Home Sweet Home

Here's a little good news from the government that may seem ironic and contradictory in light of the depressing economic news we hear on television. It seems ironic (at least to me) that the government announced a new program intended to "stimulate' the real estate market by offering an $8,000 tax credit to qualifying first-time home buyers that purchase a home before December 1, 2009.

On it's face, it seems like the classic "catch-22". It's a great time to buy a house. Inventory is high, prices are low and mortgage rates are at an all time low. Here's the ironic part: a mortgage is not as easy to get anymore and a job is not an easy thing to come by anymore. If you feel good about your employment prospects and your credit is good, then you're in Fat City; If not, you're on the outside looking in.

Here's the details:

WASHINGTON — The Internal Revenue Service announced today that taxpayers who qualify for the first-time home buyer credit and purchase a home this year before Dec. 1 have a special option available for claiming the tax credit either on their 2008 tax returns due April 15 or on their 2009 tax returns next year.

Qualifying taxpayers who buy a home this year before Dec. 1 can get up to $8,000, or $4,000 for married filing separately.

“For first-time home buyers this year, this special feature can put money in their pockets right now rather than waiting another year to claim the tax credit," said IRS Commissioner Doug Shulman. “This important change gives qualifying home buyers cash they do not have to pay back."

To qualify for the credit, you must be a first-time home buyer; you qualify if you, and your spouse (if you are married), did not own any other main home during the three-year period ending on the date of purchase. To claim the credit, you can file Form 5405 with your 2009 income tax return or you can amend your 2008 tax return using the same form. All things being equal, you should file an amended return to get the money faster. The government could change it's mind (it not like that has ever happened before).

So, if you're fortunate enough to have a job that looks stable for the foreseeable future and you want your piece of the American dream, call a real estate agent and get busy.

Remember, time is of the essence. You have to close the purchase by December 1, 2009 to get your "free money". It's free money, right? That will be a subject for another blog.

I am, as always, Father Tom.

Thomas Hicks is a Certified Public Accountant working in Brewer, Maine. For more information or to contact Tom, click here.