Understanding the First Time Homebuyer Tax Credits

The housing market crash resulted in the government’s decision to try and stimulate homebuying with tax credits. However, it is important to note that, because there were different tax credits being offered, you may have to pay back your tax credit. If you bought a home in 2008, taking advantage of the first time homebuyer tax credit, you are in the group of people who has to repay the tax credit. This is because the tax credit wasn’t a true credit at all; it is a 15-year interest-free loan. If you took advantage of the tax credit, you have to start repaying it with your 2010 taxes — which means the taxes you are in the process of preparing right now.

With this post, we hope to explain which tax credits need to repaid and which ones don’t.

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