First time homeowner tax credit.

[moneysense]

If you buy your first home between April 9th, 2008 and July 1st, 2009, the government will give you a $7500 tax credit.

This tax credit is a recently enacted legislation to help the nation recover from the mortgage crisis. This tax credit is given to keep Americans buying homes but will help builders and mortgage lenders in the end.

This tax credit will be 10% of your purchase price up to $7500, and will be interest free. Tax payers can claim the credit for the year the home was bought, then will repay the credit over a period of 15 years, interest free.

[pennypinch]

I had read about this a few months back. This will really benefit first time home buyers with a little relief. This will give them a little breathing room to have some repairs made or whatever they need to get done.

[moneysense]

Actually, to me, this tax relief seems more like a loan than a tax benefit. I mean it is interest free, but still has to be paid back within 15 years.

And I wonder how you go about paying it back, or are more taxes added to your income tax each year to cover the pay back?

[pennypinch]

It certainly is more like a loan, I have no idea why they call it a tax credit. I really do not know either how it is to be paid back. I do think it will help in a small capacity though. As I said, first time buyers may be able to get some of the things done that they need done and be able to pay it back slowly without interest being added.

[dollardaze]

Well, the government came up with the name, and it was probably named this way to further confuse those people that need help. I just hope that someone explains to them that this money does need to be paid back, and is not actually a tax credit.

I'm sure that some people will benefit from this, since they won't have to pay any interest, but I think that it could have had a better name so as not to confuse the populace.