Repaying Homebuyer Tax Credit

[flip_it_fast]

Did you know that there were actually two different types of the first time homebuyer tax credit? This has me confused and lots of those who took advantage of it too. One of the credits is actually what they considered a refund rather than a loan, the other a loan that has to be paid back.

If you took advantage of the deal in 2008, it was actually a loan that has to be paid back in fifteen years. If you waited until 2009, no pay back.

Those who bought properties during 2008 were to deduct, dollar for dollar, up to 10% of the home's purchase price or $7,500, whichever was less. The catch: The money was a no-interest loan that had to be repaid within 15 years.
Had they waited to buy until 2009, they could have gotten a much sweeter deal. Congress extended the credit and made it a refund rather than a loan.

What a bummer that is for those who bought in '08!

Right around about 950,000 have to pay up!

Now because of people having to pay up, some of them are trying to scam claiming that their purchase came much later than it actually did. Others have even somehow tried to get on a list as being deceased! The IRS is working diligently to get this straightened out so they get their money.

[flippinout]

I was not aware that there was one of these loans that didnt have to be paid back. I thought that all of these types of loans were to be paid back to the government.

And in that case, how could it be referred to in both cases as a tax credit? And what was the criteria that made one that you had to pay it back and the other one that you didnt?

Do you have any information on what was the differences in these tax credits over that two year period?

[flip_it_fast]

I see I am not the only one who didn't get this at first lol. I had the two confused as being one and the same. I was way off.

The only difference from my understanding is that the first one they came out with was only an initial credit. In other words, it has to be paid back within fifteen years. Like a loan or a "credit" card. It has to be paid back.

The second is a credit that does not have to be paid back. It is considered a tax refund.

It was the luck of the draw I guess. If you jumped on the first one you basically got screwed because they came out with a better one later.

[House on the Prairie]

My husband and I took advantage of the 2009 credit, but it doesn't come without strings. If we sell the house, or no longer use it as our primary residence, within three years, we have to pay back the credit. Luckily, we just used it to help pay for a kitchen renovation, so even if we do have to pay it back, we should be able to recoop it with a higher home value. At least, that was our thought.

[flip_it_fast]

I am so glad that you got to take advantage of the credit and that you waited and got the better credit of the two.

Of course there was strings attached. There seems to be strings attached to everything anymore. Nothing comes for free.

My understanding from everything that I have read about the 2009 credit though is basically free unless of course you do sell the house in three years or it is no longer your primaray residence. Am I correct on that?

Either way, it is the much sweeter deal of the two.

I can understand folks being upset about 2008 credit after jumping on that not knowing that they were going to "reform" it and make a better deal in 2009.

Thats just how the ball bounces sometimes though, unfortunately.

What kind of renovations to the kitchen were you able to make using the money from the credit?

[House on the Prairie]

flip_it_fast, we were definitely lucky. Had it not been for the extra push of the the 2009 New Homebuyer Credit, we'd probably still be renting and living in a 2 bedroom, 1 bath home with three young kids. And probably either filing for divorce or the asylum!!

We ended up opening up our small kitchen to the rest of the first floor, putting in new cabinets, flooring, and lighting. It has made such a dramatic difference to the house, and, more importantly, let's me keep a watchful eye on the chaos. We did go over the $8,000 budget a bit (who doesn't??), but it was worth it. Good thing my kids like mac-n-cheese and hot dogs!

Since were able to buy a foreclosure, our house is on the low-value end of a high-value neighborhood. I think we're in good shape with what we're doing with the house. The yard, however...will definitely need to be addressed if we ever want to sell it. Right now, the deer, fox, and chipmunks have free reign (yes, even minutes from Washington, DC!!), but soon I'll have to claim it back or start charging them rent! Goodness knows I could use the extra income!