A question on one of Bidens proposed tax policy reform....

[andy753]

Biden is proposing a $15,000 tax credit to first time homebuyers, and this is an advanceable credit. My question is, if you currently owe the IRS money ($20,000), and you are doing a first time homebuyers program, would this offset your current tax liability, enabling you to purchase the home with the standard 3% down + closing (plus the remaining $5000 in back taxes). Asking for a friend, haha, seriously though, asking for a jackass friend who didn't make his tax payments on a framing business 2 years ago and is slowly paying them back.

And please, if you can't answer this intelligently and with out a bunch of political shit talking, please sit on the sidelines and watch. Some of the responses to legitimate questions on this forum are horrible. Hoping there's someone out there who truly understands this stuff.

 

[Daryl Hunt]

Biden is proposing a $15,000 tax credit to first time homebuyers, and this is an advanceable credit. My question is, if you currently owe the IRS money ($20,000), and you are doing a first time homebuyers program, would this offset your current tax liability, enabling you to purchase the home with the standard 3% down + closing (plus the remaining $5000 in back taxes). Asking for a friend, haha, seriously though, asking for a jackass friend who didn't make his tax payments on a framing business 2 years ago and is slowly paying them back.

And please, if you can't answer this intelligently and with out a bunch of political shit talking, please sit on the sidelines and watch. Some of the responses to legitimate questions on this forum are horrible. Hoping there's someone out there who truly understands this stuff.

For starters, you can stop with the "You are Smarter than I am" bit.

Now on to the meat of the discussion.

Are you aware this isn't a new idea? The first one was signed into law by GW Bush. Then a second was signed into law by Obama but it ran out in 2010 when the economy turned around. Bushes was for 7,700 and Obama's was for 8000. Each time, it was to build a fire under the economy. Not much different now except the Economy is in worse shape and 15,000 is probably justified. It's not a tax break, it's a tax credit.

Biden’s $15,000 first-time homebuyer tax credit explained

And that Credit could only only be used at the time of Purchase. The way a Tax Break is, it can be carried over. But the proposed Tax Credit is used is a one time thing. It's only used for the year that a new home buy buys a home. If you have ever purchased a home in the past, you don't get that credit.

This isn't a Red of a Blue thing. It's an economy thing to get more people into new homes. And that supports entire communities in building of those new homes as well if it's needed. It puts a lot of out of work people back to work, not just making it easier for the new home buyer to afford a home.

 

[andy753]

Biden is proposing a $15,000 tax credit to first time homebuyers, and this is an advanceable credit. My question is, if you currently owe the IRS money ($20,000), and you are doing a first time homebuyers program, would this offset your current tax liability, enabling you to purchase the home with the standard 3% down + closing (plus the remaining $5000 in back taxes). Asking for a friend, haha, seriously though, asking for a jackass friend who didn't make his tax payments on a framing business 2 years ago and is slowly paying them back.

And please, if you can't answer this intelligently and with out a bunch of political shit talking, please sit on the sidelines and watch. Some of the responses to legitimate questions on this forum are horrible. Hoping there's someone out there who truly understands this stuff.

For starters, you can stop with the "You are Smarter than I am" bit.

Now on to the meat of the discussion.

Are you aware this isn't a new idea? The first one was signed into law by GW Bush. Then a second was signed into law by Obama but it ran out in 2010 when the economy turned around. Bushes was for 7,700 and Obama's was for 8000. Each time, it was to build a fire under the economy. Not much different now except the Economy is in worse shape and 15,000 is probably justified. It's not a tax break, it's a tax credit.

Biden’s $15,000 first-time homebuyer tax credit explained

And that Credit could only only be used at the time of Purchase. The way a Tax Break is, it can be carried over. But the proposed Tax Credit is used is a one time thing. It's only used for the year that a new home buy buys a home. If you have ever purchased a home in the past, you don't get that credit.

This isn't a Red of a Blue thing. It's an economy thing to get more people into new homes. And that supports entire communities in building of those new homes as well if it's needed. It puts a lot of out of work people back to work, not just making it easier for the new home buyer to afford a home.

Thanks for the reply, and I wasn't trying to be condescending. But man, sometimes this forum is horrible when trying to ask a normal question. You can ask the most basic question (what kind of topping do you like on your pizza?) and it usually turns to lots of cussing, insults about family, Biden this Trump that, seem like most responses come from angry 10 year olds. But again, thanks for the reply.

I knew the old tax break expired, just wasn't sure how those credits play out if you owe back taxes. My buddy is cleaning up his credit for the most part and saving money for down payment, when in reality he probably should be taking the money he's saving and paying down his tax bill. But he was told by someone (not a tax professional) that he might be able to use the credit up front to eliminate his tax bill and purchase the home as a normal first time home buyer. Wasn't sure about this.

 

[Grumblenuts]

Biden is proposing a $15,000 tax credit to first time homebuyers, and this is an advanceable credit.

No. It apparently hasn't even been written into bill form yet, but advanced credit only seems to be the intent. One can apply it as a down payment on their first home purchase up to $15K or 10% of the purchase price, whichever turns out to be less. No other options. So if your friend is buying his first home, then he'll apparently be able to take this one-time credit. But if the home isn't worth at least $150K I'd wait.

Unlikely to "offset your current tax liability, enabling you to purchase the home with the standard 3% down + closing (plus the remaining $5000 in back taxes)" because while the mortgage lender is assured of repayment at tax time by the full faith and credit of the U.S. Treasury, they must still wait for that money on top of extending credit to someone showing lots of debt exposure already. Might work if the seller agreed to inflate the purchase price by the amount owed in back taxes, then immediately paid that back to the buyer. Not sure if that's legal, but I've seen stuff like it done.