$8000 First Time Homebuyer Tax Credit

There has been a tremendous amount of talk regarding the first time homebuyer tax credit for 2009, as you can well imagine. I think there is also a lot of confusion. The National Association of Realtors put together a good FAQ for it and you can click here for the link. It helps clarify how the credit is given. For example, if you qualify for the tax credit then next year when you file your taxes you will first have to see if you owe the IRS any money. Say you owe them $1500, then that would be deducted from the $8000 tax credit. So, instead of writing the IRS a check for $1500, you would receive a check for $6500.

One thing that I have not seen clarified anywhere is if the first time home buyer co-signs with someone else who is not a first time homebuyer. For example, a buyer who must co-sign with a parent in order to qualify for the mortgage. This is extremely common and, from what I understand, doesn't qualify for the $8000 tax credit. The lesson here is to consult with a tax expert if you think you may not qualify.

WASHINGTON STATE FIRST TIME HOMEBUYERS READ HERE!!!!

On April 16, the Washington State Senate passed an ammendment making Washington one of only a few states that will allow you to use the $8000 tax credit for your downpayment. How does it work? First they created a $25 million fund. The buyer "borrows" $8000 from the fund to make the down payment and signs over his/her federal tax credit to the fund. When the buyer files his/her 2009 taxes the $8000 credit is delivered directly back to the fund. Needless to say, the buyer would be responsible for paying any additional taxes they owe that year.

You have got until November 30, 2009 to go out and take advantage of this!