$7500 First-Time HomeBuyer Tax Credit

One of the most common misconceptions that I see right now is about the first-time home buyer tax credit. I want to take a moment to do my best to explain this. I am not an accountant, so please if you think you are eligible, go talk to your accountant, but here is some general information on the topic.

First, let me say that it is a really good thing. If you qualify, you get a $7500 interest free loan. Yes you read that correctly, it is a loan. What the government is willing to do is to give you up to $7500 on your tax return. It is a "tax credit" and not a "tax deduction" so you get the entire $7500. Let's assume that you eligible and take out the full amount. If you do this, then you will be require to repay the loan over the next 17 years. The first 2 years, they do not require any payment, then at that time you would pay $500 towards the loan when you file your taxes. So if you were going to get $2200 in a tax refund, you'd get $1700.

If you happen to sell your house during the time of repayment, then you would required to pay the balance at that time with the profit from the home sale. If there is insufficient profit, then the remaining credit payback is set to be forgiven.

Here is the Tax Credit "at a glance"