Hat tip to SM for sending in this from CNNMoney.com:
Nearly half of all Americans who claimed the first-time homebuyer tax credit on their 2009 tax returns will have to repay the government.
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.
The confusion comes because homebuyers were eligible for two different credits, depending on when their homes were purchased.
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.
Now, the IRS is developing a strategy for separating the 2009 taxpayers who are required to repay the credit from those who are not.
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.
It is also taking a look at all those deceased taxpayers who received credits.
The inspector general reported that 1,326 single people listed as dead by the Social Security Administration claimed more than $10 million in credits. The IRS threw out 528 of those 1,326 claims, saving $4 million.
You mean I can’t get a post-mortem tax credit? Since it’s a tax credit – doesn’t it offset against the dead persons taxes owed? How many dead people owe taxes?
I love that they only threw out less than half of the claims by dead folks! Now THAT is government efficiency.
$10 million in credits for dead people? And the IRS saved $4 million by throwing out 528 claims? What about the other $6 million? Can’t the IRS do simple math???
Sorry for being so grumpy. I’ve spent nearly a week in real estate negotiations. At the last second– (while my agent and I were on the phone)–the listing agent called and said the seller rescinded his latest offer to me ‘cuz he got a full-price offer.
*Sigh* Real estate negotiations–not for the faint-of-heart…
what a joke.Show how the govt really works.
I wonder how many pet claims were rejected….still trying to sniff those out I guess.
Since people vote with their pocketbooks, I am there will be a lot of upset voters come the November elections.
I remember that on the first round…I thought it was less to be repaid than the 15 years(maybe it got upped?), but more importantly it could be rolled into the principal/loan itself.
Meaning on a 30-year @ 5%, you were basically paying almost $16K for that $8K “credit.” (if not really more, since it was part of the total principal)
Idiots.
It’s completely possible for a dead person to be eligible for the credit. They buy a house then die. I assume the credit would then go to their estate.
Correction: “Had they PREDICTED THE FUTURE, they could have gotten a much sweeter deal.” You could make a lot more money than that if you could just predict the future. The non-repayment credit was legislated well after the repay credit was in full effect. The chronology is wrong here.
And as Geotpf pointed out, it’s completely possible for a dead person to be eligible. The same way a dead person can pay taxes, or get a tax credit. Taxes are settled for the previous year – whether you’re dead or alive today.