Home Buyer's Refunds Are Not Taxable as Income

In 2007 the IRS has ruled that that commission refunds to home buyers are not taxable. The IRS position is that payment or credit at closing to the home Buyer represents an adjustment to the purchase price of the home and generally is not includible in a home Buyer's gross income.

The IRS centers its reasoning on similar cost-saving options available for consumers in other industries, such as when an auto purchase manufacturer offers rebates and similar financial incentives that represent an adjustment to the purchase price.

There is currently no public IRS ruling on a subject, but there is a private ruling that describes a principle and logic behind Buyer’s refunds. IRS private ruling does not determine the tax situation of each home buyer but clearly outlines the reasoning why Real Estate Agent is not obligated to report a Buyer’s Refund as income. Based on this ruling Real Estate Agent does not have any obligation to issue a 1099-MISC to home Buyer who receives a refund (https://www.irs.gov/pub/irs-wd/0721013.pdf)

At HomeOpenly our goal is to provide users with the best and most effective local Real Estate representation options. We do not provide legal advice and do represent anyone in real estate transactions. All inquiries on this matter should be directed directly to the IRS. The process of securing Buyer’s Rebate into representation agreement undeniably helps consumers to come out in a better financial position when buying a home in States that allow rebates. HomeOpenly is an absolutely free real estate service that matches consumers with local Real Estate Agents who offer savings. Real Estate Agents never pay referral fees to HomeOpenly making all our recommendations absolutely free and unbiased.

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