So… why are we talking about taxes on a HOUSING blog? It’s not just a simple reminder to pay your taxes - it’s a reminder that if you took advantage of the (up to) $7,500 “tax credit” on a home purchased between April 9th 2008 and July 1st 2009, your first repayment of that “tax credit” is due on your 2010 return.
Here’s a link to our original fact sheet (created in 2008, no longer available on our website).
Here’s the important text:
Homeowners will have to pay it back. While these funds have been labeled a tax credit, it's really a 15 year, zero interest loan that must be paid back in equal installments over 15 years, starting in the second year after the home is purchased. If you buy a house this year and claim a $7,500 credit on your 2008 tax return, you'll have to pay an additional $500 a year in taxes for 15 years, starting in 2010.
Time to start paying the piper.
The SECOND tax credit, which was a maximum of $8,000 for first-time buyers who purchased between January 1st, 2009 and April 30th, 2010 (last year’s tax credit) does NOT have to be paid back via your tax returns, unless you:
- Sell the home within three years of purchase or the home is no longer your primary residence.
- If you sell within three years, and the amount you make on the sale is less than the tax credit, you only have to repay up to the amount of the gain… not the full amount.
- If you make MORE on the sale, or the home is no longer your primary residence, then you do owe the entire amount.
Confused? Many people are… so make sure you speak with a qualified tax professional if you have any questions about the Homebuyer Tax Credit(s) or any amounts you may owe.