First-Time Homebuyer Tax Credit

A first-time homebuyers tax credit was included in the recent Housing and Economic Recovery Act of 2008. Here is the catch - if you elect to take the credit, you have to repay the tax credit over a 15-year period. So, if you take the maximum tax credit of $7,500 on your 2008 federal income tax return, you would need to begin repaying the credit on your 2010 return - $500 per year for 15 years. Basically, the tax credit is a 15-year interest-free loan.