Homebuyer's Tax Credit Question

[disney junky]

Can anyone tell me if the first time homebuyer's tax credit of $8500 effect the normal tax return? For example, if I just purchased a home, I would have a significant number of write-offs that I didn't have previously: points, interest, other applicable closing costs, which would likely up the amount of my tax refund. Does this tax credit cancel that out, does it count as income, or is it just plain money from the government free and clear?

 

[Cheshire Figment]

Looking at Form 1040, it is Line 69 which means it is a refundable credit treated as a payment made to IRS. This puts it in the same category as withholding or estimated tax payments made.

It is one of the very last items before considering if you have underpaid (and owe money) or overpaid (and are due a refund).

I'm not entirely sure how to put it in English, but it has nothing to do with any other part of the return or the house purchase.

Mike (CPA Retired)

 

[golfgal]

I think the credit is for $8000. It wouldn't cancel out any deductions you have, interest, points, etc. If you are worried about that you CAN amend your 2008 tax form and apply the credit there-and get the money back faster. It might be worthwhile to consult a CPA about this since it is a special situation.

 

[disney junky]

Eight thousand. Right. Was confusing last years 7500 with that.

Thanks. My SIL to be just bought a house, and he and dd are getting married next July. He's lived at home and had few deductions since graduating from college, and my dd is concerned about having money for the honeymoom. I suspect she may possible be angling for help from dad but I also think he may be surprised at how large his refund is. He had planned to put the 8000 on the principal when he gets it.

My son if following suit, and I suspect he'll find that large first year refund helpful as well.

Thanks for the replies. I'm always a bit suspect of government programs.

 

[golfgal]

Eight thousand. Right. Was confusing last years 7500 with that.

Thanks. My SIL to be just bought a house, and he and dd are getting married next July. He's lived at home and had few deductions since graduating from college, and my dd is concerned about having money for the honeymoom. I suspect she may possible be angling for help from dad but I also think he may be surprised at how large his refund is. He had planned to put the 8000 on the principal when he gets it.

My son if following suit, and I suspect he'll find that large first year refund helpful as well.

Thanks for the replies. I'm always a bit suspect of government programs.

One thing to keep in mind is that it is not automatically $8000, if they buy a house that is less then $80,000 they get 10% of the purchase price-so if the house is $70,000, they get $7,000.