8000 first time homebuyer tax credit

[maat55]

Many of you know that I am against the tax credit. I think it is redistribution/socialism.

That aside, I see this as a possible complication of when the government gets involved in the free market.

As we all know, the government has to put contingencies on the credit or people will turn it into a business deal. This is removed with the three year requirement to stay in the home.

Problem: How responsible the reciever of the credit is important. What if you buy a house and recieve the credit and you take the money out and buy furniture, a car, etc. This leaves you with a 8000 dollar possible debt to the government for 3 years.

What happens if you loose your job? Need to move, etc.?

My advice is that anyone who takes the money should do so with the knowledge that you are in debt to the government for three years. I would set it aside as a backup EF and not blow it on stuff.

[autoxer]

I just took last years version of the credit, which actually is a debt. But at least it is interest free. Starting in 2010 I will have to pay $500 back per year for the following 15 years. Most of the money I get will be used to beef up my EF, but some of it will be spent.

[maat55]

I just took last years version of the credit, which actually is a debt. But at least it is interest free. Starting in 2010 I will have to pay $500 back per year for the following 15 years. Most of the money I get will be used to beef up my EF, but some of it will be spent.

Yours is a true loan, therefore you know to treat it as one. The 8k is another animal. This economy is unstable and recipients should take heed.

[swanson719]

There is no such thing as a free lunch. $8,000 might be free right now, but our grand-kids will be paying for it.

[maat55]

There is no such thing as a free lunch. $8,000 might be free right now, but our grand-kids will be paying for it.

This I agree with. My concern is the possible personal finance fallout that could occur if/when the economy turns worse.

[red92s]

The large majority of people that would get into trouble with the $8k homebuyer credit would probably find a way to get into trouble without it.

[littletoobigformybritches]

I'm a little foggy here. I thought it would just be an $8000 tax credit, rather than a straight refund check like they gave out last year...am I misunderstanding something?

[autoxer]

I'm a little foggy here. I thought it would just be an $8000 tax credit, rather than a straight refund check like they gave out last year...am I misunderstanding something?

Yep, it is a tax credit.

[littletoobigformybritches]

OK, so what people are really referring to is the refund that you would (assumedly) get in 2010. Got it.

[maat55]

OK, so what people are really referring to is the refund that you would (assumedly) get in 2010. Got it.

It is a refund with strings attached. You are required to live in the house for three years, Anything can happen in three years, in this economy.

[reptile411]

As you know from our previous conversation I did take it. I still have it sitting in a cosy high interest account making me more money. I have no problem being in debt to them for 15 years but I see what you are saying. I am much more secure in my employment and cash flow than the average Americans right now so even if they had good intentions and wanted to pay it back but lost there job now they can not. What will the IRS do then? Send us to collections? I don't recall seeing any repercussions for nonpayment, I would imagine with the way things are going it would be forgiven until witch time you worked again and could have it deducted again from your taxes. Its anyone's best guess.

Many of you know that I am against the tax credit. I think it is redistribution/socialism.

That aside, I see this as a possible complication of when the government gets involved in the free market.

As we all know, the government has to put contingencies on the credit or people will turn it into a business deal. This is removed with the three year requirement to stay in the home.

Problem: How responsible the reciever of the credit is important. What if you buy a house and recieve the credit and you take the money out and buy furniture, a car, etc. This leaves you with a 8000 dollar possible debt to the government for 3 years.

What happens if you loose your job? Need to move, etc.?

My advice is that anyone who takes the money should do so with the knowledge that you are in debt to the government for three years. I would set it aside as a backup EF and not blow it on stuff.

[maat55]

As you know from our previous conversation I did take it. I still have it sitting in a cosy high interest account making me more money. I have no problem being in debt to them for 15 years but I see what you are saying. I am much more secure in my employment and cash flow than the average Americans right now so even if they had good intentions and wanted to pay it back but lost there job now they can not. What will the IRS do then? Send us to collections? I don't recall seeing any repercussions for nonpayment, I would imagine with the way things are going it would be forgiven until witch time you worked again and could have it deducted again from your taxes. Its anyone's best guess.

My guess is that they will treat you like they treat anyone who owes them money, that could mean penalties and interest on money not paid on time.

You yourself, are with the knowledge that your money is a loan and not a freeby, those with the 8k freeby may forget that it is not afreeby until after 3 years.

[kman]

Job Offer

I bought a house and received the $8000 tax credit this year. I agree that I should have put in a EMF, but I am a first time home buyer and I needed basic appliances and repairs to my house that I used the money for. Well 60 days after I moved in to the house my employer offered me a great job opportunity, but I would have to relocate to another state. If I take the job, I am penalized with an $8K debt. Is there anything in the law that will allow for this? I think that this would hurt people who have great job opportunities.

[cptacek]

I bought a house and received the $8000 tax credit this year. I agree that I should have put in a EMF, but I am a first time home buyer and I needed basic appliances and repairs to my house that I used the money for. Well 60 days after I moved in to the house my employer offered me a great job opportunity, but I would have to relocate to another state. If I take the job, I am penalized with an $8K debt. Is there anything in the law that will allow for this? I think that this would hurt people who have great job opportunities.

Bingo. This is exactly what maat is talking about.

[Taxplanr]

I bought a house and received the $8000 tax credit this year. I agree that I should have put in a EMF, but I am a first time home buyer and I needed basic appliances and repairs to my house that I used the money for. Well 60 days after I moved in to the house my employer offered me a great job opportunity, but I would have to relocate to another state. If I take the job, I am penalized with an $8K debt. Is there anything in the law that will allow for this? I think that this would hurt people who have great job opportunities.

Your circumstance is very unfortunate. You now have to weigh the benfits of the promotion against the penalty of having to repay the credit. Look very closely at the job offer and cost of living to where you are relocating. Also the expenses involved with moving.

I have not run across a case like this yet but I would venture that if you do move and are not able to repay the credit by April 15, 2010 you will more than likely be facing interest and penalties.