Will my home buyer rebate be taxed by the IRS?

Answer:

No, our 2% buyer’s rebate is not taxable.

Will my home buyer rebate be taxed by the IRS?

There had been some discussion when we began our 2% home buyer rebate in 2002 whether it would be declared as taxable income by the IRS.

Remember:

A rebate is essentially a refund of a percentage of the buyer’s agent commission fee.

In traditional real estate, the home seller pays a 6% commission. The listing agent and the buyer’s agent splits that two ways with 3% going to each agent. The vast majority of agents simply pocket the commission that they make when representing the home buyer in a transaction.

In fact, less than one percent of all real estate agents offer a rebate. This is where we are different.

At Creekview Realty, instead of keeping the buyer’s agent commission, we rebate 2% back to the buyer and only keep 1% for our services after closing. The home buyer rebate applies to both existing and new build homes.

Click here for more information on getting the home buyer rebate.

Home buyer rebates are not considered income and therefore not taxable.

Instead, they are an adjustment to the purchase price of the property. Because they are from the purchase of a home, rather than the sale, they are not subject to Capital Gains taxes.

Capital gains taxes only apply when there has been an increase in the value of a piece of real estate that has been sold. The seller, not the buyer, is the one who pays capital gains taxes.

For the same reason, receiving a home buyer rebate does not require you to complete an IRS 1099 form, used to declare miscellaneous income.

“In other words, no. Your home buyer rebate will not be taxed.”

By | 2018-03-21T15:51:27+00:00 April 16th, 2015|Buyer Questions|