Tax Credit Filing Options
First time home buyers are eligible for up to an $8000 tax credit for buying their first home. However, those who qualify for this tax credit are not able to get the money until their 2009 tax return is filed in 2010 – which is long after the time when the home is supposed to be bought to qualify for the tax credit. So the tax credit cannot be used for the down payment – which leaves many first time home buyers still scrambling to come up with enough money for their down payment. See $8000 Home Purchase Tax Credit for more information.
It is not well known, but the IRS has set up some ways for qualifying first time buyers to get access to their tax credit shortly after settlement versus having to wait until next year. This could make getting a short term loan from a parent or relative a way to get a down payment in order to qualify for a FHA home loan.
$8000 Home Purchase Tax Credit Filing Options
The IRS explains 4 filing options to allow first time home buyers quicker access to their home purchase tax credit.
File Now Amend Later – If you need to file your taxes for 2008 file them in 2009 as normal even if you are considering buying your first home. You can always go back and amend your tax return and claim your tax credit later. If you do it this way, it is likely, says the IRS, that you will receive your tax credit in a few weeks after filing an amendment.
File An Extension – If you haven’t filed your extension by now, it may be too late for this option. If you have filed an extension and you are looking to buy your first home you can file your return immediately after you purchase your home and get your tax credit within about 10 days of filing. This is a better option if you want to get your tax credit before you have to file your 2009 return in 2010.
Amend Your 2008 Tax Return – If you have already filed your 2008 taxes in 2009 and you purchase your first home before Dec. 1, 2009 then you could file an amendment. You do not have to do this if you do not need the money, but if you do not want to wait until your file your taxes in 2010 then an amendment may make perfect sense for you.
Claim The Tax Credit On Your 2009 Return and File in 2010 – You may not need the money. If this is you, then you may just file for your tax credit in your 2010 tax return filing of your 2009 taxes.
Our advice is to talk to your tax adviser for the best tax credit filing options for your financial situation. Ask them about your options to qualify for the first time home buyer tax credit and happy house hunting.