$8,000 First Time Home Buyer Tax Credit Now Applies To Seller Financing Deals

Posted on: September 15, 2009

Categories: How To Sell, Profit

Author: buyfixandprofit

Home Buyer Tax Credit Update

The Senate has passed a bill to give homebuyers another three months to close on their homes and receive tax credits up to $8,000. The Tax Extenders Bill would apply to homebuyers who met the April 30, 2010 deadline with a signed contract to purchase a new or existing primary residence. The amendment would extend the deadline to September 30, 2010 for homebuyers to close on their real estate transaction. The previous deadline was June 30, 2010. The bill now goes to the House of Representatives, where it is expected to pass.

The National Association of Realtors estimates that as many as 180,000 homebuyers have qualified for the tax credit and met the contract deadline of April 30, 2010, but might not be able to close their transaction by the June 30, 2010 deadline due to the sheer volume of loan applications in the pipeline.

Seller Financing and the home Buyer Tax Credit

Anyone looking to provide seller financing to first time home buyers should use this as a marketing tool to help sweeten the deal.  Just remember that this tax credit expires on April. 30, 2010.

The IRS has recently changed its mind on this issue.  Here’ the link:



Can a taxpayer claim the first-time homebuyer credit if the purchase is pursuant to a seller financing arrangement (as in the case of a contract for deed, installment land sale contract, or long-term land contract), and the seller retains legal title to secure the taxpayer’s payment obligations?

If the taxpayer obtains the “benefits and burdens” of ownership of a residence in a seller financing arrangement, then the taxpayer can claim the credit even though the seller retains legal title. Factors that indicate that a taxpayer has the benefits and burdens of ownership include: 1. the right of possession, 2. the right to obtain legal title upon full payment of the purchase price, 3. the right to construct improvements, 4. the obligation to pay property taxes, 5. the risk of loss, 6. the responsibility to insure the property and 7. the duty to maintain the property.

pixel $8,000 First Time Home Buyer Tax Credit Now Applies To Seller Financing Deals

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