That’s a great question. If you haven’t bought a home yet, the questions is pretty much moot as the new $8,000 bill made it so you basically don’t have to pay the credit back (see my updated post in the links after this article). If you did purchase during the time the $7,500 tax credit was available, that becomes a great question. From my understanding (and I am not even close to a tax advisor) the IRS is using the amount of equity after the sale as the determinant. So, in the above example you gave, you would have no equity after the sale ($195,000 sale price minus $10,000 commission would be $185,000; which is what you paid for it) and thus my understanding of the bill is that you would not owe any of the $7,500 tax credit back to the government. I’ll try to get some clarification on it to be sure and will let you know.

Usually they try to make bills like this retroactive from the time they are proposed (so people don’t wait until bill is passed to purchase their home). That is where the April 9th date came from. I understand your frustration, but also understand that there has to be a firm cut-off date for the program. If they set it to March 1st…then we’d hear the same thing from people that purchased in February.

Example: If I had a build job that would not be complete until 05/01/2009 and I did my 2008 tax returns by 02/15/2009. Obvisously my tax returns would be completed and back to me before my Closing date of the build job. Would I recieve my (upto) $7500.00 prior to 05/01/2009 (before I closed on my home)??