State and local governments depend on many different types of taxes, one of which is known as an excise tax. Like general sales taxes, excise taxes are paid on the purchase of an item. But unlike sales taxes, excise...
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- Paying Back First-Time buyer Tax Credits
Paying Back First-Time Homebuyer Tax Credits
An MSNBC article explains which of the homebuyer tax credits must be paid back this April:
Under the terms of the 2008 tax credit, the credit must be paid back over a 15-year period, beginning with this year's return.
That means anyone who took the maximum $7,500 credit will have to add $500 to their income tax liability for 15 years. If you sell your house before the 15 years are up, the entire tax credit bill will be due the year the house is sold.
The Internal Revenue Service describes the 2008 program as "like an interest-free loan."
This may come as a shock to some people, who may have forgotten the terms of the so-called credit, which was really more of a tax deferral. The IRS said it is sending reminders.
"There will definitely be people that are going to be surprised by it," said Sean M. Dowling, vice president of The Dowling Group in Stamford, Conn., and a certified financial planner.
For others, it paid to be late. If you bought a home in 2009 or 2010 using the same tax credit, you don't have to pay it back, as long as you stay in your new home for at least three years.
Another article on the topic from MSN Real Estate: "Do you have to repay your homebuyer tax credit?"
Tax Foundation blog posts on homebuyer credits:
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