That’s right, this is one of the “better” provisions included in the Housing and Economic Recovery Act of 2008, the much-hyped legislation which became law in late July of this year. Otherwise known as the “First-Time Homebuyer Tax Credit”, the provision gives homebuyers yet one more $7500 reason that it might be a good time to jump into the market.

According to market research, first time home buyers make up approximately 40% of all buyers in the United States. The government is defining a “first time homebuyer” as an individual (or couple, if married) who has not owned a principal residence during the three-year period prior to the close of escrow date (on the new home). Additionally, there is an income restriction (you knew there would be catches, right?); in general, the credit is available in full only if your adjusted gross income doesn’t exceed $75,000 ($150,000 if you file a joint return). There is a phase out in which the credit is reduced up to $95,000 for a single filer, and $170,000 for a joint return.

The eligibility period for this tax credit is between April 9, 2008 and July 1, 2009 (so get on the stick). The $7500 tax credit must be paid back to the government over 15 years (beginning with the second year after purchase) at 6.67% a year (which equates to $502.50 a year, if you took the full amount).

For a detailed summary of all the provisions included in the Housing and Economic Recovery Act of 2008, read this article.

Using someone else’s money for no charge seems like a good idea to me; do you agree? I do it all the time with my zero interest credit cards, and then pay it back “as agreed” without penalty. The key is ensuring that you are financially capable of paying the debt, whether it is your home loan, credit cards, or tax liabilities.

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