$7,500 Tax Credit for new home buyers, not a true tax credit.

Did you know that first time home buyers can receive a $7,500 kickback on their taxes if they buy a home before July 2009?

I found this article in Realtor Magazine. It is good news, but with a twist. The $7,500 "Tax Credit" is really a loan to be paid back over several years.

I'll be posting real estate news (local and national) every week. Let me know what you think.

6 Key Facts About the First-Time Buyer Tax Credit

By Robert Freedman
November 2008

The $7,500 home ownership tax credit that the federal government created earlier this year as part of the Housing and Economic Recovery Act (H.R. 3221) is another tool at your disposal to encourage potential buyers to jump off the fence and get into the real estate market.

When you combine the tax credit with today’s low interest rates, wide selection of for-sale inventory, and affordable home prices, many of the pieces are in place for your customers to buy now. But tax credits can be confusing.

1. Buyers have until July 2009 to make a purchase that qualifies.

2. Buyers don't really have to be "first-timers."
The tax credit is actually available to any individual or household that hasn’t owned a home for at least three years.

3. Even if buyers exceed the income limit, they can benefit from the credit.

4. Think of it as an interest-free loan.
The federal government requires the tax credit to be paid back in small, 6.67-percent increments over 15 years, although repayment will be no more than $500 yearly and payments will not start until 2011. For that reason, some analysts have likened the credit to a 15-year, interest-free loan to help make home buying affordable.

5. You don't have to be authorized before making a home purchase.

6. New-home construction qualifies.