Homebuyer Tax Credit: Nearly Half of Recipients Must Return It

Adding insult to injury, around 950,000 homebuyers who claimed the first-time homebuyer tax credit for 2009 will need to return the money. The Inspector General for Tax Administration announced last week that roughly half of the 1.8 million Americans who took the credit on their 2009 tax returns did so in error and therefore must repay the government. The problem? There were two separate tax credits, one in 2008 and one in 2009. Buyers who purchased homes in 2008 were eligible to deduct 10 percent of the home's price or $7,500, whichever was less, but that money was a no-interest loan to be repaid in 15 years. But those who bought in 2009, got a similar credit as a rebate that they could keep. A main factor cited for the recent surge in home sales, homebuyer tax credits have come under criticism lately for artificially inflating recovery numbers. Renting suddenly sounds like a pretty good deal, no?