ask matt cpa we are free agents nation …

A new batch of tax updates just come in.  As always, as new rules come in to the play, new angles of applying such changes will be discovered, then more new rules will come.  This is an on-going race.

Extended home buyer credit

The 2008 $7,500 credit that requires repayment for the first time home buyer was replaced by the $8,000 credit in 2009.  This credit is refundable – if the credit exceeds your tax, you get a refund for the excess – and expiring on Nov 30, 2009.

Congress extended this credit, partly due to the lobbyist of the realtors, to first time home purchase signed before April 30, 2010 (and closed before June 30, 2010), and no more extension is promised.

The Tweaks:

- People with higher income can take full credit now.  As long as your AGI is less than $225,000 (replacing the former $150,000) if filing jointly, or less than $125,000 (replacing the former $75,000) if filing as single,  you are in.

- If “first time” had been the heartbreaker for you, here is a new deal.  For people with 5 continuing years as home owner out of prior 8-year period, you are in for a $6,500 credit if you buy a new house during 11/6/2009 to 5/1/2011.  Hmm, the 5-continuing-year is to block out speculator with short ownership; and the 8-year period is to allow people lost houses within the last 3 years.  Just a guess why the rule was ironed out this way.

- Credit can be taken in the amended 2008 return or in 2009 even it is a 2010 deal.  That is generous.  Sooner you can take the better.

- Home with price over $800,000 won’t qualify.  The credit is meant for people who just need a decent home, not luxury living.

- Purchase from your relative?  That won’t qualify the credit.  As long as I am buying and helping the depressing market, that should be in line with the purpose of this credit, and why do they care whom I buy from?  Unless I am buying a property with inflated price.  Hmm, still don’t quite get this one.

- Using your dependent child’s name to buy won’t qualify for the credit.  If you are under 18, this rule also applies.  This one is obvious, some people creatively use children who are unlikely to have prior home ownership to circumvent the “first-time” requirement.  I am wondering how they finance the purchase with dependent as owner though.