Housing Assistance Act of 2008 - When is a Credit a Loan?
The Housing Assistance Act of 2008 (the "Act") was passed by Congress in late July 2008, and was signed by the President on July 30, 2008.
The Act provides that for qualifying home purchases made after April 8, 2008 and before July 1, 2009, a "refundable tax credit" equal to the lesser of 10% of the purchase price or $7,500.
If two or more unmarried people purchase a residence together, they share a single credit.
BUT, the credit is not really a credit - it is a loan. The amount of the credit must be repaid to the IRS in 15 annual installments starting two years after the credit is allowed. There is no interest on the repayment obligation. The credit must be sooner than the 17 year period (15 plus 2) if the residence is sold prior to full repayment of the credit.
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