Almost 1 million must repay homebuyer tax creditby Tim Manni
Did you claim the homebuyer tax credit on your 2009 tax return? If so, depending on which version you got, you may have to pay it back:
According to a report from the Inspector General for Tax Administration, released to the public Thursday, about 950,000 of the nearly 1.8 million Americans who claimed the tax credit on their 2009 tax returns will have to return the money.
But I thought I didn’t have to pay the tax credit back?
There is some understandable confusion concerning who has to pay back the credit and who doesn’t. The reason for this confusion is because of the way the credit was originally structured (and it has changed several times since):
Those who bought properties during 2008 were to deduct, dollar for dollar, up to 10% of the home’s purchase price or $7,500, whichever was less. The catch: The money was a no-interest loan that had to be repaid within 15 years.
Had they waited to buy until 2009, they could have gotten a much sweeter deal. Congress extended the credit and made it a refund rather than a loan.
Earlier this year the IRS was criticized for not being able to properly distinguish filers who purchased homes in 2008 versus 2009. Apparently, the IRS says they have found a way to correct this problem:
A review by the Inspector General earlier this year found that the IRS could not easily distinguish between home purchases made in 2008 and 2009. That heightened concerns that some claims could be erroneous or even fraudulent, that buyers could, for example, claim their purchase came later than it actually occurred.
Thursday’s release reported that 73,000 claims, more than 4% of the 1.8 million homebuyers who received the credit, had incorrect purchase dates recorded by the IRS.
Some of the inaccuracies counted against the taxpayers. Nearly 60,000 were listed as purchasing in 2008 (meaning they had to repay the credit) or had no purchase dates at all, rather than their correct 2009 purchase dates, which would free them of the obligation to pay it back.
Not sure what purchase date you included on your 2009 tax return? Check your tax return. While we don’t give out tax advice, we suggest you follow up with the IRS to be certain which version applies to you. The IRS may not have determined whether or not you have to repay your tax credit this year, but the IRS is known for tracking people down and penalizing them. Not to mention, the sale date of your home is public record, so it won’t be too hard for them to find you.