What is the $7500 home buyer tax credit program?

Vic asked:


I am looking at buying a house and have read quite a bit into this federal housing tax credit program, including on the website federalhousingtaxcredit.com, but I still don’t quite understand what a tax “credit” is…probably because I’m not too savvy on taxes and I don’t pay in at the end of the year. I don’t understand how this is supposed to be an incentive to buy houses because it doesnt sound like the first time buyers are getting a check cut to them or anything. How is this a beneficial program? I know my question sounds stupid but I’m young and not very well versed on taxes and how they correlate with home ownership. Any help would be appreciated!

Simi Valley Real Estate


One Response to “What is the $7500 home buyer tax credit program?”

  1. Peilthetraveler Says:

    April 5th, 2009 at 11:56 am
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    Baltimore real estate

    Its actually more like a 0% interest loan that you have to pay back in 15 years. The good news is, that there is no system set up in place for repayment in 15 years so its a good bet that the money you get will just be “Forgotten about”

    Even if it isnt. 7500$ 0% interest loan with no payments until 15 years is up is pretty good because inflation will eat that 7500 down to 3500 worth of buying power meanwhile you can throw that into your IRA, get 10% interest per year and in 15 years its worth $31,000+

    Personally if someone reads the whole thing, its not quite the incentive to buy that the government is hoping for. But if you just happen to buy anyway, its a nice little free loan (with not much of a chance of them asking to pay it back because there is nothing in place to get the money back)

    Its not quite the “free money” it tries to sound like, but if someone is offering it, why not take it?