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Government wants homebuyers' credit back from some

Posted November 12, 2010

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— Tax bills will be a little higher this year for some people who bought homes in 2008.

The Internal Revenue Service is reminding them that the first-time homebuyers' tax credit was not free money.

Mike Tickle and his wife bought their home in Durham in July 2008. A veteran, he got a VA loan with no money down at a decent interest rate.

The deal got better when his real estate agent told him he could receive a $3,750 credit on his 2008 tax return because he qualified as a first-time homebuyer.

“We used a lot of that money to pay off the debt we'd accrued to get the house set up,” Tickle said.

This month, Tickle received a letter from the Internal Revenue Service, reminding him that it is time to pay back that tax credit in equal installments of $250 a year over the next 15 years.

It’s no surprise for him.

“I made sure I read the fine print,” Tickle said.

But Michelle Hartley, a tax preparer with Jackson Hewitt Tax Service, says many of her clients who bought their houses before Jan. 1, 2009, and received the credit were surprised.

House front Some homeowners to get bigger tax bill

“Most of the people who purchased in 2009 or most of 2010 don't have to pay their first-time homebuyers credit, and it was even more,” she said.

Tickle says he adjusted his tax withholding, so he would get a larger refund on this year's taxes, and that is what he'll use to make the first $250 payment on his no-interest loan.

“I don't feel bad at all about having to pay it back,” he said. “It's a nice program.”

First-time homebuyers in 2008 might have to repay the full balance of the tax credit if they sell their home in the next 15 years.

For homes purchased in 2009 or 2010, first-time buyers must live in the house for three years after the purchase, or they will have to pay back the credit.

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  • chellehartley Nov 15, 2010

    I said that the buyers in 2008 were "surprised", when the new FTHB credit came out, for 2009- 9/2010, the 10% was up to 8,000, and didn't have to be repaid. People with purchases in 2008 were hoping the economic recovery act would include their FTHB credit too.

  • clickhere Nov 15, 2010

    "You get nothing free from the Government, sooner or later you will pay." - ranquick

    Somewhat true, but not always. There is group of Americans that doesn't pay taxes, but works and makes good money, some also receive veterans checks or disability through SSA - but never bothered to file their yearly tax returns. They get free medical by claiming to be indigent, or too poor to pay. Charities support them. I don't know how they can live with themselves, but they sure do seem to have political opinions. They are self-employed, get payment in cash, and live on others. They sure do seem to be getting away with it at government expense.

  • ykm Nov 12, 2010

    I was going to try to explain but let me say it like this. If you are adjusting your taxes to get a refund please go talk to someone who handles money or take a class at wake tech on personal finance.

  • ranquick Nov 12, 2010

    You get nothing free from the Government, sooner or later you will pay. Those on disabilty and SSI that should not be are only using your money and benefits thatis why we as workign class will never get those benefits!

  • howdiditgettothis Nov 12, 2010

    I think they should require anyone who benefits from a program like this to take a financial literacy class..........

    Really? I think whoever thought to name the program "homebuyers' tax credit" ought to take an english course.

    The bottom line this was pretty much a low dollar, long term loan....sounds something like my school loan.

  • Pseudonym Nov 12, 2010

    purplerado,

    I agree with you and add those that still believe in the illusion that there is a tax benefit to having a mortgage. Do the math: when you take the mortgage deduction, you pay WAAAAY more to your mortgage lender than you ever would to the government.

  • 78overdrive Nov 12, 2010

    Oh, and our house is in Knightdale, not Durham.

  • 78overdrive Nov 12, 2010

    I actually owed taxes last year, so a little adjustment in withholding was not such a bad idea. We also had a child in June, which will be an additional tax deduction. Thanks for your critique, purplerado!

  • tracya3904 Nov 12, 2010

    I informed 2 people this year that this money was not free and that it would be taken back some way!!! I new it was too good to be true, but not at all surprised.

  • ykm Nov 12, 2010

    Sad isn't it.

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