I know the basics about how the old "interest free loan" Home Buyer Tax Credit works, and I also know a little about the proposed Homebuyer Tax Credit that is a "true" tax credit. My questions mainly deal with how these two credits are related and/or how they interact. I know my questions are probably a little premature; however, I would appreciate anyone's help (or links to sites that describe the new provision in painstaking detail (every site I have seen is very "general" about the proposed new credit).
Facts: Taxpayer purchased a home on March 1, 2009 and otherwise qualifies for the First-time Homebuyer Credit.
Questions:
(1) If the Taxpayer claims the First-time Homebuyer Tax Credit (the "old" version of the Credit that is, economically, an interest-free loan) for this purchase on her 2008 income tax return, will the repayment of such Credit be waived under the new law that is expected to be signed by the President today? I guess this really comes down to, for homes purchased in 2009, are there two distinct homebuyer credits (the "true" credit anticipated in the economic stimulus package for 2009 home purchases and the older "interest-free loan" credit), or has/will the economic stimulus package tax credit basically supersede/amend the the repayment requirement of the previous credit?
(2) If your answer to number (1) is that both the "interest-free loan" type of credit and the "true" tax credit apply to 2009 home purchases, is it possible to claim the "true" tax credit for 2009 home purchases on your 2008 income tax return (I know it is possible to claim the "interest-free loan" credit relating to 2009 purchases on your 2008 income tax return)?
My gut feeling is that the new provision merely alters the present Code Section dealing with the First-time Homebuyer Credit and waives the repayment requirement for home purchases that fall within January 1, 2009 to December 1, 2009 (i.e., there are not two distinct credits that apply to home purchases during the overlapping time periods of the "old" and "new" credits). My gut is also that, if you claim the credit on your 2008 income tax return on Form 5405 for a 2009 purchase, then repayment will not be required since the "new" credit will alter the repayment rules of the "old" credit. However, I am not comfortable going on my gut alone, so I would like to know more!
If my gut is correct, under the "new" credit the maximum credit is $8,000, whereas the maximum under the "old" credit was $7,500. How will the Taxpayer receive this additional $500 if they claim the "new" credit on their 2008 income tax return on Form 5405 (which only anticipates a $7,500 credit).
Sorry for the long, and probably convoluted, question, but $7,500 / $8,000 of "free money" is a nice chunk of change and I want to get this right.
