The industry definition of a first time home buyer: is an individual who has not owned a principle residence in the last three years. As part of the Economic Recovery Act the $8000.00 "first time homebuyer" credit was created.
As a way of stimulating the slumping housing market and creating home owners was a solid sales pitch. The credit is mainly directed towards home renters as the target audience, thus converting them to home buyers using $8000.00 as bait.
Yes, this program does help to stimulate home sales over a short period of time but also creates property tax payers for a long period of time. In most cases the typical "first time" buyer will use up their entire credit within 3-5 years of purchasing the home due to the creation of a new tax burden on them.So is the true purpose to serve as a tax credit or just tax money? Are we attempting to solve a short term problem at the risk of creating more long term problems?
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