$7500 First time homebuyer tax credit repayment likely to be eliminated

Posted by Michael DiMella on Thu, Jan 22, 2009

APRIL 10, 2010 - IF THIS IS YOUR FIRST TIME VISITING THIS BLOG, THANK YOU AND PLEASE NOTE: There have been a lot of visitors asking if the 2008 tax credit repayment was eliminated.  It has not been.  The information on this page refers to the NEW tax credits enacted in 2009.  If you purchased a home and took advantage of the $7500 tax credit in 2008, the repayment has not been eliminated.

 

UPDATE (NOV. 5, 2009): Read this for information about the newly extended and expanded $8,000 home buyer tax credit which is is open to more than first time homebuyers and extended to May 1, 2010.

 

UPDATE (Feb 18, 2009): Here are the current details for the new $8000 first time homebuyer tax credit which is non-repayable AND refundable for homes purchased between January 1, 2009 and Novemeber 30, 2009.  Homes purchased in 2008 are still eligible for the previous $7500 first time homebuyer tax credit (but that credit is still repayable over 15 years).  For more details on the new 2009 non-repayable tax credit click here.

 

UPDATE (Feb 12, 11:22am):  Latest info about the compromise stimulus bill has the credit becoming an $8,000 tax credit (non-repayable) so it is a full credit, but it looks like it will apply to homes purchased by first time buyers between Jan 1, 2009 and August 31, 2009. 

Presumably, the repayable version $7500 "credit" would still be an option for those who already purchased last year after April 9th.  This are still many details unclear and this is subject to change so make sure to check back in to my new posts about it here.  I will update as I get more information.

 

Ways and Means Chairman Charlie Rangel has released an outline of a $275 Billion tax package to be included in the Obama economic stimulus bill. Among its many provisions is one that would eliminate the repayment feature of the $7500 first-time homebuyer tax credit. An outline of the Senate Finance Committee package is expected shortly, as well, and is likely to also include the provision to eliminate the tax credit feature. Ways and Means markup on the bill is tentatively scheduled for January 22, 2009. The Finance Committee's deliberations will be roughly concurrent with Ways and Means.

The June 30, 2009 expiration for the credit remains intact in the Ways and Means package. NAR is working to have the effective date extended through the end of the year so that the more robust credit can have an impact. Congressman John Lewis (D-GA), a senior member of the Ways and Means Committee, has introduced H.R. 525, a bill that would extend the tax credit through December 31, 2009.
(from N.A.R. Press Release)

I wrote the details of the tax credit previously in $7500 First time homebuyer tax credit and $7500  home buyer tax credit update - is it worth it?, but currently the credit is repayable over 15 years making it, in essence, a 15 year interest free loan.  Having it not repayable at all is like getting $7500 straight off on a home purchase.  That is certainly a bigger incentive to buy and could spur more demand in the market.

As always, please comment below or contact me for more info on this post.

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Tags: taxes