First-time Homebuyer Credit(s)

I shall faithfully do my duty as a citizen of this world to stimulate the economy.

Enter: House.

I'd be growing Pinocchio's nose if I said that this first-time homebuyer credit isn't motivating me to sign on those dotted lines and hand over my lots and lots of hard-earned cash this Wednesday.

No more shopping sprees (i.e., uninhibited window shopping) or vacations to exotic locales (i.e., collecting travel magazines) to tempt my pocketbook. Yes, it's the 30's with a bang!

So how do I get this nice bit of cash incentive? The IRS Ten Facts about the First-Time Homebuyer Credit is a great place to start understanding the federal credit. I don't have a CPA, so I've been doing some reading, and I don't think this is as complicated and scary as I had originally thought (given that the IRS is involved). Some states, Georgia included, also are offering a first-time homebuyer credit, which is a nice bonus.

Federal Credit
Practically speaking, I only need to submit 1 form (or 2, depending on when I want to get the money) to get the federal credit. Form 5405: First-Time Homebuyer Credit is the primary form, and if I don't want to wait to file with my 2009 return (so I can get the money a lot sooner), I can submit Form 1040X: Amended U.S. Individual Income Tax Return to amend my 2008 return. The 1040X will take 8-12 weeks to process, but I'm hoping it'll be quicker since this is not a busy IRS season, and I've heard that the IRS is watching out for 1040X forms filed explicitly for the first-time homebuyer credit so as to push out the stimulus money. Yes, ARRA, I'm listening!

Georgia State Credit
On May 11, 2009, Georgia state governor Sonny Perdue signed House Bill 261 for Georgia's "eligible single-family residence tax credit," which looks a whole lot like the federal one, but with a few more limitations. This Georgia Department of Revenue Informational Bulletin on the tax credit is helpful to understand the bill and what the process should be, and this FAQ handout by the Georgia Association of Realtors about both the federal and state tax credits is simply awesome. My observations that follow are by no means comprehensive of the provisions in this bill.

• The Georgia first-time homebuyer credit is valid only on homes purchased during the six-month period starting from the month following the effective date of the legislation, i.e., June 1, 2009 - November 30, 2009.
• The purchased home must have been on sale prior to May 11, 2009 and still be on sale; in default on or before March 1, 2009; or already in foreclosure.
• The credit is equal to 1.2% of the purchase price, or $1,800 (whichever is less).
• Unlike the federal credit which can be claimed in one lump sum, the Georgia state credit is claimed in 1/3 annual installments starting with the 2009 return.

Practically speaking again, I need to fill out the eligible single-family residence tax credit portion of Form IND-CR and file that with my 2009 Form 500. None of these Georgia state tax forms is yet available, but should be soon. I also must include a bona fide listing agreement from the real estate agent that shows eligibility of the residence and a copy of my closing agreement.

Well now, that wasn't too bad. Nothing like a good blog to make me do my homework!