Photo of tax creidt and for sale signs.
The homebuyer tax credit wasn't all it was hyped up to be. CC by aimeesblog.Flickr

One of the few things that helped to prop up an anemic housing market was the homebuyer tax credit from the government. The way it worked was that people who bought homes could get some fast cash from Uncle Sam as a gift for doing their part in stimulating recovery, under certain conditions. A lot of people are going to end up paying the tax credit back. A lot of the credits were low interest loans, not refunds.

Washington offers a little quick cash

The recession took a huge toll on many industries. One of the hardest hit was the housing industry. Available home loans and capital dried up, prices and value went into freefall and foreclosures skyrocketed. Plans for a way to stimulate home sales were put into effect. The flagship was a homebuyer tax credit. In 2008, the first year of the program, at least $7,500 or 10 percent of the purchase price could be deducted for buying a home. The deduction was changed to a refund in 2009, when the program was extended. However, there is a catch, according to CNN. The catch is that the deduction was not really a deduction or a credit, but a deferment. Basically, it was a loan.

Due to the IRS in 15 years

Those who claimed the tax credit have 15 years to pay it back. There are 950,000 people who owe for the low cost loans, according to the Internal Revenue Service. However, the IRS does not know exactly who owes and who doesn’t and is investigating inaccurate and fraudulent paperwork. Among the discrepancies there were 1,326 people who filed for the tax credit who are actually dead.

Debate stimulated by stimulus

Since stimulus programs were initially proposed, there has been questions over what good the programs would do. Rightly so; the mortgage modification program hasn’t been very successful, and the bonus that 950,000 or more people believed they were getting for a home purchase has to be paid back. If people had known the tax credit had to be paid back, would they have bought homes anyway?


Post By bryanh (1,420 Posts)


Do you have a fantastic idea related to this article, but just don't have the money you need to start your own company or side-business? Get the loans you need from to help get your new company underway, from the small loan professionals at PersonalMoneyNetwork.

PG&E to pay $70 million for pipeline tragedy

PG&E to pay $70 million for pipeline tragedy

Pacific Gas and Electric Co., a northern California utility, has agreed to pay $70 million to the California town of San Bruno for a pipeline explosion that killed eight people in 2010. Company says it’s remorseful The San Francisco-based power company’s president, Chris Johns, released a statement Monday, saying PG&E is sorry and eager to […]

Judge stabbed and deputy shot in Washington courthouse

Grays Harbor County Courthouse

Following a standoff in a Washington state county courtroom Friday, a man reportedly escaped after shooting a sheriff’s deputy in the shoulder and stabbing a judge in the neck. The man is still at large. Treachery among the tree farms The incident occurred Friday afternoon in the western Washington town of Montesano, which bills itself […]

Microraptor was one flashy little dinosaur

Microraptor fossil

A team of Chinese and American scientists have found that Microraptor, a small four winged dinosaur that went extinct about 130 million years ago, was likely black and almost certainly had glossy, iridescent feathers. Until now, the coloring of extinct creatures was a matter of pure speculation. That may no longer be the case. The […]

Autocorrected message leads to school lockdown

Homage to the Sun

Adjacent schools in Georgia were locked down for two hours Wednesday after a text message reportedly warned of a “gunman” on campus. Later, it was learned that the message was the result of a smartphone autocorrect function, attempting to “fix” the misspelled slang word “gunna.” A series of mixups A series of mixups led to […]