Wow, there is a lot of bad information out there concerning the tax credit. If you bought a home prior to January 1st 2009 you will be allowed to take a credit on your taxes of $7500, but this money will have to be paid back over a 15 year period. This assumes that you are a first time home buyer.

The $8,000 tax credit that just got signed into law this last week is available to first time home buyers and does not have to be paid back as long as you live (claim the home as your primary residence) in the home for 3 years. A first time home buyer that purchases a home between January 1st 2009 and December 31 2009 will be eligible for this tax credit. There are income limits on this tax credit where you would no longer be able to claim the credit. If you are single and make less than $75,000 a year you will be entitled to the entire credit. If you make more than $75,000 a year you will have this credit reduced for each set dollar increment you exceed $75,000. If you are a couple and file a joint return then the income limits are $150,000 and $170,000.

In plain english since you are a first time home buyer and make 60K a year you will be eligible to get 8K as a sort of gift from the government that off sets your tax liability. So, if you paid 9K in taxes for 2009 and it was determined that this was the correct amount of taxes you owed then you would get a tax return of 8K that you will not have to pay back as long as you live in the home you bought for 3 years. If you do not live in the home for 3 years then you would have to pay back some part of the credit and a CPA can help you wth that item.

This is just a interest free loan that you can take to help put as part of a down payment on your house. You can borrow all or some of it. But you have to pay it back over three years. It just brings down the total price of the house by how much you want to borrow. It isn’t free money. We are in the same boat, about to buy a house. But we won’t need to use it…just another bill to have to pay.