aid us in this injustice. Although, with many other things that are brought to our government's attention would a petition with enough signatures be enough to get this overturned? I have e-mailed kim at askkim@kiplinger.com for any information that she might have. I will keep up my research and ask that you do the same until we find a solution to our problem.
Posted by: Doug at 03/16/2010 03:01:05 PM
I am sorry politicians lured you in with my money. I was totally opposed to the 1st credit as well as the 2nd. I will be calling on my Congress to revoke both credits and make you file retro-actively. I will probably not get what I want, but there are more and more of us that are sick of those people leaching off the system. I don't blame you as I am guilty of taking credits as well, but I want you and I off the system.
Posted by: JD at 03/16/2010 05:34:13 PM
And what about the people who bought in or before 2007? They got nothing at all. All new entitlements are unfair in this way. Think about that next time you support a new one.
Posted by: Cates at 03/16/2010 08:57:43 PM
My spouse filed at age 62 for the Social Security spousal benefit on my record, instead of waiting until full retirement. Now, she's wondering if that was the right thing to do, in terms of total payout. What would be a good rule of thumb?
Posted by: Ham Kennedy at 03/18/2010 03:16:55 AM
Sorry that you got stuck on the 2008 first time homebuyers credit. From now on beware of the person bearing gifts. In other words when the bearer says he is from the goverment and is there to help you grab your pocket book with both hands and run like hell.
Posted by: Nathan at 03/18/2010 09:22:56 PM
To all 2008 First Home Buyers,I am starting a petition and gathering people who want to help overturn paying back the 7500...If the government wants to throw money away by bailing out the stock market, then I would rather my money stay in my pocket then paying the already rich people getting thousand dollar bonuses on Wall Street.
Posted by: clark at 03/29/2010 11:32:59 PM
The whole tax structure should be thrown out. There is so much inconsistencies and filing abuses. The issue of employee vs contractor, the commuting vs business miles, the deductions for undocumented contributions (wink, wink, uh, how much can I take?), the schedule C flat out mythical expenses, the butchering of itemized deductions, the list can go on and on. The more they re-work the tax code, the more obtuse, insane, and wrong it becomes. The elderly get trapped because of mis-leading information, the system is totally out of whack. But, just look at what goes on in Washington, its not too hard to figure out why. And they are supposedly working for us, "public servants". Boy, is that ever another joke.
Posted by: Pam at 07/07/2010 05:34:22 PM
I bought a house with a friend. She qualified for the first time home buyer credit. I would have qualified for the tax credit of 6,500.00. We gave her the credit. She is going to get off the loan. I am going to refinance and keep the house. Does she have to pay back the 8,000.00 or since I am keeping the house and refinancing so will the credit still count?