First-time home buyer tax credit: news roundup
Three things about the first-time home buyer tax credit:
1. Despite the credit's name, you don't actually have to be a first-time buyer to get it, merely someone who hasn't owned a home in three years. But you are supposed to -- you know -- actually buy a home.
The Treasury Inspector General for Tax Administration says more than 19,000 people have claimed the credit despite not purchasing anything. Just over 70,000 claimed it though they apparently didn't meet the definition of a first-time buyer. And 582 individuals under 18 claimed it, including some 4-year-olds. (I can just picture the parents: "What? He's a first-time buyer, isn't he?")
The agency says it "recommended that the IRS require taxpayers to provide documentation to verify a home purchase, such as a U.S. Department of Housing and Urban Development Settlement Statement (HUD-1) issued to homebuyers at closing," but the IRS said "nah." (OK, not exactly "nah," but that's the general idea.)
2. The Government Accountability Office issued a report that -- among other things -- breaks out the tax-credit usage by state as of Aug. 22. Maryland ranks 34th, with about 24,000 taxpayers claiming $166 million in credits. Report here, in PDF form. (Thanks to Jay Hancock for noticing this.)
Total nationwide: 1.4 million taxpayers claiming nearly $10 billion. Both the current version of the credit and the less-generous 2008 credit are included in the tally.
3. If you haven't already signed a contract on a home, you're going to be hard-pressed to get the credit -- assuming it expires Nov. 30 as planned. To close by that date, "you basically would have to sign a contract to buy a house today to qualify," Lawrence Yun, chief economist for the National Association of Realtors, told the Los Angeles Times ... yesterday.
Several local real estate agents, noting that most first-time buyers use slower-to-close FHA-insured loans, have told me they recommend allowing 45 to 60 days.
UPDATE: Looking for news about the Senate proposal on first-time and repeat-buyer tax credits? Go here.