According to the Inspector General for Tax Administration 950,000 families took the New Home Owners Tax Credit incorrectly and will need to repay the money to the government.
First, how badly can a program can be implemented that over half of the people who applied got the specifics wrongs. Seriously, only the Federal Government could screw this up. If it was a private business that messed this up so badly every channel on the television would have lawyers advertising for the class action lawsuit.
Secondly, this is going to leave a great deal of pain across the country. The typical home bought with the new home owner tax credit was a first time home or on the lower end of the housing spectrum. Essentially families for which 8,000 dollars is a lot of money. Now they will have to come up with it in cash, not roll it into the mortgage as they would have, and pay Uncle Sam, or face ridiculously high penalties and interest.
This is not what we want to deal with during a recession.
According to a report from the Inspector General for Tax Administration, released to the public Thursday, about 950,000 of the nearly 1.8 million Americans who claimed the tax credit on their 2009 tax returns will have to return the money.
The confusion comes because homebuyers were eligible for two different credits, depending on when their homes were purchased.
Those who bought properties during 2008 were to deduct, dollar for dollar, up to 10% of the home’s purchase price or $7,500, whichever was less. The catch: The money was a no-interest loan that had to be repaid within 15 years.
Had they waited to buy until 2009, they could have gotten a much sweeter deal. Congress extended the credit and made it a refund rather than a loan.
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That wasn’t the only tricky thing about the program. When we looked into it, the deadline to sign a contract was April 30, 2010. BUT, you had to close on the home by July 30 (which for us meant we had to be done building by July 30). Try building a 3,000+ sq ft custom home from contract signing to welcome mat in 90 days. Not gonna happen. Definitely not well thought out.
Your story was really inofrmtiave, thanks!
It is good that the typical home bought with the new home owner tax credit was a first time home
Now isn't that just what you expected from your "government at work." Do something really sloppy, without thinking through the actualy process that will occur, implementing it without a plan of how to avoid fraud and abuser, make a big splash and then clean it up afterward doubling the cost of the program
These pieces really set a santdard in the industry.
Well at lest the government tried to do something to help out the real estate market. Wouldn't it have been worse if they hadn't acted at all.
Why is it that no matter what the government tries to do to help the real estate industry, it turns out poorly. Are we the one industry that always seems to be on the short-end of the stick even when government "tries" to help.
Is there such a word as "repayed" (in your header)? Shouldn't that be "repaid?"
Interesting article and an appropriate picture..money down the drain.