Want some good news? Of course you do! How about a tax credit to first time buyers and anyone who has not owned a home in the last three years? Eligible buyers will receive up to a $7,500 tax credit for all homes purchased between April 9, 2008 through July 1, 2009.
The tax credit is based on 10% of the sales price up to a maximum of $7,500. It must be the buyer’s primary residence and there are a few income restrictions. To capture the full amount, single borrowers cannot make more than $75K and couples can’t earn more that $150K. At $95K and $170K respectively, the credit gets phased out all together.
There has to be a catch, right? Let’s look at the fine print here. Well, this kind of generosity from Washington can’t be free. And it isn’t. It’s actually an interest-free loan which must be paid pack over 15 years or $500 a year if the tax credit extended was $7,500. But heck, there’s nothing wrong with getting an interest-free loan when buying a car, why not when buying a home?
Also, if the home is sold before 15 years, repayment of the loan, will be limited only to the amount the home has appreciated.
If the homeowner dies, the loan is completely forgiven.