Government wants homebuyers' credit back from some
Posted November 12, 2010 4:41 p.m. EST
Updated November 12, 2010 10:31 p.m. EST
Raleigh, N.C. — 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.
“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.