$7500 First Time Homebuyer Tax Credit

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Farm House with Rising SunUpdate 2/12: The $15,000 provision has been replaced by an $8,000 first-time home buyer credit, according to the Wall Street Journal. The credit is set to expire November 30th unless it is extended (which is currently being discussed).

Senate Republicans added a provision that would make the credit a $15,000 tax credit for all home-buyers, not just first time home-buyers. It would also be a true credit, not a “credit” you have to pay back over 15 years.

One of the big pieces of the housing rescue bill, passed and signed into law in July, was a $7,500 “tax credit” for first time homebuyers. While experts aren’t sure whether it’s “going to work,” these types of tax credits have been used in the past so they do have some history.

There is one aspect of this bill that is surprising and it has to do with one of the qualification rules. You can own a vacation home or a rental property and still qualify for this tax credit. I don’t know if it’s an oversight because of the strict determination of “primary residence” or if it was an intended rule. I don’t think individuals who own rental property or vacation homes necessarily need assistance on buying a primary residence.

First Time Homebuyer Tax Credit Rules

To qualify, you must satisfy these conditions:

  • The home much be purchased as a primary residence.
  • You must not have owned a primary residence in the last three years. For couples, both individuals must not have owned a primary residence in the last three years. Vacation homes and rental properties don’t affect this (you aren’t DQ’d if you have a vacation home or rental property).
  • Must not be a non-resident alien as defined by the IRS in Publication 519.
  • Individuals must have a modified adjusted gross income of less than $75,000 annually and couples MAGI of less than $150,000 to qualify for the full amount.
  • The phaseout range begins at $75,000 and ends at $95,000 for individuals, $150,000 and $170,000 respectively for couples.
  • The home must be closed between April 9th, 2008 and July 1st, 2009.
  • No mention of a credit score or history requirement, but knowing that will help when it comes to getting a mortgage. I recommend checking out, a service of Fair Isaac, the people who invented the FICO credit score.

How the “tax credit” works:

  • The tax credit is 10% of the home’s sale price with a maximum of $7500.
  • You can claim the credit on taxes filed in 2008 or 2009.
  • It’s a credit and not a deduction (difference between tax credit and tax deduction).
  • “Tax credit” is a misnomer because it’s really a zero percent loan with some qualifications.

Tax Credit Loan Repayment Terms

The tax credit isn’t really a tax credit, it’s really just a tax free loan with some qualifications. You have to start paying back this loan within two years and you make equal payments over 15 years. When you sell your home, any profits will go first into paying off that loan. If you sell at a loss, the difference will be forgiven… meaning you will not owe any money on the loan (though it should be recorded as income as is typical with most loan forgiveness agreements, so you will owe taxes on it).

Should You Do It?

I would, why wouldn’t you take an interest free loan? 🙂

(Photo: orvaratli)

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1,255 Responses to “$7500 First Time Homebuyer Tax Credit”

  1. billie says:

    Ok..I talked to the IRS and since my husband is deceased his half of the $7500 first time homeowners tax credit is void….so I only have to pay back $3750 and make payments of $250 until I sell the house

  2. antcq1994 says:

    If I had been informed by my tax preparer that I could have opted not to take this loan , I would not have it. Now two years later my situation has changed and I am just frustrated.

    • HC says:

      Same here… i thought it was free money lol i guess there is no such thing as free 🙁

      • Kdub1974 says:

        Nothing is free!!!!

      • salina says:

        Same here I’m having issues w my taxes now this year. Me n my husband r split up now n we did our taxes separate but my tax preparer called me n said I have to do it together with my ex since I filed that loan as joint n married. Which sux cause we r separate we don’t wanna do our taxes together n e more….Does anyone know what I could do?

        • kat says:

          salina, I have been operating a tax preparation business for a number of years now. my understanding is that you are not required to file married/joint for the purpose of paying back the loan. the payback is $500/yr against your tax refund. if you speak with the irs you will be responsible for half the loan amount paid at$250/yr instead.

        • Anonymous says:

          You shouldn’t have to file with him just when the question comes up you pay your half and he pays his you don’t have to file with him plus by law you two aren’t married anymore so you have to file single or head of household.

    • Mic says:

      I just got a letter saying i have to pay back the entire $7500 in one lump sum because I got engaged and moved in with my fiance to save money. I can’t sell the house and make a profit, I’m losing money renting it and i don’t want to foreclose but they won’t let me do a payment plan. I wish they stipulated that you had to have the home as your main residence for 15 years or you would have to pay it all back at once…I never would have taken it then. I guess my psychic ability was down when I channeled in to what my next 15 years would look like.

      • RKo says:

        Have you gotten any new news on the the repayment of the credit? I am in the identical situation.

        • John Logue says:

          Ever consider selling the house at a loss and letting the gov’t pay the diff from the loan? Read the ‘loan repayment terms’ paragraph above… I thought that might be a viable strategy.

      • Anonymous says:

        they did tell us that. Primary residence for 15 yrs. If u sell at a loss u do not have to pay anything back.

      • kat says:

        You were required to keep the home for 36 months (3yrs) after receiving the credit and 15 years to payback at $500/yr charged against your tax refund each year. Next best thing to do is to just setup a payment plan.

      • Lori says:

        I feel for ya I just had the same thing happen and I really needed my tax money!

      • Dixie says:

        Almost all taxpayers qualify for a payment plan (unless you have unfiled returns or are in default on another payment plan).

    • Renee says:

      My tax preparer did not give me a choice to opted out on the tax credit. He just said to take the tax credit because it was “free” money and I would not have to pay it back. Now, my situation has changed and I need to sell my house, but I screwed. 🙁

    • Army Vet says:

      Ditto, and how unfair is that? The others that recieved this credit do not have to repay it, I’m disabled, lost 8,000$/year income due to my kid reaching the age of 18, they definitely should not refer to it as a credit!

  3. Jude says:

    We bought a house in June 08′ and received the 7500.00 first time home buyers credit- and a couple of weeks ago we received a letter from the IRS stating that we could ammend our 08′ tax return for the other 500.00 dollars ( making it the 8000.00)- my question is should I take the 500.00 credit or is it just money I am going to have to repay anyway? We have been living here since June 08 with no plans of moving.
    Thanks for any advise,

    • Kdub1974 says:

      Don’t take it. Just pay the 7500 back. You may end up having to pay the 500 at some later time.

      • colleen says:

        How did you get a letter from them? If you can somehow qualify for the $8,000 it does not have to be paid back whereas the $7,500 does.

    • jamie says:

      I ourchased in dec 2008 I did not get an offer to ammend. Are they going to have to pay it back? Or is it like the credit they had not to long ago 8000 and you keep it?

    • Brandon says:

      Yes how did you get that letter, I would love to do the same!

      • Jude says:

        The letter from the IRS came to us I did not request it – that’s why I was surprised! The letter explained that under the ” American Recovery and Reinvestment Act of 2009″ I need to file a 1040x and submit a corrected form 5405 to amend our return.

    • Cattac says:

      Hey Jude…
      So did u file an amend to your 2008 taxes and was it accepted by the IRS? From what I can find online they only senerio that references a letter to amend for an additional $500 credit to get to the $8000 tax credit given in 2009/2010 was if u purchased in 2009 but had already filed for the $7500 u could file $500 to get u to the $8000 tax break. Any leads to getting my 2005 purchase onto the $8000 credit from the $7500 repaying credit would be great! Thanks

  4. june says:

    It is terrible the 2008 first homebuyer tax credit must be repaid. Great way to take advantage of first time homebuyers. My realtor used the tax credit to her advantage saying oh you will get a tax credit of $7500, never mentioning it must be repaid. This added to the pressure of my purchase in 2008. It is not fair that the rules changed in 2009 and that a few months makes a difference whether the credit needs to be repaid. If 2009 buyers do not have to repay, neither should 2008 buyers. Calling something a credit is misleading if it needs to be paid back. I cannot think of any other credit by the IRS that needs to be paid back. If I knew the credit was not really a credit in 2008, it would have contributed more realistically on my decision to buy. The government and realtors duped people into buying in 2008 with hyped up talk of this phony credit. They suck!

    I think this was Misleading and Unfair practice by everyone involved. The 2008 “tax credit” was not a tax credit. It was a loan and should have been called that from the start. The IRS and realtors shouted tax credit but kept the repayment part hush-hush until 2009. Calling something a credit implies non-repayment.

    • Delaini says:

      The same thing happened to me. No one ever informed me that it was a loan. I am now very frustrated and very angry. I never read that it had to be repaid. No where in my papers did it state that it was a loan and needed to be repaid. I feel like that was midleading. Any lawyers out there??

      • TaxDiva says:

        When you signed the 1040 federal tax form and claimed the credit, you told the government you understood it was a loan. You did not have to take it. It was no ones responsibility but your own to understand what you were signing for. Surely you didnt think this was free money.

        • Anger person says:

          No the government knew but nothing was put in writing on the forms stating that it was a loan and you have to pay back. The people is trained to lie just like dogs are trained to be house broken. The government is crookied and full of liers, then and now. They take advantage of people always have and always will. I hate politics!!!

        • Really says:

          For anyone buying after 2008, it was free money and more of it at that. There should not be double standards. It is really a credit after 2008. Totally unfair!

          • Clinton says:

            People, there isn’t a place on your tax form for a “Loan” it had to be listed as a credit. “Double Standards”? Tax rules and regulations change every year. “Changing standards” maybe. That’s how we grow, through change. I’ve said this before, but what about the people in 2007 and previous years that didn’t get any help.

            It’s not that I don’t feel for you and I too think it would have been nice if everyone got some free money. The point is, you should’ve known what you were signing. You can’t blame someone else, when all you had to do was call the IRS and confirm what you were told. They would have told you the same thing they told me. It has to be repaid and they would have informed you of the terms of the loan.

            Learn from this and in the future don’t jump into a contract until you know and agree to all of the terms. You shouldn’t take tax advice from a real estate agent anyways. That’s like calling The Home Depot for advice on repairing your Television, it doesn’t make sense.

        • angela says:

          I agree I was told it needed to be paid back at the second year for the $500 for 15yrs and so on but my thing is a few months later a new one was done and the first set of homebuyers basically got screwed. Think about it the second set of homebuyers had the option to get the first tax credit had a new one not been implemented and they dont have to pay it back and only stay in their homes for 3yrs. An amendment should’ve been done where it would have been fair all the way around. Personally I think a class action lawsuit should be started against the government for unfair tax credit practices. Regardless if you knew or not it still isn’t fair.

        • GiGi says:

          Why would one not think it was free money if the very next year they gave new home owners 8.000? was that not free? do they have to pay it back?

        • Angie says:

          Your tax preparer should have explained this to you. I am a tax preparer and make it part of my job to make sure that everyone understands what they are signing, what they are getting and for why.

        • Army Vet says:

          Well isn’t the credit for 08/09 credit “free” money? it doesn’t have to be repaid.

    • Nikki says:

      I wonder if there is anyway to get the IRS to reconsider the 2008 payback credit. I too agree it is unfair that 2008 buyers have to payback and 2009 buyers do not. Some of the 2008 buyers lost there homes or are struggling to keep there homes and now it is suppose to be time to payback. But what if you can’t. This still makes the economy suck for a lot.
      What can we do? Who can we write? We MUST PROTEST!!

      • TaxDiva says:

        Yes alot of people lost jobs and our economy sucks. However, it sucked in 2008 which was half the reason this loan was given in the first place. If you didnt have a backup plan for the just in case, you shouldnt have bought a home that would be beyond your means to pay if your income changed.

        You took a loan, time to repay it.

        • JB says:

          Well, That was kind of rude. Some people didn’t move because of foreclosures, etc. My husband and I were relocated due to work – They shut down the office in the city where we bought our house. We did research on it before buying the house, and were informed by multiple accountants and realtors that even if sold, you would still repay at $500 a year. There is just no accountability for professionals in the field who gave incorrect advise (or just signed people up for it, as others stated). Now, many are in no better financial position. My husband and I both have good jobs, but were not planing on paying back $7500 in a lump sum due to a move that was forced upon us. If we didn’t relocate we would have been out of income and then foreclosed… but then it would have been forgiven. I just do not see the practicality in punishing those who sell instead of allowing the house to fall into disrepair. I am not opposed to paying it back, but forcing a lump sum upon people is very hard, and likely impossible for most. The issue many have is that aspect was extremely hidden when the “credit” (which is not really a credit in the first place) was rolled out.

        • Tax Diva says:

          That is such a rude and close-minded response. Maybe you can say that to someone you KNOW and whose situation you have insights on. But what people are frustrated about was that people in years after 2008 can get the same so-called credit that those of us who purchased in 2008 but they get to keep it whereas we now have to pay it back. It’s unfair. You are in NO POSITION WHATSOEVER to tell someone else under what circumstances they should or should not have bought a house. Get off your high horse before someone knocks you off.

          • florencio says:

            i got the loan in 2008 for 7,500 but i didnt buy the house. do i have to pay back the full amount or just 500 a year?

        • jamie says:

          I closed in dec 30, 2008 I must say to everyone I understood the loan very well. It was all over the internet and I ask questions about it. I was also aware that it was 500 for the next 15 years. My questions I was 2 days away from 2009 is there anything I can do about that?

        • sigtau says:

          Explain to me how someone can have a back up plan for the “just in case” when it comes to unforseeably losing an income? I made 3/4 of our income and lost my job when oil tanked.

          you sound just like the wonderful people at bank of america who told me i shouldn’t have bought a truck when i knew i was going to lose my job. this, of course, was right after they took a huge bailout of my tax money.

          i am one of the many that was duped by the “tax credit” but i am not bitching about it. i am bitching about your logic. I can’t see the future and am very careful with my money but people don’t always get a 3 month notice letting them know they are going to lose their jobs giving them a chance to plan around it.

          regardless of what it had to be listed under on the tax forms they still could have called something else, like “first time buyers interest free loan”. I purchased my house on 12/31/08. trust me, had i known that 8 hours would have given me $500 more and not had to pay it back i would have waited. fortunately, $500 taken out of my refund isn’t a very big hit.

    • Kdub1974 says:

      Did you really think the IRS would miss out on their money? It is a travesty of Justice that you have to repay it I agree, but I go into everything thats has to do with the government with the idea that they are trying to screw me and how do I stop it.

      Everyone that has to pay the “loan” back should start a class action lawsuit. Either against the government or the people that don’t have to pay it back. Try to minimize the amount you have to pay.

      • JB says:

        I’m in the same boat, this is ridiculous! If I would of bought my house 2 months later I would of got more money and wouldn’t have to pay it back. Plus I get that same letter we all got saying it’s time to start paying the “credit” back, and I find out I have to stay in the house for 15 years? Who stays in their first house 15 years? Since I bought the house I got married and had a kid. This house is getting a little small for me now but I’m suppose to stay here for 15 years or pay the $7500 back in one lump sum. What can we do? Somebody let me know.

        • TaxDiva says:

          No it isnt 15 years.

          You must own a home and use it as your principal residence for any five-consecutive-year period during the eight-year period ending on the date you by the home on which you are claiming the credit. The five-consecutive year period can cover any uninterrupted time span during the eight-year period.

          For example, suppose you made a qualifying home purchase on Nov. 30, 2009. The eight-year period would run from Dec. 1, 2001, to Nov. 30, 2009. If you bought and began living in your previous home on Nov. 1, 2003, and continued to own and live in that home until at least Oct. 31, 2008, you meet the five-consecutive-year requirement.

          • Anonymous says:

            That reply makes absolutely no sense. The 5 out of 8 year clause is to determine if you qualify for the credit as a long time resident. It has nothing to do with how long you must live in your home for repayment purposes. Check your facts Tax Diva..I’ve read several wrong answers from you on this topic.

          • Dixie says:

            Incorrect, Diva. You DO need to stay in your home for 15 years for the 2008 credit. The 5 out of 8 year rule is to determine if you were qualified as a long time resident to get the lesser credit which was approved for homes purchased after 11/6/2009. You should read the instructions on the form 5405 before you try to tell others the rules!

      • Clinton says:

        I can’t believe that you’re intelligent enough to type but so ignorant, as to suggest that the tax payer’s whom received the “real credit” have done something wrong.

        Besides, payback and the formula was clearly stated in your contract. You have only yourself to blame, for not reading what you were signing.

        The credit “Loan” helped a lot of people in 2008 and nothing was there for people in 2007. Should they start a class action suit against you? Not that you or anyone could actually do that. You can’t sue someone for getting a credit on their taxes..

        Your way of thinking would allow someone to sue a guy in the back of the line for picking the winning lottery ticket. Your kind of stupidity is responsible for the decay of our society! You’re a bunch of crybaby, sue happy, social degenerates! You act as though the world owes you something for nothing…. Get a clue, grow up and learn to take some responsibility for your own actions!!

        • Cale says:

          Im in the same boat as most people on here. But oh well it is what it is, fuck it. But Clinton there is absolutely no reason for you to even be on this forum. If you agree with everything the government has done and these terms, then my question to you is why are you here? Have you nothing better to do with your sad pathetic life? We are all voicing our frustrations and venting. Apparently you have absolutely no life but to be the douche sitting behind his keyboard trying to belittle people via your attempts of intelligence. Maybe you should take your hostility and go do something productive with your life, maybe help the economy by working, hell at least go get laid to relieve your tensions. If you’d like to help any one of us Im sure we’d gladly accept. But until then shut the hell up and go to a forum where you can maybe pick up a hooker that might actually lay your fat sorry a$$.

      • TaxDiva says:

        No it isnt the IRS money, it is taxpayer money…. and the travesty is that you got a FREE loan at all. People have bought homes for years and the government didnt hand them money for it. So why do you think your special just because you now bought a home?

        It was a loan, I am sure your realtor told you about it, it was a big sell factor for many and in the end you should have exercised personal responsibility. Do your homework. You got the loan, pay it back. That was taxpayer money and you were NOT ENTITLED to it.

        • Angry&Confused says:

          I personally don’t have a problem paying the money back. I was informed & knew when I accepted the money I would be paying it back.

          The problem I have is why the 2009 & 2010 homebuyers DON’T have to pay it back? Explain that to me Miss TaxDiva AKA Know It All, what makes that fair? If I was “NOT ENTITLED” to it, why are they “ENTITLED TO” to it?

          Not to mention I’m a single female w/ no children or dependants, they took over 17 grand from MY paycheck for taxes & my calculated return this year is 1100.00 – the 500.00 I owe back for the loan = 600.00.. HOW THE HELL IS THAT FAIR? I’d be better off birthing a few curtain climbers, quitting my job, getting free healthcare & living off system w/ which consist of all those taxes that are being taken from the middle class like myself..

        • Pat says:

          Hey Tax Diva, welfare and food stamps come from tax payer money as well. Do they have to pay back those funds when they get a job? Oooops, that assumes they will eventually work. Not likely when they can caount on us to take care of them.

          • Clinton says:

            Ha ha ha.. Pat you poor clueless person! When the people that lost their jobs and had to turn to food stamps/government assistance or what have you, they DID NOT sign a contract to pay it back. So, I’m not Tax Diva but I can answer your pointless question. NO they don’t to repay it. We’re talking about end year taxes here!

            “Angry&Confused” So, if 2009 and 10′ had to pay it back you would be ok with everything? What the !@$# does that have to do with your lot in life? You should quit your job you poor thing, it must be tough living off your $150,000 a year salary.

            Let me ask you something. If you had known when you were offered the credit, that people in 2009 wouldn’t have to pay it back, would you have still taken the credit? I’m sure you would have. 2009 got it better then you did and 2007 didn’t get it as good as you and your only complaint is towards the people that got it better! You have no true concerns for fairness, you’re only concerned with yourself!

            NO! Please don’t have any “Curtain Climbers”, children deserve a better life then what your immature nature would provide.

          • Skye says:

            I guess i should go to the corner and hold up a sign will work for food would you stop and give me a job. Did not think so.

          • Amanda says:

            Wow. I came here to read up on the 08 “credit” and I just cannot hold back on making this post. Clinton and TaxDiva, you both really need to relax and quit getting on everyones case. People are upset that the government allows later tax years to the free money and not re-vamp the 08 interest free loans to be fair. Period. No reason to attack people for making more money than you. Good for that person to be able to make a good income. But everyone has different expenses and you surely are not any better than anyone else. So shut your loser mouth and learn to assist people in their frustrations and not make fun of it. Furthermore, for the number of postings you both have published on here, I say you have too much time on your hands and should go out and make something of your lives. Sheesh. And for Clinton to go as far to proclaim that she should NOT have children because YOU think she is immature and children don’t deserve her??? Well you are the most inconsiderate PRICK I have ever encountered. You have NO right to make a comment like that. Who do you think you are? You are the biggest idiot on this entire site and are the true immature one. You have spent more time downing people about their personal lives, only proving that you hate your own worthless life, than you have offering any assistance to them. If you wish to just piss people off, than go in a Yahoo chat room. Your rude, small-minded, and unwanted comments do not fit in a TAX article comment section. Grow Up!

          • Clinton says:

            Amanda, I came here to offer a helping hand of advice and to a few people here I accomplished that. The comments that you are referring to, were only left to those of whom, were NOT looking for advice. They were here only to complain about their lot and to blame others for it. Much like your-self!

            The “please don’t have children” comment was left to a person that was using the reference as a tax credit and not for the Children them-selves. You may have understood my comment if you would have read the one I was replying too.

            As for myself- I have four very beautiful and well behaved children,for whom I credit my happiness too. My wife works at General Motors and I own and operate my own business (Self-defense for women and children). You would have no clue as to the type of person I am, based on comments left to some of these people.

            My life is very good and I am a very happy person. I contribute that success largely to the fact that, we except responsibility for our own actions. You can fix the problems in your life, only when you realize, they are your problems. You can’t fix someone else and you can’t fix the “problem”, if it belongs to someone else. It’s called “unnecessary resentment” Look it up, we could all learn from it.

            Also, “Assisting people in their frustrations” in these cases, would amount to me lie’n to them to make them feel better. One of the troubles with our society today, is that we hide the truth behind a blanket of lies, so that no one gets their feelings hurt.

    • Tom says:

      Did any of you do your research before you bought your house? Every single newspaper article at the time outlined that this was a 15-year interest free loan. You don’t even need to start paying it back until 2 years later, how can you be whining about that? When someone is going to give you a “free” $7500 I would read the fine print first.

      • Anonymous says:

        Tom, by chance I read an obscure article online pertaining to repaying this tax credit. It was VERY difficult to fing information on the payback terms. I had to look to the IRS web site and still had a little trouble finding all the info I was looking for. Sure seemed like a con job to me. BUT, as I read from another poster, why would I not want a tax free loan? LOL

    • TaxDiva says:

      All over the news and 2008 IRS website it stated it was a credit that must be repaid. In 2008 there was no question on the terms.

      I can understand freustration because the laws of 2009 changed, but that is how it is.

      And any credit that is refundable, it taken inncorrectly must be repaid. If you do not live in the home or live up to the terms of the 1st time 2008 homebuyer credits they too will have to repay it.

    • clcarr1217 says:

      I so agree with everything you said. The fact that those who got the 8k a month later and don’t have to pay it back makes me furious. In fact this 500.00 a year pay back is going to put me in more financial trouble than if I had never taken it to begin with. Lots of us were duped. The only positive thing is knowing I was not alone. Obviously, everyone buying a home and getting this credit could not all be totally ignorant.

  5. Darlene says:

    I have to agree with most of the postings. I did my taxes on line. I filed all the forms that said I needed to file. I had no idea this was a loan I would have to repay. It did not state that anywhere. As far as I was concerned I did not qualify for the 1st time home buyers because it was Dec 2008 before Obama passed law in Jan. 2009…So now I owe $5,000.00 and I am on a fix disability income and will find it so hard to repay this. I would have never taken this had it said it needed to be repaid or it was a loan….I feel cheated and abused. More stress already added to the major health issues I have.

    • Clinton says:

      Cheated? My God, are you serious? Yeah you cheated yourself by filing your own taxes, when you obviously lacked the proper knowledge to do so! People in your position, will one day cost us the right to file our own taxes.

      If you had, had any prior concerns that your taxes were being handled properly, you would have learned the ropes. Doing your own taxes, is more then merely pressing next on your tax software. If you had been trained (even self taught) you would not have missed the details of the credit (Loan). Then, you would not be where you are right now. So, take the blame,fix yourself and learn something from it. At lest that will justify the fact that you “Cheated and Abused yourself”!

      One other thing to consider: A plus side maybe… Your credit (loan) payments will be deducted from your yearly return. So if you normally receive a refund of more then $500. Then the money for the loan will not come out of your pocket but out of your return.

      In that case…. You received an interest free loan from tax payers money, and you’re paying the loan back with tax payers money. You can’t go wrong as you have ventured nothing but gained a lot!

  6. Kerry says:

    I too at age 61 took the first time homebuyers tax credit and 7 months later lost my job, they do not take into consideration we were just into this recessiona and many of us would be victims also, they wanted to sitmulate the buying of homes but I seriously doubt that it did stimulate anything at that time. I only recently found a part time job and had to take SS early, was on unemployment for 2 years.
    Now the IRS sent a letter stating I would owe
    $400 something for the next 10 years. . well I guess that will put me at 73 and highly unlikely I will be able to do that. Write your congressmen, the President and anyone else who will listen, tick toc time is running out.

  7. Mr. T says:

    It is to late people, It would take forever the way these goons work to get congress to pass a bill now. I think we just have to pay the money back. I was told at the time i had my taxes done the money would have to be repayed. Sooo i have been waiting for the this…..

  8. JeffK says:

    I got my repayment information in the mail today, indicating that my first $500 payment is due upon filing of my 2010 taxes. I plan to contact my Senators and Representative and complain. My heartburn is that I applied for and received this “credit” in 2008 with repayment in mind while a first time homebuyer in 2009 does not have to repay. CONTACT YOUR SENATORS AND REPRESENTATIVE:

    • sam says:

      I totally agree with you, they changed the credit one month after we bought our home. Not only do WE have to pay it back, we get less than those who don’t. Why do some of us have to pay it back and some don’t? If we had known they were going to extend it and give out more, we would have waited. Can’t we sign a class action something or other?

      • TaxDiva says:

        No there is nothing you can do. Tax law change year to year and while it is not fair, it is what it is. No one made you buy the home or take the loan, but you did and you recieved a 7500 loan interest free, you wont get that from anyone else.

        • Anonymous says:

          I knew everything I was getting into when I got the tax free “loan” in 09. Im happy for everyone that was given the opportunity to receive the 8000. I can’t deny that I did get my hopes up, like millions of other Americans, that I would not have to pay it back. Unfourtnatly that didn’t work out for me, and of course I’m bummed and a little bitter who wouldn’t be! So it’s truly unfair for some of you to discredit our frustrations. Venting is a coping skill that EVERYONE has used one time or another. Some of us were lied to, some of us didn’t “read the fine print, and some of us knew the terms of the deal, but to call names and belittle those who are upset is extremely selfish and immature! If you don’t like what people are venting about on here DON’T READ IT!!

        • Slightly Frustrated says:

          I was clear I would have to pay it back. I have never been upset with that, but I think some of the stipulations that were set for if you paid back the loan in payments or lump sum were a bit much.

          I had just finished up going through a divorce when I claimed my “credit” and was clear on the terms. Who knew that two years later I would be married again. My husband took his credit in 2009. So now both of us have a credit on homes wer are supposed to live in for 5 yrs. We obviously are moving in with each now that we are married. Now we will have to pay a lump sum on one of the two credits because one house will now no long be a main residence. I don’t mind paying mine back, I just think it should still be allowed in payments.

      • Clinton says:

        Sam, TaxDiva is right! What about buyers from other years whom didn’t get any extra help at all? You have to draw a line somewhere. The IRS can’t go back and pay everyone that didn’t get a credit, that was issued in a later year. There isn’t any sense to that in any way.

        It sounded like a good deal when you agreed to it. The only reason you have an issue with it now, is because someone else got a better deal then you did. I noticed that you didn’t include those whom didn’t get as good of a deal as you got. BUT as for your question… NO! you can’t sue anyone! You can how ever be thankful that you received any help at all.

        • Randall says:

          I agree it is what it is. I took the credit and did not know it would have to be paid back. But, they should have stated it was a tax free loan (not a tax credit rebate) that has to start being paid back in 2 years. I have had many tax credit rebates through the years and they never had to be paid back. That is the one and only complaint I have about it.

    • Anonymous says:

      Did you contact anyone? and what was the out come? I am in the same boat as you.

  9. Pete says:

    Unbelievable,even my cpa told me The 2008 tax “credit” not “debit” was mine to keep if I kept the home for 3 years.I never owned a home because I felt you never own it anyway but with the economy so bad and deals so good and the 7500 “credit” at 54 years old I bought my first home.Yup,I got the letter too,totaly shocked especialy to find out the 2009 same “credit” doesn’t have to be repaid.So will they collect enough from us suckers to pay for FannieMae” mistakes.They make Bernie Madeoff look like an angel.I would hate to think where this wonderful country will be when I make last payment in 15 years.So will they ask for my chid “credit” back or how about my new car purchase credit to save the auto industry,”credit”.

  10. Sheila says:

    I am absolutely disgusted with our government now, even more than i already was. i’m an honest person, work two jobs just to make ends meet, cant afford to pay for my daughter college tuition, and there’s not enough help for her even though i’m a single mom. and now this? unbelievable..and i’m sure it is too late. no one cares.

  11. Val says:

    Well I took the Credit. My husband and I filed seperatly and it went on mine. My husband made sure we took it. Now we are divorced and sold the house to get in a better neighborhood and I have to repay the 7500 this tax year. Isn’t life great….ridiculous!

    • Clinton says:

      You lost your Husband, moved out of the first home you bought with in a year or two and you want to blame someone else for how bad your life is?? Sounds like you need to start looking at the whole picture before you jump in.

      Everything you needed to know was right in your face when YOU made the wrong choices. Yes… You now have to live with those choices and pay the credit back in full. If you are bothered at this point and are unable to cover the entire amount this year… You will really be in a bad mood when you see the penalties, interest and late fees build up until you do pay the credit back.

      Did you think that “always look before you jump” was taught to you just because it sounded cool?

      • Amber says:

        You are plain cruel. I’ve never met someone as judgmental as you. You know absolutely nothing about Val’s life or anyone else’s for that matter. I’m on here reading about “tax credits” and all I keep seeing is cyberbullying from the same person. What are you? 15? People who live in glass houses shouldn’t throw stones.

  12. Paco says:

    I bought a home in 2008 and when it came time to do my 2008 taxes, I used turbo tax. When it promopted me about buying a home and asking about taking the credit, I looked up / googled the rules.

    I read the details and it was pretty clear that it was NO INTEREST LOAN. You pay it back starting with your 2010 tax filings, $500 per year for 15 years.

    I do feel cheated that 2009/2010 home buyers don’t have to repay theirs, BUT, a few moments of research lets you know that it’s a loan, even though it is labelled as a credit. Sneaky, yes…but I don’t feel bad for people that didn’t bother to read the details. And if your CPA didn’t know or didn’t tell you…do your taxes yourself or get a new CPA…that’s pathetic.

    • silencebk says:

      I completely agree! The people complaining about not knowing that it was an interest free loan should probably do more than one minute of research before accepting $7500. I too did my taxes on turbo tax, I guess that makes me smarter than some CPA’s.

      So I am not shocked about having to repay my loan, however it does bother me that had i closed on my house 8 days later I would have had an additional $500 without having to repay anything.

    • Pam says:

      I also agree Paco, it was made very clear that it was not “free money”, but a loan when taxes were done. I don’t have a problem paying it back, but I think that the $8k the later people got should have to be paid back as well!

      • TaxDiva says:

        I agree Pam… everyone should have been made to repay theyt loan

      • Clinton says:

        Why do you think the others should have to pay it back Pam? Will it make your life any better knowing that no one else got a better deal in life then you? It’s sick that you would even suggest that! It shows what kind of person you are.

        The IRS was trying to help stimulate sells, it didn’t go as planned the first time around. So, they made some changes, to make it better, in hopes that they would achieve their goals the next time. You should be thankful that you received any gain from their efforts at all, as many millions of people did not.

        • Pam says:

          I happen to be a very good person who pays all my bills on time and also pays my taxes. Wow, such anger you have, you are a very sad person feeling the need to lash out like that!

          • Clinton says:

            A “Good Person” has nothing to do with paying bills and I wasn’t lashing out at you. I also have to disagree with “Taxdiva” on this one. I agree that the loan wasn’t that much help in a lot of cases, when you consider having to pay it back but why would it make you feel better if 2009 home buyers had to pay it back?

            I assume that you would be ok with the outcome, had you bought in 2009 and were able to keep your $8,000. If so, that would make you the hypocrite that I assume you are.

            If your child or parent received the 2009 credit would you want them to repay it? I have my doubts that you would.

            What about the people whom bought in 2007, should they receive the same credit you did? If you’re not the hypocrite that I assume you are, you would answer yes. So, where does it stop? buyers from 10 years ago? 20 years ago, should they get the same chance at the credit you got?

            I understand where you’re coming from. What I don’t understand is why you want hardships to fall on others because your situation isn’t as good as theirs is. That’s the sad part and is why I commented in the first place. You can’t wish hardships on people whom you don’t know and be a good person at the same time.

            So not only are you NOT a good person, you’re also a Hypocrite and contradiction of your own common sense.

          • Slightly Frustrated says:

            Personally Clinton I can speak from the side of having the 2008 credit and the 2009 thank you very much. I took the 2008 credit and must pay that back in the LUMP SUM mind you. Yes I knew it was a loan and no I don’t mind paying it back because I got married and moved in with my husband who also took the credit in 2009. I still think that 2009 should be paid back as well! Just continuing to get hand outs is partly what has put our country in debt the way it is. More credits and free money get given (Whether that be welfare money food stamps other credits etc.) than taxes paid in. Everyone should be carrying their own load and paying their own way.

        • Dixie says:

          “The IRS was trying to help stimulate sells, it didn’t go as planned the first time around.”

          Last time I checked, the IRS doesn’t make the laws, Congress does. Clearly, the 2008 credit wasn’t working well enough, so they changed it.

        • belaine says:

          Buddy, Sign off

          We rely on “professionals” rel estate agencts, and tax preparers to fully inform us, I would not have taken this money that was called a “TAX CREDIT” as a loan, it’s a sleazy bait and switch and I am disgusted. You are a little aggrevating too, if you are going to take part in this discussion, show a little compassion, and stop implying that the people who are shocked and hard put to pay this money back are somehow irresponsible, you have made this point several times in this thread, so your thoughts on the matter are clear, do you work for the IRS? rhetorical question.

        • Am says:

          Technically Clinton… the homebuyers of ’08 didn’t recieve any gain you jackass! at the point in time we gained the money, but we are paying it back thank you very much! so therefor there was no gain! it was just 15 years of tax money that we would have gotten, it was just paid in advance! so shove your foot in your mouth and SHUT UP! yeah it sucks that the two years after our tax loan don’t have to pay theirs back but we do, it really sucks! but we are taking the responsiblity to pay it! also you don’t need to belittle the people who are gripping about it! if you have anything else to say to them, be nice and just give advice or cork it! that’s what this site should be about! questions are asked and answers are given!

    • TaxDiva says:

      Do you really think you would get $7500 for free? What makes you think you deserve $7500 from the backs of taxpayers just because you bought a home? The travisty is that those who got the $8000 dont have to pay anything back as long as they live in the home five years. None of you deserved the money, and if you lost your home or jobs well you should not of bought something you can not afford., People who rent work as hard as you do and often pay more they you do for your mortgage. When they lose thier jobs they get evicted in 30 days. I work in the tax field and and there was so much fraud, people filing saying they bought a home- just to get the money. It is a crime and those of us who pay taxes pay for it.

      It is your personal responsibilty to read what you sign! So boo hoo you have to pay it back,you got an interest free loan of $7500 from the government- you wont get that deal any place else!

  13. Me says:

    This is suck, I just got a letter stated that I have to repay the tax credit for first time home buyer. Instead of tax credit I think they should put it as “Loan have to repay w/o interest”. What action should one take, beside pay back? any advises? I do agree with some people that why 2008 have to pay and not 2009.


    • Jim says:

      You don’t have a choice, you’ll have to pay it back.

    • TaxDiva says:

      Sorry, the terms of 2008 were that you repaid the loan. You didnt have to take it. For those in 2009 and later, they have a different contract, yes it is better, and no they do not repay it as long as they use it as a principal residence for any five-consecutive-year period during the eight-year period ending on the date by the home on which you are claiming the credit. The five-consecutive year period can cover any uninterrupted time span during the eight-year period.

      • jamie says:

        Taxdiva is right about most the things she says. I was glad for the help. But does anyone know I am just curious b/c i was 2 days before 2009 if I had any options. If not I understand I have to pay back the loan. But i do agree with some of the post for someone like myself who claims 0 and paid over 20k in taxes I feel we do get screwed. Middle class is hard we get the least amount of help. Look at even mortgages if you dont pay and may go to foreclosure sometimes you get bett rates. I got a good rate pay always early great credit score but the gov gives the people who cant pay better. I guess it is how it is.

  14. amy says:

    I just went and did my taxs I got the tax credit, loan whatever you want to call it in 2008 I had to give up my house last year in forclosure…I’m a single mom with 4 kids. They told me now that I have to pay back the 7500 this year too. Or they have to use a payment calculater to figure out what I have to pay back or something or other. I knew it had to be repayed but I didnt know it was in only 2 years. This Sucks.

  15. mvmv says:

    ALL I CAN SAY IS WWOOOWWW i didnt think you had to repay that money….iam glad we didnt go for it

  16. Mic says:

    Okay I posted a reply earlier so sorry for the repetition. I knew I had to repay the loan when I got it so I have no problem with that but I am now faced with paying the loan back in full this year because circumstances changed and I rented out my house not knowing that I would be forced to cough up $7500 all at once. Did anyone see the stipulation that it had to be your main residence for the 15 years of your loan? I looked it up yesterday on the IRS website and it says the home must be your main residence to qualify for the credit which it was for the last 2.5 years. It says nothing as the 2009 free credit does about residing there for 5 years or however long. I just moved 4 months ago to live with my fiance to save money for our upcoming wedding and then I got the letter. They won’t work with me unless I want to pay penalties and interest on my interest fee loan. Any ideas on what I could/should do? I’m not trying to get out of paying…I just don’t have $7500 laying around.

    • TaxDiva says:

      You can call the IRS and start a monthly payment plan. If you do not, then they will start adding interest.

      The interest rate is determined quarterly and is the federal short-term rate plus 3 percent.

      Interest is compounded daily. If you file on time but don’t pay all amounts due on time, you’ll generally have to pay a late payment penalty of one-half of one percent of the tax owed for each month, or part of a month, that the tax remains unpaid from the due date, until the tax is paid in full or the 25% maximum penalty is reached.

      The one-half of one percent rate increases to one percent if the tax remains unpaid 10 days after the IRS issues a notice of intent to levy.

    • Cam says:


      My husband and I are in a very similar situation. We took the tax credit (advice from our financial advisor), we did know that we had to pay it back over 15 years, but not once were told (or did I read in my research) that you would have to reside in the house for any specified amount of time (some on this board are saying 5 consecutive years and some are saying 15, but did anyone see those terms before they accepted the loan?) Regardless, at the time of the loan, we intended to stay in the house for awhile and were excited at the chance to pay down one of our higher interest college loans. Two and a half years down the road our job situation changes and we are now traveling for my husband’s job. We decided to rent our house until we finished traveling, and now we receive the letter stating that we must pay it back all at once. We have no problem paying the loan back over time, but now have no idea what to do about paying it back at once! We how to come up with that money on such short notice (only thing I can come up with is emptying my retirement account, but I am unsure if the penalties from that will outweigh the penalties of late payment to the IRS). I don’t feel that it is unfair to require all ’08 buyers to pay it back, but asking people for one lump sum is an outrage, especially people like us who are going to go back to that house at some point soon. If anyone has any advice or loophole about how to continue with the payment plan, please post it. I stimulated the economy purchasing this house, I am still making all the payments and will still own this house in 15 years probably, but I just can’t figure out why we should be punished by being forced to come up with $7500 in a few short months…just let us pay it over 15 years like we said we would…is that too much to ask?

  17. amv says:

    I closed 12/08 moved in 1/09 and had no intentions of taking the credit, knowing it had to be re-paid, then lost my job and got pregnant. Took the credit, which kept us in the home for a few months. But eventually we were going to loose home or had to move. We moved (we both make more $$ here) Rented the home becuase the loss would be significant if we sold. The problem is, I can’t possibly pay it all back, I don’t have it? Will I go to jail now? So much for help…

    • Mic says:

      I am in the same boat, as you can see on my above comment. I called and you can work out a payment plan but you will be paying penalties and interest and they will probably slap a lien on your house. You’re not alone. If you do call ask for the 2008 homebuyer credit specialist. That will save you from telling your story over and over and being transferred numerous times but beware. They are not the least bit nice or willing to work with you.

      • TaxDiva says:

        No they will not be nice, they simply will tell you the facts. You owe regardless of your new circumstances. It is best that you make a payment arrangement asap.

  18. Mike says:

    I bought my house in California in Aug. 2008. I got my letter stating that I have to start paying back the $8000. My sister bought her house in Arizona in June, 2010. She doen’t have to pay back her $7500. I paid more for my house than she did. She has a better house than I do. And, she gets to keep her money. I got screwed.

  19. Jackie says:

    My husband & I took the $7500.00 loan since we bought a house in 2008. We filed together last year. But in March I moved out & he still lives in the house & does not plan to move out. Do I have to repay just half ($250) if I file as Head of Household this year?

    • justinsgurl says:

      Hey please let me know if you find out anything I am in the same situation. My husband and I bought a house in 2008 took the 7500$ tax credit in 2009. In 2010 we filed together and dovorced in feb. I still live in our home he does not. I am confused as to why I have to pay back the whole 500 for the next 15 years by MYSELF if we took the loan together?? If you can give me any information I would greatly appreciate it! thanks

  20. bob says:

    i took it now 3 payments now i.r.s holding tax refund will loose home over it soon another forecloser got it with reported 11,400.00 income family of 4 bad economy loss of hours what a horrible deal,homeless is abound want us to hand return taxs with pyment 2011 can,t be done without child credit income return first.its a mess

  21. Josh says:

    Bear in mind, if you got the $7,500 2008 interest free loan and later sold your house, the re-payment is limited only to the GAIN on your sale. In other words, if you sold the house you purchsed in 2008 during 2009 or 2010..or later years…at a loss (highly likely in this market) your re-payment amount of the credit is reduced. Refer to form 5405 for instructions on calculating this. Check with your tax professional if your home was foreclosed…certainly you didn’t make a “gain” on a foreclosure so that may eliminate the repayment. Howver, if you simply rented the house out, or it ceased to be your primary residence, then yes, you have to re-pay the full amount on that year’s tax return.

  22. Cassandra says:

    I also received this credit to help out and am now paying ti back. The only problem I’m having with it now is HR block says the IRS rejected refund because the form was not completed and can’t be completed until February however so many have already filed they then told me to re e-file and I could amend my repay for the credit in February I really hope it does go through but honestly I have no clue and it’s my house payments for this month and last (my tax money) I had counted on it and now am not sure when I’ll be getting it back. Does anyone have a clue about it – can you file now and then amend the form in February to pay the first installment or will it just be rejected again only to have to wait to file paper taxes.

    • Kristine says:

      So, you filed at H & R and you told them you owed the money? Or did you go in there and not even mention it and the refund was still denied??

      • TaxDiva says:

        if you recieved this credit and now have to repay- you will not be able to file until late or mid february. The IRS did not program the software and over 60 million people have to wait to file. If you attempt to file without the form, the irs will keep all your refund because they know you have recieved the loan. The 5404 form lets them know you still live in the home and only to take back the 500 if you claimed the form in 2008 and if you claimed the loan later, not to take anything.

        you need to do as you were told and wait.

        • Really says:

          Actually, H&R Block is stating on their software that you can chose to file without noting the homebuyer credit. Then, they say that after the IRS accepts your return, to file an amended return prior for April. That is actually what H&R Block is telling people is one of three filing options for the homebuyer credit. So, what we are being told is inaccurate?

          • Dixie says:

            Be careful..did you know preparers charge additional to file the 1040x for you? And again, Diva is incorrect. If you don’t claim the payback, you will get a letter & it will be taken out of your refund. Your entire refund WILL NOT be held.

        • Melissa says:

          I took the credit in 2008 and was well aware of the repayment terms. Yes it sucks that one year later and I wouldn’t have to pay it back, but oh well. My problem is I filed my return with the correct forms and they are holding MY money because THEY didn’t program THEIR COMPUTERS!! Now they NEW who claimed the credit in 2008 they NEW payments would start with the 2010 tax returns!! They had TWO YEARS to get this together and prepared for the payments that they want so badly!! I say release the rest of my money and keep the 500 payment until you figure out what you want to do with it!! Had I known they weren’t prepared for the payment I would’ve happily filed with out the payment and amended my return when they were ready for their money!!

          • Melissa says:

            Shoot so mad, I just found out today they were holding my return, I’m not thinking or spelling correctly! I meant KNEW (and I had the nerve to capitalize it)

    • Skye says:

      I am having the same problem! Freaking ridiculous!
      I have filed without this form and with and one is being held and the other rejected. Funny thing is I am not suppose to file this form anymore because I had a loss on my home and do nothave to pay it back but the IRS Computers are old and outdated and cannot simply see this form has been processed and approved.

  23. Anonymous says:

    OK, so I read through all of these posts and I just want to clarify fo my own understanding! We purchased our home in 2009 and have since moved out. So, if I am understanding right, if the credit was taken in 2008 & later sold or what not, the credit has to be re-paid…but if the credit was taken in 2009 & later sold, the credit does not have to be paid back?

  24. Kristine says:

    I got the credit in Feb of 2009. Within a few months the my son got lead poisoning and we had to move out. The house is still sitting there, uninhabitabal. What is my situation now? Do I still owe even though the house is now worth nothing? Are they going to take my whole refund this year automatically??

    • TaxDiva says:

      I am very sorry about your son. However you will owe the money back in full, in a one time lump sum. The IRS and government does not care about circumstance. They gave you a $7500 loan on the condition that you keep and live in the home for a certain number of years. This was not free money, it was a loan- an interest free loan. You would never get that anyplace.
      Sadly now, because you no longer live there, you owe the money back in full and all 7500 is due immediately.
      My best advice is to call the IRS and set up a payment plan. If you are expecting a refund this year, they will take it until the 7500 is settled.

      • Dixie says:

        Tax Diva, you need to stop answering if you don’t know the answer. Actually, Kristine, you may NOT have to repay. There is a clause about condemned (if this is your case) property. If you replace you home within a time period, you may not need to repay. My suggestion is to read the instructions on the form 5405. Take everything very literally and read it entirely to see what may apply to you. If you have trouble understanding the instructions, call the IRS. Don’t take advice from random posters on the net!!

  25. Disabled Veteran says:

    I love all the complaints I see about paying back a 15yr interest free loan with 2 year before you start to repay. I bought a house Sept 2008.. Took the credit and I’m not upset at all. I don’t think the government should be giving away money to anyone.. Bail-outs etc.

    The people that got non repayment credits.. Are the ones that congress should nail and get our money back. I think that should have been illegal. I can see interest free loans to stimulate the economy right now, but I don’t like seeing my tax dollars given away for ANY reason.

    Nobody deserves to be handed money by the government. I also hate when people have lots of kids and get back more then they payed in. They got others tax dollars for having kids. Sorry we shouldn’t pay for your kids.

    V/r 100% Disabled Veteran.

    • Clinton says:

      I agree with very little of what you have to say cause I think you’re a little misdirected. The tax money that we send to rebuild other countries and to support these wars that do nothing for us but negative is wrong.

      The tax money that cycles back to the people in the USA is a good thing! If you’re not getting any then you don’t need it and have no clue what the people go through day to day that do need it.

      Some people may be as upset as you are about their tax dollars going to disabled veterans. After all, the poor man/woman that bust his or her asses all day, out in the hot sun and freezing cold, building houses and what-knots give back a lot more then the disabled community can.

      You served and may or may not have done great things for us, but the children these taxes are meant for, are our future and I’m sorry but they are far more valuable to our growth then you are. So you’re not giving your tax money to them, you are investing your tax money through them, for hopes at a better tomorrow.

    • Anonymous says:

      Hi Diabled Veteran,

      My husband and I bought our house in 2010 and we got the 8500 dollar tax credit. We WAITED to buy once we found out we didn’t have to repay the credit (three years longer to buy). We don’t have any children and we owe taxes every year the the governmnet, somtimes breaking us at the end of the year. So tell me how we should not be allowed a little breathing room on our first house, or why we should be sorry for actually taking an option that was OFFERED FREELY to us by the government?

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