Taxes and First Time Homebuyers

[Jbeckman]

Anyone who purchased a home recently (I think from April 2008) can claim up to a $7500 tax credit....however, be aware you must pay this back.

Either (if you take/qualify for the entire $7500) $500 additional a year in taxes for 15 years, the remaining balance if your sell your home at year end of sale, or, if you die, I think the debt is eliminated. So, essentially, this is not a "credit" but an interest free loan.

 

[Chainsaw Slayer]

Yes it is an interest free loan. But if you take into account an inflation rate of 3% a year and zero interest you are really paying back less than 7500.

 

[Jbeckman]

But you still pay back $7500 total.
If I take a loan anywhere, interest free, I still pay back the whole amount....feel the whole amount in my wallet.

Also, what are the tax ramifications reference 1099 from the feds on tax refunds for 08 as income on Maryland taxable income. Will it include only your regular tax refund amount or the refund plus the "credit"/ loan.
Is it clear, or should one prepare for the worse, and have more money taken out for MD state/county now in case....and if too much is taken out, possible penalities for paying too much and a high refund.

Also, people should have an increase of taxes (fed) withheld now to make up for the $500 annual payback.