New York – The Inspector General for Tax Administration released the news on Thursday that nearly half of the American’s those who claimed first time home buyer tax credit on their tax returns in 2009 would have to repay the amount to the government. The estimated amount of people were around 1.8million who claimed the tax credit on their returns.
Reason for This Announcement
The amount of tax credit is being asked to paid back is because of the confusion that rose due to the two different types of credits which the home buyers were eligible for depending on the date when they had made the purchase. The properties which were bought during the year 2008 were to be deducted on dollar to dollar basis upto 10% of the purchase price or $7500, which ever was lesser. The thing which needs to be looked at here is that the the money was a no interest loan which had to be paid back within the time of 15years.
However, had the purchases been made in the year 2009 than compared to 2008 then they could have been in a better situation as the congress decided to extend the credit and allowed a refund on it rather than a loan. Due to this reason a strategy is being drawn which would separate the two categories, 2008 and 2009 since the 2009 buyers are required to repay the credit than compared to the one who bought their homes in 2008.
The approach being followed above resulted in many problems as the IRS could not distinguish between the purchases made during between both the years, 2008 and 2009. This became a problem as now home owners would clam that the purchase was made much later than it actually occurred.
On Thursday, it was discovered that 73000 claims were made that more than 4% home buyers of the 1.8million had incorrect purchase dates recorded who had received credit. If any person was listed in 2008 then they had to pay the debt again where was those who bought it in 2008 were free of any obligation. The IRS also took those into considerations who had passed away and by doing that they saved up to $4million.
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