Help: $8000 First-Time Home Buyer Tax Credit

[6FeetUnder]

Hey Everyone. I'm hoping for some advise around the First-Time Home Buyer Tax Credit from here:Federal Housing Tax Credit for First-Time Home Buyers: Home.

Current Situation:
I'm living with a roommate who is currently unemployed and is going through the Foreclosure process of his house. Hes been told that they're going to take the house in the middle of August. He hasn't been paying his mortgage because of a few different reasons. (Unemployement, not sure what he wants to do to resolve the situation, embarassment, etc.)

Here is my question: One of our options is to refinance, and have me put on the mortgage as well. This should lower the payment amount due to my credit, and we can essentially start over from today's date and move forward from that point. (and not have to pay back the amount we are behind) If we do that, will I be eligible for the $8000 tax credit?

I know there are definately risks associated with this whole thing, but I wanted to get some of your opinions, so I can make an informed decision and make sure I'm not missing anything.

I appreciate all of your input!

[Shewillbemine]

The $8,000 credit applies to individuals who make less than $75k a year and are first time home buyers. Because you would only be co-signing the refinanced mortgage, as opposed to buying the house outright from your roommate, you would probably not be eligible for the credit.

Furthermore, and do not ever ignore this advice, DO NOT EVER COSIGN on a loan/mortgage/etc with anyone unless it is your spouse or child. And even with those two, you still have to watch out. Your roommate's immediate inability to pay his/her own mortgage should be a red flag for you. By co-signing the mortgage with this person, should he/she default on his/her part of the mortgage payment, your own credit is at risk.

Again, DO NOT COSIGN ANYTHING WITH A NON-IMMEDIATE FAMILY MEMBER, especially if this person is just "a roommate".

[momof1in150]

The $8000 is for new purchases only and you can't own a home for the last three years. So, no you will not qualify. The only way you would qualify is if you purchase the house from your roommate and they were not on the mortgage or deed.

[glock35ipsc]

Again, DO NOT COSIGN ANYTHING WITH A NON-IMMEDIATE FAMILY MEMBER, especially if this person is just "a roommate".

Better yet, do not cosign for anyone, for any reason, EVER! The bank wants a cosigner for a reason...... Be ready to make all the payments if you do.

[simpletron]

assuming you can afford the house, why don't you purchase it from your roommate. you will be able to buy it for the loan amount or maybe less if the lender is willing to negotiate. you get the 8000 credit. you don't have to deal with the credit problems of your roommate and might get a better rate. the big hang up is the initial cost, you would have to come up with a downpayment and escrow on top of the closing cost.

edit:

your roommate also get things out of this deal: his escrow money back at a time he needs money, perserve some credit - which some employer consider aka improve job chances, doesn't have to move out(it's up to you),...

[6FeetUnder]

Thanks everyone for your replies. This is a very tough decision for me to make, but everyone has pretty much answered as I knew you would, (And with what i KNOW I SHOULD (not) do). Its just a really hard time because my friend is going through a lot of personal things which have compounded into this foreclosure thing, and I feel that if I help him, he might get through it.

I appreciate everyone's help. Foreclosure happens in August, and I'm hoping he does what he needs to do to save his house.

[parafly]

Another $8000 tax rebate question

A bit off topic, but since we are discussing the $8000 tax rebate for first time home buyers, I figure I could ask here.

Does the tax credit apply for land purchase and new construction? Or is it strictly for existing homes?

[simpletron]

from the FAQ in the link in the OP

13. Instead of buying a new home from a home builder, I hired a contractor to construct a home on a lot that I already own. Do I still qualify for the tax credit?
Yes. For the purposes of the home buyer tax credit, a principal residence that is constructed by the home owner is treated by the tax code as having been "purchased" on the date the owner first occupies the house. In this situation, the date of first occupancy must be on or after January 1, 2009 and before December 1, 2009.

In contrast, for newly-constructed homes bought from a home builder, eligibility for the tax credit is determined by the settlement date.


land only purchase do not qualify, and the home must be your primary residence, so no investment property.

[parafly]

from the FAQ in the link in the OP

13. Instead of buying a new home from a home builder, I hired a contractor to construct a home on a lot that I already own. Do I still qualify for the tax credit?
Yes. For the purposes of the home buyer tax credit, a principal residence that is constructed by the home owner is treated by the tax code as having been "purchased" on the date the owner first occupies the house. In this situation, the date of first occupancy must be on or after January 1, 2009 and before December 1, 2009.

In contrast, for newly-constructed homes bought from a home builder, eligibility for the tax credit is determined by the settlement date.


land only purchase do not qualify, and the home must be your primary residence, so no investment property.

Thanks!

[Inkstain82]

I've heard of this in passing but never really considered it because we never thought we'd be in position to buy a home.

So let me get this straight:

First-time homebuyer puts up down-payment, gets mortgage for rest, purchases house.

His next return, he gets an $8,000 tax credit that is refundable even beyond his tax liability?

[momof1in150]

[QUOTE=Inkstain82;220839]I've heard of this in passing but never really considered it because we never thought we'd be in position to buy a home.

So let me get this straight:

First-time homebuyer puts up down-payment, gets mortgage for rest, purchases house.

His next return, he gets an $8,000 tax credit that is refundable even beyond his tax liability?[/]

That is pretty much how it works. That is why so many first time home buyers are buying homes right now. Almost all of our recent sales have been to first time home buyers. The first time home buyer is defined as not owning a home in the last three years. You can also amend your 2008 tax return to get the credit sooner.

[Inkstain82]

That's crazy. For the area we want to live in, $8000 is pretty close to a 20% down payment in and of itself.

[momof1in150]

The credit is actually no more then 10% of the sale price so you most likely wouldn't get the full credit unless the house is more then $80K. I live in a high cost area so I didn't think of the minimum purchase price

[Inkstain82]

The credit is actually no more then 10% of the sale price so you most likely wouldn't get the full credit unless the house is more then $80K. I live in a high cost area so I didn't think of the minimum purchase price

Dang. Good thing I wasn't spending it already

[simpletron]

I've heard of this in passing but never really considered it because we never thought we'd be in position to buy a home.

So let me get this straight:

First-time homebuyer puts up down-payment, gets mortgage for rest, purchases house.

His next return, he gets an $8,000 tax credit that is refundable even beyond his tax liability?

Fast $8,000 down-payment assistance for homebuyers - May. 19, 2009

the federal government is trying to change it such that you could have access to the credit at closing though the FHA. also some states have passed similar credits for state taxes. my bother just told me about this one for georgia