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it is basically an interest free loan that you have to pay the principal back in increments over time.. It is misleading calling it a tax credit. If they really want to help anyone with buying a house they should be helping the first time home buyer with getting a loan.
the "credit" is repaid over time and you may be forgiven if you don't make money on resale. Starting in the 2nd year after purchase up to 15 years you are expected to make "pro rata" repayments on your federal filings. If you sell the house before the end of payment schedule and you have no gain on the sale you won't be expected to pay it back.
Depending on where you live, if houses continue to drop another 20-30% then buying a house to get this $7500 "credit" ia a very bad idea. (IMO)
If your total taxes is $6500, then I dont think you can afford to buy a house....
Azrob did a whole write up on this when it was first passed.
Does it have to be a foreclosure? I bought a short sale does that count?
you are missing the point... you will have to pay it all back over 15 years. you should not be so excited about that, it isn't much of a good deal. (and yes you can get it for buying any home, provided you have not owned a home for 3 years)
you are missing the point... you will have to pay it all back over 15 years. you should not be so excited about that, it isn't much of a good deal.
I think it's a fabulous deal. I'm building my savings back up after making a big withdrawal to buy a house. I won't get $7,500 due to income limitations, but I still hope to get a nice chunk to dump into savings. Yeah I have to pay it back, but at least it'll be in the account earning interest. Paying $500 a year for 15 years into my account at 3.5% interest would yield $9,635.66 at the end of 15 years. Putting the $7500 in, then making the $500 yearly adjustment to my taxes yields $12,132.09 in the account.
So, the "worthless credit" nets me $4600 over 15 years. I'll take that. Now, if I didn't save the money, then the credit isn't too exciting.
I said it in the other thread on the topic, but if you use the 7.5k as additional payment on your mortgage - paying it down early - you can save ~37k in interest long term. Subtract 7.5k for repaying the tax credit loan loan and you still come out 30k ahead.
These numbers assume:
* 200k loan
* 6.35% interest rate
* 30 year mortgage
... and, it's free and anonymous
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Can someone explain the $7500 housing bill for a new guy like me?
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I see that if you are a first time home buyer and buy a foreclosure, you get a $7500 tax credit. Now are there any restrictions with this tax credit? I got the impression that at when I do my taxes, I get a $7500 credit. Last year I had $6500 in total taxes. My plan was to pretty much buy a house, have absolutely no taxes taken out of our paychecks, file our taxes, and then get back $1000. This sounds too good to be true so I am asking the professionals.
Next I see this other thread that says that the $7,500 really is a deferral of taxes or a downpayment assistance thing. So what is it?????? Is my thinking not correct?
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