The Internal Revenue Service issued an estimated $37 million in questionable refunds to buyers using the first-time homebuyer tax credit, a federal audit conducted by the Treasury Inspector General for Tax Administration found.
The report, released today, shows that some taxpayers received multiple refunds of the homebuyer credit, and others amended tax returns in order to qualify for a version of the credit that did not require repayment. Not all questionably amended claims were sent on for examination or scrutiny.
The tax credit, introduced in 2008, is a refundable credit available to taxpayers who are purchasing a principal residence. In order to qualify, they cannot have owned a residence for three years prior to the date they bought their new home. There have been various amendments to the credit’s regulations. — Katherine Clarke [more]
Posts Tagged ‘first time homebuyer tax credit’
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First-time homebuyers who rushed to take advantage of the government’s $8,000 tax credit before it expired last year have already lost nearly twice that much to falling property values, according to Smart Money. The tax credit program, which was in place between January 2009 and April 2010, prompted a surge in activity in the U.S. housing market (and later a drop-off, after the program expired). But according to the Zillow Home Value Index, which released its data for March this week, home prices have fallen by an average of $15,000 over the last year, and $20,000 since two years ago, meaning that those who got $8,000 credits have actually lost money. [more]
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Home prices may be on their way down nationwide, unless a new round of federal support for mortgage refis emerges, according to Harvard economist Martin Feldstein. The end of the first-time homebuyer tax credit — and subsequent decline in home prices — could lead to more defaults and foreclosures, Feldstein told Bloomberg News. And as more homes go into foreclosure, “more homes [are entering] the market, driving prices down,” Feldstein said. Solutions to this problem include an extension of income tax cuts for an additional two years, Feldstein said, along with a new federal housing program aimed at reducing principal on home loans. [Bloomberg]
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Marina Walsh
Independent mortgage bankers nationwide saw profits surge during the second quarter of the year, according to the Mortgage Bankers Association, which reported an average profit of $917 on each loan originated, up from the first quarter, when that figure was down at $606. Meanwhile, firms saw a total average production volume of $196.6 million in the second quarter, compared to $157.8 million during the previous quarter. Marina Walsh, an associate vice president with MBA, said that the first-time homebuyer tax credit likely spurred this upward momentum. “The significant rise in loan origination volume during the second quarter reflects the surge in first-time homebuyers seeking to take advantage of the tax credit before the deadline expired,” Walsh said. But, even with this quarterly rise in activity, the MBA data showed profits significantly below those seen during the same time period a year earlier. “A year before, quarterly production volume averaged $280.9 million,” Walsh said. TRD
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A Senate vote slated for this week or next might determine whether buyers rushing to close on units purchased under the federal first-time homebuyer tax credit program will have more time on their hands, according to the Wall Street Journal. After last night’s Senate vote in favor of a proposal to extend the closing deadline to Sept. 30, from its current June 30 date, a follow-up vote is all that’s needed to push the measure onto the House. Under current regulations buyers who purchased a home and qualified for the $8,000 credit — which expired April 30 — had to seal the deal by the end of this month. [WSJ]
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A Senate vote slated for this week or next might determine whether buyers rushing to close on units purchased under the federal first-time homebuyer tax credit program will have more time on their hands, according to the Wall Street Journal. After last night’s Senate vote in favor of a proposal to extend the closing deadline to Sept. 30, from its current June 30 date, a follow-up vote is all that’s needed to push the measure onto the House. Under current regulations buyers who purchased a home and qualified for the $8,000 credit — which expired April 30 — had to seal the deal by the end of this month. [WSJ]
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Home builders are slashing prices to keep buying activity up since the first-time homebuyer tax credit expired at the end of April, according to the Wall Street Journal. While many developers nationwide, including Lennar and Beazer Homes, accelerated their speculative building to capitalize on the tax credit, its wake is leaving some with extra inventory on their hands. Jody Kahn, a vice president with John Burns Real Estate Consulting, said that the decision to cut prices may be a way to ride out the tide. “[They] want to keep the momentum going,” Kahn said. “Traffic and sales fell off pretty dramatically in May.” [WSJ]
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Home builders are slashing prices to keep buying activity up since the first-time homebuyer tax credit expired at the end of April, according to the Wall Street Journal. While many developers nationwide, including Lennar and Beazer Homes, accelerated their speculative building to capitalize on the tax credit, its wake is leaving some with extra inventory on their hands. Jody Kahn, a vice president with John Burns Real Estate Consulting, said that the decision to cut prices may be a way to ride out the tide. “[They] want to keep the momentum going,” Kahn said. “Traffic and sales fell off pretty dramatically in May.” [WSJ]
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While industry experts have reported a nationwide boost from the first-time homebuyer tax credit recently, Manhattan agents have been more negative, and some brokers outside of the city say that they didn’t see many last minute deals today as the tax credit expired, according to Inman News. One Long Island broker, Jedd Stone, said that while the tax credit encouraged some buyers, many more felt that the credit wasn’t reason enough to rush. [more]
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While many Manhattan brokers say the homebuyer tax credit doesn’t make a difference to their business, Long Island brokers say they’re seeing buyers racing to make purchases before this Friday’s deadline. Long Island homebuyers are rushing in part because they’re skeptical that the tax credit, which offers $8,000 to first-time buyers and $6,500 to repeat buyers, will be extended, as it was last November. Many brokers there say that the weeks preceding the deadline have been even more hectic than what was seen in November, because April is a busier month for homebuying, traditionally. [more]
