heads up on first-time homebuyers credit

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Subject Author Date heads up on first-time homebuyers credit Brew1 05-29-2009  Re: heads up on first-time homebuyers credit Alan 05-29-2009  Re: heads up on first-time homebuyers credit brew.one 05-29-2009  Re: heads up on first-time homebuyers credit Mark Bole 05-29-2009
Posted by Brew1 on May 29, 2009, 5:09 pm Please log in for more thread options had a client come in wanting to amend her '08 return and claim the first-time homebuyer's credit in advance of purchasing her first home. I told her that this was not allowed; however, her lender faxed over an FHA letter explaining how "advances" on the credit were to be handled. The lender also stated that she was aware of others who had gotten the credit in advance of the purchase. I called the IRS and the agent I spoke with said yes, it was allowed. However, I have ceased to believe anything I'm told on the phone by the frontline folks there. I told the client that I would have to do further research. A fellow EA kindly provided me with this reference: http://www.irs.gov/newsroom/article/0,,id=206293,00.html It specifically addresses this issue with "No. You may not claim the credit in anticipation of a purchase..." There is a small loophole--if you have "finalized" the purchase you can claim the credit. Perhaps on an FHA loan that is possible before closing? Anyway, our software does not allow a future date to be entered on Form 5405 and now I see why. The "success" stories are obviously going to breed imitators, along with IRS employees who give out answers like the one I got today. -- << ------------------------------------------------------- >> << The foregoing was not intended or written to be used, >> << nor can it used, for the purpose of avoiding penalties >> << that may be imposed upon the taxpayer. >> << >> << The Charter and the Guidelines for submitting posts >> << to this newsgroup as well as our anti-spamming policy >> << are at www.asktax.org. >> << Copyright (2007) - All rights reserved. >> << ------------------------------------------------------- >> Posted by Alan on May 29, 2009, 7:20 pm Please log in for more thread options Brew1 wrote: > had a client come in wanting to amend her '08 return and claim the > first-time homebuyer's > credit in advance of purchasing her first home. > > I told her that this was not allowed; however, her lender faxed over > an FHA letter > explaining how "advances" on the credit were to be handled. The > lender also stated that > she was aware of others who had gotten the credit in advance of the > purchase. > > I called the IRS and the agent I spoke with said yes, it was allowed. > However, I have > ceased to believe anything I'm told on the phone by the frontline > folks there. I told the client > that I would have to do further research. > > A fellow EA kindly provided me with this reference: > > http://www.irs.gov/newsroom/article/0,,id=206293,00.html > > It specifically addresses this issue with "No. You may not claim the > credit in anticipation of > a purchase..." > > There is a small loophole--if you have "finalized" the purchase you > can claim the credit. Perhaps > on an FHA loan that is possible before closing? Anyway, our software > does not allow a future date to > be entered on Form 5405 and now I see why. > > The "success" stories are obviously going to breed imitators, along > with IRS employees who > give out answers like the one I got today. > The FHA announced a plan to provide short-term loans equal to the tax credit in advance of the purchase. Entities that can offer "tax credit advances" (HUD's words, not mine) with second liens are federal, state, and local governmental agencies and nonprofit instrumentalities of government and FHA-approved nonprofits. It is a loan! Go to http://www.hud.gov/offices/adm/hudclips/letters/mortgagee/ and select letter number 09-15. (It's an MS Word doc.) -- << ------------------------------------------------------- >> << The foregoing was not intended or written to be used, >> << nor can it used, for the purpose of avoiding penalties >> << that may be imposed upon the taxpayer. >> << >> << The Charter and the Guidelines for submitting posts >> << to this newsgroup as well as our anti-spamming policy >> << are at www.asktax.org. >> << Copyright (2007) - All rights reserved. >> << ------------------------------------------------------- >> Posted by brew.one on May 29, 2009, 8:29 pm Please log in for more thread options Thanks, Mark and Alan--that clarifies the issue for me; however, I think there is going to be a lot of confusion. I don't have the HUD letter in front of me, but there was a requirement that the borrower show proof that they had applied for the credit. It seems hard to swallow that HUD did not confer with the IRS on how a home buyer would get the egg before the chicken. -- << ------------------------------------------------------- >> << The foregoing was not intended or written to be used, >> << nor can it used, for the purpose of avoiding penalties >> << that may be imposed upon the taxpayer. >> << >> << The Charter and the Guidelines for submitting posts >> << to this newsgroup as well as our anti-spamming policy >> << are at www.asktax.org. >> << Copyright (2007) - All rights reserved. >> << ------------------------------------------------------- >> Posted by Mark Bole on May 29, 2009, 7:23 pm Please log in for more thread options Brew1 wrote: > had a client come in wanting to amend her '08 return and claim the > first-time homebuyer's > credit in advance of purchasing her first home. > > I told her that this was not allowed; however, her lender faxed over > an FHA letter > explaining how "advances" on the credit were to be handled. The > lender also stated that > she was aware of others who had gotten the credit in advance of the > purchase. I read something in the last week or two about how specialized refund anticipation loans (RAL's) might be allowed against the credit. I don't think it affects the actual filing of the tax return (no new form or box to check), and IIRC not all the details have been worked out regarding repayment, liens on the property, and so on. The following URL is too long, I know, but I'm sure folks here can find it on there own if this doesn't work. It doesn't go into detail but gives you something else to continue searching for. http://blogs.wsj.com/developments/2009/05/29/how-to-get-the-8000-first-time-home-buyer-credit-upfront/ -Mark Bole -- << ------------------------------------------------------- >> << The foregoing was not intended or written to be used, >> << nor can it used, for the purpose of avoiding penalties >> << that may be imposed upon the taxpayer. >> << >> << The Charter and the Guidelines for submitting posts >> << to this newsgroup as well as our anti-spamming policy >> << are at www.asktax.org. >> << Copyright (2007) - All rights reserved. >> << ------------------------------------------------------- >> Similar Threads Posted Re: Question about IRA Withdrawal (Penalty-Free) for Homebuyers ?? April 10, 2009, 2:05 am Re: Question about IRA Withdrawal (Penalty-Free) for Homebuyers ?? 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