Our government is making an effort to entice first time homebuyers to purchase houses. On July 20, 2008, then President Bush signed into law, as part of the Housing and Economic Recovery Act of 2008, a $7,500 tax credit for first time homebuyers. This tax credit is available from April 9, 2008 to July 1, 2009.

Here are some details you need to know:

• The tax credit if for 10% of the cost of the home, not to exceed $7,500.
• The tax credit must be paid back over a 15 year period. It is however, an interest-free loan.
• The property purchased must be used as a primary residence.
• A single borrower must have an adjusted gross income of $75,000 or less. That goes up to $150,000 if you file a joint return.
• You must be a first time homebuyer.

If you choose to sell your home before the 15 years are up, you owe the IRS. Say you still owe $3000 and you make a $20,000 profit from your home when you sell. You would pay the IRS that $3000 at closing and walk away with $17,000.

Stay tuned, you never know when our government will change the rules and hopefully make this a gift, instead of a interest-free loan!