A buddy of mine at work told me he qualified for a
'First Time Home Buyers Tax Credit' . . . .
Except that, as it turns out, it was not a credit
and now the poor sap has to pay the IRS an
extra $500 a year . . . . seems the 'tax credit'
was 'washingtonese' for a no interest loan.
http://www.irs.gov/newsroom/article/0,,id=186831,00.html
Tax Credit to Aid First-Time Homebuyers; Must Be Repaid Over 15 Years
NOTES:
March 23, 2011: See Update on First Time Homebuyer Credit and Tax Refunds
The 2009 Worker, Homeownership and Business Assistance Act and the American Recovery and Reinvestment Act updated the first-time homebuyer tax credit.
IR-2008-106, Sept. 16, 2008
WASHINGTON — First-time homebuyers should begin planning now to take advantage of a new tax credit included in the recently enacted Housing and Economic Recovery Act of 2008.
Available for a limited time only, the credit:
Applies to home purchases after April 8, 2008, and before Jan. 1, 2009.
Reduces a taxpayer’s tax bill or increases his or her refund, dollar for dollar.
Is fully refundable, meaning that the credit will be paid out to eligible taxpayers, even if they owe no tax or the credit is more than the tax that they owe.
However, the credit operates much like an interest-free loan, because it must be repaid over a 15-year period.
So, for example, an eligible taxpayer who buys a home today and properly claims the maximum available credit of $7,500 on his or her 2008 federal income tax return must begin repaying the credit by including one-fifteenth of this amount, or $500, as an additional tax on his or her 2010 return.
(Site does go on . . . Zim.)
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