Understanding the ’08 and ’09 Home Buyer’s Credits

Understanding the ’08 and ’09 Home Buyer’s Credits

Does the tax credit for first-time home buyers need to be repaid? I have heard different stories and need to have this clarified. My son recently bought his first home. Will he receive a check for the credit, and, if so, when will he get the money?

The repayment rules depend on whether he bought his home in 2008 or 2009. If you bought a first home between April 9, 2008, and December 31, 2008, you are eligible for a tax credit of 10% of the home’s purchase price, up to $7,500. But you must repay that credit over 15 years, starting two years after the year you claim the credit. Sell the home before you finish paying back the loan, and the balance is due in full the year of the sale. For more information about the first-time home buyer credit for 2008, see the IRS First-Time Homebuyer Credit Information Center.

But if you buy a house between January 1, 2009, and December 1, 2009, you could receive a credit for 10% of the home’s purchase price, up to $8,000. This credit does not have to be repaid as long as you remain in the new home for at least three years.