| The first-time homebuyers tax credit has been a | | | | say you decided to make the leap and bought a |
| bit hit. Much like the Cash for Clunkers program | | | | home in November 2008. It was your first one, |
| spurred on the auto market, this tax credit has | | | | so you qualified for the credit. You claimed the full |
| been…well, credited with sparking action in the | | | | $8,000 on your tax return and use the savings to |
| housing market. If you bought a house in 2008 | | | | make the down payment on that new home. |
| using the tax credit, there is one big catch. | | | | What a deal! Well, yes and no. You have to start |
| A tax credit is a beautiful thing. It is much more | | | | to repay the tax credit in 2010. The repayment |
| valuable than a mere tax deduction. How so? Tax | | | | will be in 15 yearly installments and figured into |
| credits are deducted dollar for dollar from the tax | | | | your taxes. Ah, not such a deal after all, eh? |
| you owe Uncle Sam while tax deductions are | | | | At this point, you’re probably wondering why |
| merely used to reduce your adjusted gross | | | | I keep talking about 2008? The answer has to do |
| income before you figure what you owe him | | | | with how the program was renewed for 2009. If |
| from the tax tables. Most tax credits come | | | | you use the first time homebuyers tax credit to |
| without any catches, but the first-time | | | | purchase a residence in 2009, you do not have to |
| homebuyers tax credit has a big one. | | | | pay back the $8,000 tax credit. Yes, you read |
| So, what is this catch? It is simple. If you used | | | | that right. People who used in 2008 must repay, |
| the tax credit in 2008, you have to pay the | | | | but those who waited till 2009 do not. Welcome |
| government back. That is one big catch! Let’s | | | | to the tax code! |