March 1, 2010
I Guess I Should Be Thanking Bank of America
So if you're scoring at home (or even if you're alone)* you know that I spent most of the summer cursing Bank of America's name, as they took the better part of four months to progress from offer to approval to closing on an "approved" short sale. I may have to revise that opinion.
The rules that were in effect with regard to the first-time homebuyer credit back in July were:
- Take 10% of the value of the house, or $8,000, whichever is least
- Subtract your gross income from $95,000 and divide by $20,000. If the number is less than 0, it becomes zero. If it's more than 1 it becomes one.
- Multiply the second number by the first, and there's your credit.
- Except that it's credit like a credit card. The Fed wants 10% of that amount back every year for the next 10 years (no interest, at least). So I'd have gotten about $4,000 on my 2009 return this year, then I would have owed the government $400 on my 2010–2019 returns.
But BofA took a long time to get their stuff done. And Congress expanded the program and changed the rules, effective November 9th.
- Step 1 is the same.
- In step 2 the math is the same, but the maximum amount jumps from $95,000 to $125,000.
- Step 3 is the same, so now I'm eligible for all $8,000!
- And this is a credit in the credits-and-debits sense. The IRS gives me money and that's the end of the story. No repayments.
Thanks to BofA's dickitry I closed on November 20th, after the new rules went into effect. So in the short term I get an extra $4,000 or so, and in the long term I get to keep all of it making my long-term net $8,000 compared to $0.
Now I know they didn't do this on purpose to benefit me, but sometimes the cards come out in your favor. I'm sure it's a cold comfort to the two sets of friends I inconvenienced from September through Thanksgiving that I get more money, but maybe if I buy them all a nice dinner it'll make that bitter pill a little easier to swallow.
So, thanks, Bank of America, ya jerks.
* Sportscenter catchphrase stolen mercilessly in the dead of night from Keith Olbermann.