Buy a house, get a check

If you're thinking of buying a house, run, don't walk, to the nearest real estate office. Time is running out for first-time homebuyers to get an $8,000 tax credit.

"We're seeing closings take 30 to 45 days, so they'd better do it right now," advised EiIeen Mikulecky, a Keller Williams Realty broker associate. Her latest customer will use the money to fix up his new home.

The credit is available to anyone who hasn't owned a home in the last three years. Unlike Cash for Clunkers, the $8,000 can't be used in the closing.

Most homebuyers will declare the credit on their 2009 tax return. If they don't owe that much, they'll get a tax rebate check.

Although it doesn't have a catchy name and therefore hasn't gotten the publicity of Cash for Clunkers, the home credit is popular. With five weeks left to close on a home, reports suggest a sales surge is underway that will drive sales through the roof.

The Internal Revenue Service reports 1.4 million buyers have applied for tax credits through 2008 amended returns; more are expected when 2009 income taxes are filed in April. The National Association of Realtors projects 350,000 buyers will beat the Dec. 1 deadline.

Politics and the economy

The credit has already cost the government $10 billion. Even so, real estate advocates have urged Congress to extend the credit, and that might happen, said Jeffrey Ostermayer, an aide in U.S. Rep. Tom Rooney's office.

"He supports increasing it from $8,000 to $15,000," Ostermayer said. Rooney, R-Tequesta, cosponsored HR 1245. The congressman believes extending the tax credit will help the housing market recover from a recession that started during the Bush administration.

"So much of Florida's economy is based on real estate," Ostermayer said. "Extending this tax credit would go a long way in helping to kickstart the market."

Ostermayer thinks HR 1245 may get thrown in a hopper with other tax extenders that will be brought to the House floor before the end of this year.

"There is a lot of support for renewing this," Ostermayer said, "and we are hopeful that legislation is brought to the floor."

Speaker Nancy Pelosi, D-Calif., said Wednesday the House not only plans to extend an $8,000 first-time home-buyer's tax credit - it may be broadened to include all home purchases.

A Dozen Questions

Q. What's a first-time home buyer?
A. Anyone who hasn't owned a principal residence three years prior to the purchase. If married, both buyer and spouse must qualify. Vacation homes or rental property aren't disqualifications.

Q. Who's eligible?
A. A home purchase must close between Jan. 1 and Dec. 1, 2009. The purchase date is when closing occurs and the title transfers to the home owner. An IRS exception exists for certain contract for deed and installment sale purchases.

Q. How is the tax credit determined?
A. The tax credit is for 10 percent of the home's purchase price, up to $8,000.

Q. Do income limits apply?
A. Yes. Single taxpayers can earn up to $75,000, $150,000 for married taxpayers filing jointly.

Q. How is the tax credit claimed?
A. Complete IRS Form 5405 for the 2009 federal tax return.

Q. Which houses qualify for a tax credit?
A. Single-family, townhouses and condominiums, manufactured homes, mobile homes and houseboats.

Q. What does "refundable tax credit" mean?
A. It's not an income deduction, it's a dollar-for-dollar tax credit. It can be claimed even if the taxpayer pays little or no federal income taxes. The government sends the taxpayer a rebate check for the unused portion of the tax credit.

Q. Can a home buyer access the tax credit sooner?
A. Yes. Prospective home buyers who believe they qualify for the tax credit can reduce their income tax withholding.

Q. Can the tax credit be claimed with mortgage revenue bond funds?
A. Yes.

Q. Can relatives sell to relatives?
A. Yes and no. Buyers can't purchase from parents, grandparents, children or grandchildren, or spouses.

Q. Can non-citizens claim a tax credit?
A. Yes. A resident alien who hasn't owned a principal residence in the previous three years and who meets the income limits test may claim the tax credit.

Q. Do homes purchased in 2008 qualify?
A. No, but first homes purchased between April 9, 2008 and Jan. 1, 2009, may qualify for a different tax credit.

Source: National Association of Home Builders