Many provisions of the Internal Revenue Code are complicated. Proper interpretation of the rules and regulations contained in these provisions requires the assistance of an experienced and knowledgeable tax professional. This part of our series about the most confusing provisions of the Internal Revenue Code addresses the gone but not forgotten first-time homebuyer tax credit.
Why Is It Confusing?
- Different versions for different types of home buyers
- Most credits have expired but their effect is long-lasting
Even though the first-time homebuyer credit ended in 2010, it still applies for some first-time homebuyers who purchased a home in 2008, 2009, or 2010. In each of these years, the tax law provided three different versions of these credits, including two for first-time homebuyers and one for long-time homeowners.
First-time homebuyers who purchased a home between April 9, 2008, and April 30, 2010 (with a closing date no later than September 30, 2010) are eligible for the credit. The credit reduces a taxpayer’s bill or increases a refund depending on the tax owed. The IRS refunds the credit, even if no tax is owed or the credit is more than the tax owed. However, taxpayers subject to the initial $7,500 version of the first time homebuyer credit must repay it over a 15-year period.
Despite the fact that the credits no longer exist, confusion, frustration, and audits will continue for some relatively significant period of time. The credit offers specific benefits that only certain eligible members of the military and certain other federal employees may receive, such as an additional year to buy a home in the United States. How do you sort it all out? A qualified tax professional may help.
Legislative changes in November 2009 expanded and extended the credit, but also further complicated the credit with added documentation requirements. Due to increased compliance checks by the IRS as a result of the latter requirements, failure to submit documentation typically delays the issuance of a refund, if applicable.
A tax professional may evaluate anyone’s situation to help determine the wisdom of any beginning of the year tax-savings moves. If you are an individual or business in the New York or Tri-State area and have any question about taxes, especially in planning for 2017, call THE TAX EXPERTS at the Thorgood Law Firm www.thorgoodlaw.com. For a FREE consultation call 212-490-0704.
