$8000 homebuyer tax credit...

[jimgranite]

I heard about this new tax credit that is part of the stimulus deal.  It is for "first time homebuyers" which means you can't have owned a home for the last three years.  You can get the credit for building a home if you get your certificate of occupancy before Dec. 1, 2009.   My wife and I are planning to start our house this year but I have major doubts whether we could get in by that date. We are planning on hiring out the shell, and then finishing the interior ourselves.  I called my building inspector today  and asked whether we could get a C of O if we just finished the 1st floor (1 bedroom, 1 full bath) and finished the 2nd floor (3 bedrooms, 2 full baths) later.  He basically shot that idea down, but said he would be somewhat lenient if we were "real close to finished." 
     Oh, and the tax credit is a real credit and not a deduction.  You do have to pay it back if you sell the house w/in 3 years though.

[MountainDon]

First you should do a little more checking on this. Someone here might have the answer. I believe there has already been a first time buyer tax credit program and it has been $7500. So this is only an extra $500. I have no idea what happens after 12/31/2009; disappear altogether or frop to $7500 again. I could be all wrong on that $7500 as I have owned homes for decades already.

EDIT: Oh I think I see that the old $7500 credit was repayable over 15 years... a no interest loan in other words?? If so this $8000 is a better deal for certain.

As for the CO, you might get one if the final paint wasn't done, or maybe short some carpet, IF the guy was real sympathetic.

[Kiwi55]

I wonder how this works in a "no permit" "no inspection" "no code" area. What is your proof of occupancy?

[John_M]

I wonder how this works in a "no permit" "no inspection" "no code" area. What is your proof of occupancy?

If I know our government....I would bet this means no tax credit!!

[MountainDon]

It's ambiguous; doesn't mention owner-builders.... My guess is that this would not apply to owner-builders.

    * The tax credit is for first-time home buyers only.
    * The tax credit does not have to be repaid.
    * The tax credit is equal to 10 percent of the home's purchase price up to a maximum of $8,000.
    * The credit is available for homes purchased on or after January 1, 2009 and before December 1, 2009.
    * Single taxpayers with incomes up to $75,000 and married couples with incomes up to $150,000 qualify for the full tax credit.


http://www.federalhousingtaxcredit.com/2009/home2.html

[Beavers]

Instead of buying a new home from a home builder, I hired a contractor to construct a home on a lot that I already own. Do I still qualify for the tax credit?

Yes. For the purposes of the home buyer tax credit, a principal residence that is constructed by the home owner is treated by the tax code as having been "purchased" on the date the owner first occupies the house. In this situation, the date of first occupancy must be on or after January 1, 2009 and before December 1, 2009.


I found this in the FAQ section.  Seems to me that owner builders would qualify? 

If that is true, this could be a HUGE deal for a lot of us here that are building! 

I don't think that I could have my house complete by the end of the year, but I should be dried in.  I would guess that I would have to have it appraised, and then claim that value?

[MountainDon]

Thanks for picking up on that... I missed it. 

I'd want to find out what the government counts as the price though before counting on getting credit for 10% of the appraised value. They may just allow 10% of your actual building costs with no allowance for your own labor. I say that because I do know that when I do repairs on our business properties I am allowed to expense the materials used, the mileage, but can not count my labor. Or actually to be more precise I would have to declare the labor I paid myself as income on my personal taxes. At least that's what the accountant told me. If I pay someone it's fully expensable.

It would be interesting to know what the ruling would be. Anyone going to pursue this?

And note that the occupancy must be before Dec. 1, 2009. The first of Dec, not the 31st. The inspectors around here wouldn't give my neighbor his CO when all that was left to do was carpet. In most places "dried in" won't count towards the CO.

[Beavers]

It would be interesting to know what the ruling would be. Anyone going to pursue this?

And note that the occupancy must be before Dec. 1, 2009. The first of Dec, not the 31st. The inspectors around here wouldn't give my neighbor his CO when all that was left to do was carpet. In most places "dried in" won't count towards the CO.

I've got a buddy that's a CPA, I'll see what he thinks.

Thankfully I don't live in an inspection area, and dont' have to have a CO. If I can get it insulated by December, I'll be living it in it. 

[MountainDon]

...If I can get it insulated by December, I'll be living it in it. 

There ya' go!!   

[Beavers]

So, according to my CPA buddy...

An owner built house would qualify for the tax credit! 

He said it would cover cost and NOT the appraised value.  He's going to double check and find out if an owner builder could claim any $$$ for their labor.  Like Don said, you would then probably have to then claim that as income...so, might not be worth trying to claim labor.  Even if only materials were covered, I know it would be a big boost to my budget! 

[MountainDon]

A 10% discount in effect; 10% of what you spend, up to a maximum of 10% of 80,000 = $8,000.


My own feelings on the labor is that it would not be worth the trouble. There would have to be FICA and Medicare payments on the wages as well as the income tax, MTL.

[MarkAndDebbie]

digging up an old topic...

Existing home owners can now qualify for up to $6500. It appears owner builders would qualify, as Don mentioned above, with a Certificate of Occupancy  by April 30, 2010 (this may motivate some - not sure I'll make it).

http://www.federalhousingtaxcredit.com/faq2.php

reading publication 551 - I hope I can use a basis other than cost for the house (or at least some of the land) in valuing the house. I'll check with an accountant.

Basis Other Than Cost

There are many times when you cannot use cost
as basis. In these cases, the fair market value or
the adjusted basis of property may be used.
Adjusted basis is discussed earlier.

Fair market value (FMV). FMV is the price at
which property would change hands between a
buyer and a seller, neither having to buy or sell,
and both having reasonable knowledge of all
necessary facts. Sales of similar property on or
about the same date may be helpful in figuring
the property's FMV.