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Written by Jeff Zures, Sanchez & Zures
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Monday, 13 July 2009 13:24 |
The rules for the $8,000 First-time Homebuyer's Credit recently changed. Under the new guidelines, if you are a qualified purchaser (click here for basic IRS information on the credit) you can take the credit in one of three ways:
1. Amend your 2008 tax return
2. Claim the credit on your 2009 tax return
3. Monetize the credit at the time of settlement
This third option allows you to realize the economic benefit of the credit at the time of purchase instead of waiting months for a tax refund. At the time of settlement, a short-term loan is provided from an FHA-approved lender or state housing finance agency. This loan is usually interest free, however the rate cannot be higher than 2.5%. You can use the $8,000 towards closing costs, paying down your mortgage or you can simply keep the money. You will still need to claim the credit on your 2008 or 2009 tax return. Once you do this you will have the $8,000 in hand to repay the short-term loan.
There are additional considerations when monetizing the credit. Be sure to consult your tax advisor. If you have any questions, please do not hesitate to contact Jeffrey J. Zures, CPA, CFP of Sanchez & Zures, LLC at Jeff.Zures@SZadvisors.com or 703-349-0330, extension 2.
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