Bankrate's 2009 Tax Guide
Tips and tools
taxes
First home, new tax break

"For first-time homebuyers this year, this special feature can put money in their pockets right now rather than waiting another year to claim the tax credit," says IRS Commissioner Doug Shulman in announcing the filing year choice.

If you don't need the money immediately, however, it might be better to wait and take the credit on your 2009 return.

The choice is yours. You can claim the credit now or claim it later, based on which filing year provides you with the best tax result. So run the numbers first before making a filing year choice.

And if your first-home purchase occurs after the 2008 filing deadline, which could be as late as Oct. 15 if you get an extension, you can file an amended return to make the claim.

2008 purchasers locked in

Homebuyers who closed on their first homes in 2008, however, aren't as lucky when it comes to their tax break.

Buyers of first homes between April 9, 2008, and Dec. 31, 2008, can claim the credit, but only under the original terms.

This means they are allowed a maximum tax break of only $7,500 or 10 percent of their home's purchase price.

And any credit amount must be paid back over 15 years, starting with the 2010 return.

Credit e-filing on hold

Filers who use tax preparation software can get an idea of how much claiming the credit this filing season will help. But such new homeowners won't be able to electronically file their first-home credit claims for a while.

Form 5405, which taxpayers must use to take the first-time home purchase tax break, has been revised to reflect the new purchase dates and $8,000 credit amount. However, it's not yet been formatted and approved by the IRS for e-filing.

advertisement

"All of the tax software industry is waiting for the IRS to release a time frame around which e-filing will be accepted," says Denise Sposato, director of communications and communities for H&R Block. "You can download the form and go into one of our offices and manually file it. You would have to mail it in, and there is some delay in that."

Intuit's TurboTax software packages are in the same boat. "We are actually pushing updates out to TurboTax, but the forms are still only printable," says Julie Miller, director of corporate communications for Intuit. "It's not any different from prior years when we had electronic forms that were late because of congressional changes."

Show Bankrate's community sharing policy
          Connect with us
advertisement
MORTGAGE HOME EQUITY AUTO CDs CREDIT CARDS
Product Rate Change Last week
30 year fixed, 0 point 4.32%  0.06 4.26%
15 year fixed, 0 point 3.36%  0.09 3.27%
5/1 ARM 3.37%  0.10 3.27%
 
View Rates in your area Search
Product Rate Change Last week
30K FICO-based HELOC 4.74%  0.01 4.75%
50K FICO-based HELOC 4.51%  0.01 4.50%
100K FICO-based HELOC 4.24% --0.00 4.24%
 
View Rates in your area Search
Product Rate Change Last week
60 month used car loan 2.86%  0.20 3.06%
48 month used car loan 2.79%  0.40 3.19%
60 month new car loan 2.94%  0.10 2.84%
 
View Rates in your area Search
Product Rate Change Last week
1 Year CD 0.90%  0.02 0.88%
2 Year CD 1.02%  0.01 1.03%
5 Year CD 1.59%  0.01 1.60%
 
View Rates in your area Search
Product Rate Change Last week
Balance Transfer Cards 15.71%  0.01 15.70%
Cash Back Cards 16.36% --0.00 16.36%
Low Interest Cards 10.91% --0.00 10.91%
 
Search
DAILY TAX TIP NEWSLETTER

Get expert advice during tax season on tax preparation and tips for cutting your tax bill.

advertisement

Connect with us