Roost Realty
First time homebuyer tax credit

Time to payback Uncle Sam

February 22, 2011 by · Leave a Comment 

I have not seen any reports of how many people took advantage of the first time home buyer tax credits that were available in several forms 2008 – 2010. I wonder how many folks are going to be surprised that Uncle Sam wants some money from them?

Most people would consider the tax “credit” that was available  in 2008 to be more of an interest free loan. Thanks to the Housing and Economic Recovery Act of 2008, buyers that bought after April 8, 2008, and on or before December 31, 2008 were eligible for a one time tax credit in the year of their purchase. Unlike the credits that came in 2009 – 2010 buyers under the 2008 tax credit are required to pay back their credit over a 15 year timeframe.

Exactly how are buyers going to pay back the credit? If the buyer got the full $7500 credit then they will payback $500 per year for 15 years. If the buyer sells their home before the 15 years is up then the remaining balance will be added to their tax liability for that year.

Buyers that utilized the First Time Homebuyer Credit in 2009 & 2010, via the American Recovery and Reinvestment Act of 2009, need not worry. They do not have to repay the credit, provided that they stay in their home for 36 months.

photo by: AJ Cann

Roost Realty