The Big Payback: $7500 Taxpayer Credit....It's Time to Pay Up

By
Real Estate Agent with Keller Williams Realty

The Big Payback: $7500 Taxpayer Credit....It's Time to Pay Up

Well the time has finally come for the Taypayer credit recipients to payback that $7500 incentive.

Not everyone has to pay that money back though.  Apparently only those who received the credit during the period of April 1, 2008 through July 1, 2009 will have to pay back the funds used to make their home purchase possible (or at least served as an incentive to buy).

Some may say that they didn't know it had to be paid back, while others were fully prepared.  Memory often fails us, but unfortunately the government is not so forgiving.

The good news is that it can be paid back over a 15 year period (paying back $500 per year) until paid back in full.  The other good news is that it's tax free.

There is a bright side to this damper:  Would you have purchased that home that you love so much had it not been for the tax credit?

Please consult with your tax professional for advice.  And then get ready for

 

 

 

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Rainmaker
518,597
Patricia Aulson
BERKSHIRE HATHAWAY HOME SERVICES Verani Realty NH Real Estate - Exeter, NH
Realtor - Portsmouth NH Homes-Hampton NH Homes

Yup!!  It's pay back time.....

  I like the comment Glenn made  #2  today, it says it all.

 

Patricia/Seacoast NH & ME

Feb 25, 2011 07:47 PM #34
Rainmaker
518,597
Patricia Aulson
BERKSHIRE HATHAWAY HOME SERVICES Verani Realty NH Real Estate - Exeter, NH
Realtor - Portsmouth NH Homes-Hampton NH Homes

Yup!!  It's pay back time.....

  I like the comment Glenn made  #2  today, it says it all.

 

Patricia/Seacoast NH & ME

Feb 25, 2011 07:47 PM #35
Rainer
90,359
Maya Swamy
Funds Available - Long Beach, CA
Ph.D. Long Beach, CA - fundsavailable.com

Actually $500 a year or $42 a month is pretty cheap for what they got.

Feb 25, 2011 08:00 PM #36
Rainmaker
648,839
William James Walton Sr.
WEICHERT, REALTORS® - Briotti Group - Waterbury, CT
Greater Waterbury Real Estate

Wait...you mean that people had to pay back the first version of the tax credit??? GASP! Say it ain't so, Charita, say it ain't so....

Glad that none of my buyers followed through at that time. They would be ripping right about now if they did...

Feb 25, 2011 08:43 PM #37
Rainmaker
232,642
Elliott S. Topkins
Topkins & Bevans-etopkins@topbev.com - Boston, MA
Massachusetts Real Estate and Title Atty

Charita--Great information. i forgot about what you told us. I am sure a lot of buyer have,too.

Feb 25, 2011 08:59 PM #38
Rainer
144,182
Kaera Mims
Liz Moore & Associates - Fort Monroe, VA
Associate Broker, e-PRO, REALTOR; Hampton, Newport News, York Co.

I made sure to educate my buyers during that time period and of course send them to a tax professional, but like you said, some people have gotten "amnesia". Great post...and reminder! 

Feb 25, 2011 10:07 PM #39
Rainmaker
230,403
Donna Paul
Keller Williams Realty Gold Coast - Dix Hills, NY
Long Island Home Specialist, Search for Long Islan

Did someone say PAYBACK .. I forgot... Thanks for the reminder...

Feb 25, 2011 10:09 PM #40
Rainmaker
391,339
Kevin Kueneke
Samuel Scott Financial Group San Diego - Encinitas, CA
San Diego Mortgage Banker

Even with the payback feature, the $7,500 tax credit was still a good deal.  I think an equally important fact to point out is that if the property ceases to be the homeowner's principal residence in the first three years after purchase that the entire tax credit, whether it was $7,500 or $8,000, would be owed back to the IRS.

Don't forget that military personnel who served overseas for at least 90 days in a row between 12/31/2008 and 5/1/2010, and are 1st time buyers, are eligible for the $8,000 Federal tax credit if they go under contract by 4/30/2011 and close by 6/30/2011.

Feb 25, 2011 11:18 PM #41
Rainer
135,233
Linda Humphrey
Humphrey Home Connections Realty, Reno, Nevada - Reno, NV
CRS, Broker/Owner HHC Realty

My son is one of those that purchased with the $7500 interest free loan. If we would have closed escrow two weeks later, more or less, he would have had the $8000 freebie. But who knew? No problem about it slipping his mind though, the government is already sending friendly reminders, lol.

Feb 26, 2011 12:55 AM #42
Rainmaker
670,509
Evelyn Kennedy
Gallagher & Lindsey, Alameda, California - Alameda, CA
Alameda, Real Estate, Alameda, CA

Charita:

Yes, it is easy to forget a debt owed.  Unfortunately, the government doesn't forget.  Fortunately, they make paying the debt back not to difficult.

Feb 26, 2011 12:56 AM #43
Rainmaker
309,139
David O'Doherty
Hometowne Realty Clayton East - Clayton, NC
Clayton NC Homes, Raleigh, NC

What? You gave me $7500 and now you want it back, waaaaaaaaa. What about the people who got the $8000?

Feb 26, 2011 06:22 AM #44
Ambassador
686,724
Charita Cadenhead
Keller Williams Realty - Birmingham, AL
Serving Jefferson and Shelby Counties (Alabama)

Joe I guess that's the equivalent of "what's mine is TheIRS and what's TheIRS is TheIRS."

I'm right there with you Donna. Even if it was to my advantage, I would still regret having to pay it back and not like it a bit.

I agree Chris. Anyway you look at it, it still made it possible for some people to purchase a home.  A handout would have been better, but a helping hand was just as beneficial.  I say memory is more selective than subjective.

Mike I'll bet you a million to one that that's what the recipients are saying too.

 

 

Feb 26, 2011 08:11 AM #45
Ambassador
686,724
Charita Cadenhead
Keller Williams Realty - Birmingham, AL
Serving Jefferson and Shelby Counties (Alabama)

Eric my guess would be all of them.

Patricia that's what dreams are made of (wishful thinking0.

Maya it really is when you think about it.  Especially so if you are due a refund whereby you wouldn't have to come directly out of pocket with the money.

William more like they would be ripping that "note."  But I have to say, it still was not a bad deal.  Think about how many people benefitted from the  $7500 at the time. 

I'm sure Elliott.  But who doesn't have access to an Outlook calendar or a cell phone calendar reminder?

Kaera people forget.   Some naturally.  Some selectively.  You did exactly what we all were supposed to do:  advise the buyer to consult with a tax professional.

Donna P-L.  I did, I did.

Kevin I'm in total agreement on the "good deal."  In the end, people had and should still have the docs outlining the terms of the credit and they should READ IT!

Feb 26, 2011 08:19 AM #46
Ambassador
686,724
Charita Cadenhead
Keller Williams Realty - Birmingham, AL
Serving Jefferson and Shelby Counties (Alabama)

Linda how about that?  The government is really good about those reminders huh?  You're the first to mention letters from the government, I'm curious about how early they began sending them.  If you come back to this post and you know that answer, please post it.  Thanks,

Evelyn actually paying back at tax time is perfect and less stressful if you are due a refund anyway then you don't have to come out of pocket.

David you win some (the c$7500 credit to purchase a house) and you win some (the $8000 credit and not have to pay it back).  Anyway you look at it, it's still a winning situation.

 

Feb 26, 2011 08:23 AM #47
Rainmaker
895,070
Michael Setunsky
Michael's Commercial LLC - Woodbridge, VA
Your Commercial Real Estate Link to Northern VA

Charita, I'm sure paying back the government wasn't on the top of their minds. I'm sure the government won't forget. Great video.

Feb 26, 2011 08:47 AM #48
Ambassador
1,681,950
Richard Weisser
Better Homes and Gardens Real Estate Metro Brokers - Newnan, GA
Richard Weisser Coweta Newnan Homes for Sale

Charita...

I guess that I am glad that the treasury is getting the money back, but I'll bet that there are some not so happy campers out there!

Feb 26, 2011 09:23 AM #49
Rainer
135,233
Linda Humphrey
Humphrey Home Connections Realty, Reno, Nevada - Reno, NV
CRS, Broker/Owner HHC Realty

Hi Charita - I fished out the letter from our tax stuff and it is dated December 27, 2010. It is entitled "Repaying your First-Time Homebuyer Credit". Provides a summary of credit received, how much to pay this year, and mentions a Form 5405 which must be attached to your tax return. Then it discusses the fact that if the home is no longer your primary residence (including through foreclosure!!), how you have to pay the balance in full immediately. Never miss a punch, that ole IRS!

Feb 26, 2011 11:24 AM #50
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686,724
Charita Cadenhead
Keller Williams Realty - Birmingham, AL
Serving Jefferson and Shelby Counties (Alabama)

Thanks Michael and I'm sure you're right.

Richard I can envision smoke coming out of a lot of people's ears.

Linda I really appreciate you coming back and respondin.  I hope others read it too.  BTW my birthday is on December 27th and that would not have been a present that I would have enjoyed receiving.

Feb 26, 2011 12:16 PM #51
Rainmaker
236,770
Susan Jackson
America's Network Realty Group, Inc - Sandy Springs, GA

I am sure many buyers have forgotten about the payaback, once they settled in their homes.

Loved the James Brown video.

Feb 26, 2011 05:04 PM #52
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686,724
Charita Cadenhead
Keller Williams Realty - Birmingham, AL
Serving Jefferson and Shelby Counties (Alabama)

Thanks Susan.  Linda (#50) says the government didn't forget and sent out reminder letters.  Although she says her son's letter is dated December 27th, the government probably could have given an earlier warning.

Feb 27, 2011 03:59 PM #53
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Charita Cadenhead

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