If you’ve been paying attention to the recent “stimulus” activities in Washington, you already get the reference to 8,000 reasons in the headline above. It’s really only one reason, but it could be worth $8,000 to you. The legislation signed this week by President Obama contains a measure for first-time homebuyers to receive a tax credit up to that amount if they purchase a home.
But wait … there was already a $7,500 tax credit in place, so is another $500 really such a big deal? Yes, but not because of the higher dollar amount. Hey, I’m not one to look askance at 500 bucks, but the real exciting news is that the repayment feature of the tax credit has been removed.
With the previous version of the tax credit, you were obligated to pay it back in equal installments over 15 years. Now you don’t have to repay it at all (unless you sell your house within three years). As before, a first-time homebuyer is defined as someone who hasn’t had an ownership interest in a primary residence in the last three years. Also unchanged is the fact that the credit starts to phase out at an adjusted gross income of $75,000 for individuals and $150,000 for joint filers.
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Consumer columnist
