Does the Original $7,500 Tax Credit Still Have to Be Repaid?

• February 17, 2009
• 13 Comments

by Will Smith

One of the leading questions to emerge about the $8,000 tax credit in the final stimulus bill is whether those who applied for the original $7,500 tax credit last year will get the benefits of the new legislation. Of relatively minor importance is the $500 difference between the two. What really matters is that the $7,500 credit has to be paid back over the next 15 years; the $8,000 never has to be repaid.

“So everyone who purchased a house after April 2008 is screwed by only being eligible for the $7500 that has to be paid back?!” read an irate comment on our blog post from earlier today.

The answer, unfortunately for those folks, appears to be yes. According to the Baltimore Sun, “Sorry. You get one credit or the other, depending on the year you bought the house.”

The Wall Street Journal concurs: “The new credit is retroactive to Dec. 31, 2008, which means that anyone who buys a house this year, through August, won’t have to repay it. First time buyers who used the credit in 2008 still have to pay it back over a 15-year period.”

So there you have it. People that already applied for the $7,500 tax credit will not get the benefit of the $8,000 credit in the new stimulus bill, and will still have to pay the money back.

This article originally published at http://dc.urbanturf.com/articles/blog/does_the_original_7500_tax_credit_still_have_to_be_repaid/550

13 Comments

1. Will Smith said at 4:53 pm on Tuesday February 17, 2009:

   A great resource on the tax credit, from the National Association of Home Builders:

   http://www.federalhousingtaxcredit.com/

1. Pissed said at 5:14 pm on Tuesday February 17, 2009:

   This sucks; I think what applies to one should apply to them all.  The credit is a great incentive for new homebuyers but should the government really just be giving away money that we don’t have?  At least with the first tax credit the country is getting money back that it surely needs.

1. tooearly said at 2:04 pm on Wednesday February 18, 2009:

   I bought my home in Nov 2008, didnot file yet for $7,500 credit, can I file for the $8,000 credit ?

1. Pissed said at 2:21 pm on Wednesday February 18, 2009:

   no you cant, you are only elgible for the $7500 that you have to pay back from my understanding

1. matt said at 7:59 pm on Wednesday February 18, 2009:

   what a joke, this should definitely roll back to homes bought in 2008.

1. Pip said at 9:46 am on Thursday February 19, 2009:

   It certainly should be retroactive, but our Congress decided we were not worth it. I saved for 10 years to buy my first house in November of 2008. I was responsible, found a good interest rate, had 20% down, and didn’t overspend. I can afford the payments and won’t default. The state of the economy made me nervous, but the First Time Home Buyer Credit was a good deal. A 0% interest loan to help fix up the house I bought seemed like a great idea. I make out, and the economy makes out as I’m spending that money. Then comes 2009, and all the Democrats I voted for slap me in the face. They give homebuyers $8000 free, no repayment, but then turn to me and say “except you, you pay us back”. It took me years to save up the $20,000 down payment on my house. Now they just hand out half of what it took me years to save… that money, my tax money, free. I don’t know what I was thinking, I was responsible when I should have just spent beyond my means. I saved when I should have run up massive debts. The government would be bailing me out right now if I had. Instead I was responsible and I feel sorry that I was.

1. Shankar said at 11:23 am on Thursday February 19, 2009:

   I bought my first home in Oct of 2008, and I’m a little hurt that I still have to repay the loan.  On the other hand, this $8k new tax credit might have the effect of increasing home prices on the order of ~$8k, so it is hard to tell if this law will truly make homes more affordable or just stabilize their nominal values.

1. MustAgree said at 11:55 pm on Thursday February 19, 2009:

   I have to agree with you Shanker I wouldnt be surprised if homes are just sold for a little more now

1. Pip said at 11:43 am on Friday February 20, 2009:

   It’s very doubtful it will have any affect on home prices whatsoever. Only first time home buyers can take advantage of it, and quite a lot of them were suckered into buying last year. Since these buyers usually only purchase cheaper homes that they can afford, it definitely won’t do anything to help the prices of larger, more expensive houses. There’s also a heck of a lot of houses for sale, so there’s a glut, and when there’s a surplus of anything the price comes down.

1. Tom said at 2:50 pm on Saturday February 21, 2009:

   Google the phone # of your congress men,president and others in power to resolve this issue as quickly as possible $7500 tax credit will not and must not be repay

1. Lisa said at 7:59 pm on Sunday May 17, 2009:

   Yes I agree, I plan to email my congressman regarding this as well. We purchased our home in 2008, and feel like it was a slap in the face when the new credit was introduced. All this tells us is hold out and wait…don’t spend you money, bigger and better benefits are on its way!

1. mike oliver said at 3:55 am on Friday January 15, 2010:

   I purchased a home 4/02/09. I got the 7500 dollar tax credit and i filed it with my 2008 taxes. With this new bill if passed will i have to repay my 7500 back and if so is this something that is payed back @ closing or in increments with each tax filing for a certain amount of years?

1. Jim said at 11:04 pm on Thursday February 4, 2010:

   We bought our first house on March 29, 2008. Could we eligible for any tax credit? original $7500 tax credit or any other tax credit?

   thanks

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