By Deborah Kearns, RE/MAX Senior Editor
When we bought our first home back in 2008, we were thrilled to learn we'd get a $7,500 tax credit as first-time homebuyers. At the time, housing was struggling and lawmakers and housing industry leaders alike touted the tax credits as a way to breathe life back into home sales. It was a great boost!
Fast-forward to today. We sold that home in October 2013 and bought our next one. When my husband sat down with a stiff drink and our tax software to figure out how much we owed the IRS (or vice versa), we were reminded about that lovely little credit we got on our first home that we had been repaying over time through our annual tax filings. The software spelled it out: We hadn't fully repaid the tax credit and owed the remaining balance. OK, fair enough.
If you, like us, were among those eager beavers who took advantage of the first-time homebuyer tax credits of 2008, 2009 or 2010, you might be surprised to learn that some of the credits have to be paid back under certain circumstances – and some don't. The 2008 tax credit was required to be repaid over time (15 years) – or after the property is sold if repayment is not yet fulfilled.
Then in 2009, legislation passed offering the homebuyer tax credits for the next two years that removed the repayment requirement – unless the property was no longer your primary residence or the home was sold within three years.
If you bought a home and claimed the tax credit between 2008 and 2010, visit the IRS website to figure out whether you are required to repay the credit you received. The site does a great job of explaining what you may or may not owe based on your situation.
As that April 15 deadline looms ahead, be sure to take into account these tax credit repayments, as well as any other home-related tax deductions you may be eligible to receive. USA Today recently published an article outlining what some of these deductions are. Give it a read!
(And if you haven't gotten started on those taxes, the clock is ticking!)