Since I tend to work with a large number of first-time home buyers, I have gotten quite a few questions about the first-time home buyer tax credit enacted in the Housing and Economic Recovery Act of 2008. I thought it would be useful to address it here.
Firstly, I want to direct anyone who is interested to visit the National Association of Home Builders' First-Time Home Buyer Tax Credit page. They have a fantastic overview of both the credit and the entire recovery act.
I'll also summarize it myself. In a nutshell, the tax credit provides first-time buyers with an interest-free loan up to $7,500, which they will be required to repay over 15 years. No, it's not "free money" as the name may imply, but it can be a great impetus to help buyers with the costs of homeownership. You simply claim it on your federal taxes that year.
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