April 27, 2009 12:00 am

No Advance Claim for the First-Time Homebuyer Credit

While the first-time homebuyer credit is designed to encourage the purchase of a primary residence by those who haven’t owned a home within the past three 3 years, it can’t be claimed until the home is purchased. If a home is being built, the date of purchase is considered to be the date of occupancy. In other words, the credit cannot be claimed as a way to raise cash for a down payment on a home. For example, a taxpayer expects to close on a home before December 1, 2009, and wants to claim the credit now, but the IRS says the credit cannot be claimed in anticipation of a purchase.

The credit of up to $8,000 applies only to homes purchased within the first 11 months of this year. The credit can be claimed on an original or amended 2008 income tax return. The credit is refundable so even if no tax is due, the homeowner receives a tax refund from the government.

The credit begins to phase out for those with modified adjusted gross income over set limits: $75,000 for singles, and $150,000 for joint filers.

Source: www.irs.gov/newsroom/article/0,,id=206293,00.html
Tax Glossary

Imputed interest

Interest deemed earned on seller-financed sales or low-interest loans, where the parties’ stated interest rate is below the applicable IRS federal rate.

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