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On July 31st President Bush quietly signed into law the bill that was passed by the House of Representatives and members of Congress.

Part of this lengthy bill was a tax credit to those who purchase a home after April 9th 2008 and before July 1st 2009.

What wasn’t widely publicized and is now coming forward after reading the fine print in this bill, is that this tax credit is really an interest free loan. This is one of the first tax credits that I’ve heard about that needs to be paid back to the government.

In a nutshell:

• The tax credit is for 10% of the purchase price, up to $7500.00
• It is available for those who have not owned a home as a primary residence during the previous 3 years.
• When you apply for this tax credit on your income tax return there will be a deduction if you owe the IRS any money. IE: If you owe $1000 and you claim $7500 as the full tax credit, you will receive $6500.
• The total amount of the credit must be repaid over a 15 year period. If you sell your home prior to repaying back the credit, you will still have to repay the credit. (The details on this have yet to be seen. I will update you when I have this information.)

Who does this help? I can see it helping those first time home buyers in Macomb County who have purchased a home that needs some tender loving care. (Bank owned homes, pre-foreclosures, estate sales, etc.) They would have this interest free loan courtesy of the government to put into that new roof, siding, remodeling project without having to tap into their savings or put the cost on a high interest credit card.

Otherwise, if you haven’t the need for this credit I would recommend you don’t apply for it. It’s isn’t like the child care credits, or energy credits. It does have to be paid back.

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~Kris Wales~