Money

Taxing Question: How Fast Can You Spend $4.54 Billion?

By Ilyce Glink

Updated on: April 15, 2009 / 7:24 PM EDT / MoneyWatch

Buy a first house, get $8,000 back from your friendly Treasury Dept?

Happy Tax Day. If you haven't already filed, have I got a form for you: Form 4868, a request to file an extension.

Meanwhile the tax stats are starting to pour in. The most interesting one to date: Some 568,000 taxpayers have filed for the $8,000 first-time home buyer refundable tax credit. That works out to a fast $4.54 billion, courtesy of the Treasury Department.

I've been hearing from Realtors and home builders across the country who are trying to use the $8,000 lever to jack up some additional interest from first-time buyers -- who are expected to account for just over half of all home buyers this year.

As long-time housing industry observers know, if you can get first-time buyers to make an offer on a house, their sellers can then trade up to their next home, and so on. It's like trickle-down economics in reverse.

To get folks focused on the ins and outs of the $8,000 tax credit, with the implication that this kind of change would buy a nice, new house, the National Association of Home Builders has put up a new website to help folks make some sense of yet another change in the tax code.

Here's what you need to know to take advantage of the first-time home buyer tax credit:

You don't necessarily have to be a first-time buyer. If you haven't owned a home in the past 3 years, you qualify.
It's a refundable tax credit. That means you get 10 percent of the purchase price up to $8,000, regardless of whether you pay that much in taxes this year.
You have to close on your home between January 1, 2009 and December 1, 2009. (I don't know why you can't buy a house through the actual end of 2009, but it probably had to do with calculating the cost, and hey, that's Washington!) This is actually a problem for people who want to buy new homes if the developer won't be ready to close by the December 1 deadline. You cannot close on your loan without the house being ready to live in, and if the house isn't ready on time, you'll lose out on the tax credit.
You never have to pay the tax credit back. Unfortunately, if you qualified for the $7,500 tax credit by purchasing your home last year, you do have to pay that one back. (Sorry!)
Single taxpayers with incomes up to $75,000 and married taxpayers with incomes up to $150,000 qualify for the full tax credit. The tax credit phases out a little over those levels.
You can file for the tax credit with your 2008 or your 2009 return. If you buy a house in June, you can refile your 2008 taxes to get your cash this year.

The NAHB's website also lists some excellent resources for first-time homebuyers, as well as other tax provisions contained in the American Recovery and Reinvestment Act of 2009.