$8000 Tax Credit: The End Is Near

The end is near.

The end of the $8000 tax credit (as it currently stands) is approaching and everyone who is considering taking advantage of it should be actively looking for a home in order to get it done by the deadline.

The $8000 tax credit program is scheduled for termination as of December 1, 2009 – which doesn’t leave as much time as you may think. I know, I know – you might be thinking “December is a long ways off – I can wait a while…” but consider this:

  • Due to current market conditions, houses in the sub-$300k range are getting multiple offers – which means you may need to “bid” on multiple properties before “winning” one.
  • It “normally” takes 30 days to get your financing arranged once you have a sales contract.
  • According to the IRS, you must actually close on the home home for it to be considered occupied and qualified for the credit.

Will The 8000 Tax Credit Be Extended?

Yes. That is my official prediction. And now that I have said that, you must know that I am wrong about these things more than I am right.

So don’t take my word for it.

No one really knows whether or not the $8000 tax credit will be extended – but it will take an act of Congress to get it extended — so my best advice is that if you are even considering buying a home and taking advantage of the $8000 tax credit then don’t count on it being extended.

Act fast!

Thanks to Justin McHood for contributing to this article.

$8,000 first time home buyer tax credit for down payment

youngbuyers The HUD has given approval for first-time home buyers to use their $8,000 tax credit for additional down payment money or to help with your closing costs.

So how will this work? You will need to obtain an IRS Form 5404 from the IRS website to get started. The money will be credited towards your down payment or closing costs at the close of escrow then you will be required to pay the money back when you get your tax credit.

Yes you need to pay it back. This is not money going directly from the government to the lender, it is money being promised by the government to the lender. After you purchase the house you can amend your 2008 tax return and get a credit of up to 10% of your home purchase price up to $8,000.

Once you receive the check from the government you will need to use it for what it was intended for. If you choose to use it on furniture instead of the purpose that is okay, but the money you had promised as a down payment of to help cover closing costs will not be turned into a second mortgage on your house.

You will still need your 3.5% down for your FHA loan, this additional money will be added on top of that 3.5% if you choose, not in replacement of. When you are talking to your lender about your FHA loan tell your lender you are interested in using the tax credit for additional down payment money and they will get you started.

You can also use the money toward your closing costs. Again you will need to tell your lender you plan on using the first-time home buyer tax credit for your closing costs and they will get you started on the paperwork.