Whats the Deal with the FTHB $7500 Tax Credit?

Mike,

What isn't mentioned as frequently as the main post, is that it does have to be paid back, but over time.

It is also taken over a sapn of a 15 year period. They only get to claim 500.00 a year.

It is a little gimmicky for the reason above about the pay back. It is typical Congress sell the sizzle but when we get to the fine print we find the steak a little tough to chew. But it out there and they will see it on their returns if they buy within the proscribed time

Mike,

If your buyers meet the eligibility criteria they will receive a tax credit of up to $7,500 on their taxes.  This is a tax CREDIT not a deduction, so it really is $7,500 in thier pockets when they do thier tax return.

In reality it is an interest-free loan.  The repayment is $500/year over the next 15 years.

The challenge is finding ways to use the credit as an incentive to potential buyers since the funds are not available to them to assist with the closing.

I think tax credit is poor verbage.  Since it must be re-paid, isn't this a loan?  Like everything else they do, it sounds great but in fact is complicated and time delayed.

If they sell the house in five years, then they pay back the rest in one lump sum.  They have to live in the house for 15 years to enjoy paying it back at $500 a month for 15 years.  Doesn't seem that great to me. 

It appears that it was more or less a spin on words.  In our area, many homes in the market turn over in a three year period.  Alot of our clientel are Soldiers and many of those are 1st time home buyers who will have to sell within 3 years - right now many are renting and will continue to do so in fear of not being able to break even in the market we are in.

Mike here is a good post by Ron Bolton that gives you all the ins and outs of the FTHB tax credit. It simply is not as clear cut as they make it appear.

7500 Tax Credit FAQ