Tax credit adding to debt

Stunned. That’s all I can say. The IRS has just released the latest version of tax forms and instructions, and you have to know this.

As you might recall, in 2008, in the midst of the mortgage meltdown, Congress passed the First-time Homebuyer Tax Credit (Form 5405). It really wasn’t a credit but more of an interest-free loan, repayable over the next 15 years. It was done to stimulate the housing market and to help first-time homebuyers get into the game.

Now some might say this only got people into the game who couldn’t afford it, but for the most part it was revenue neutral and a reasonable attempt to stabilize things. But guess what? That same credit is also available to anybody who owned and lived in a home for the previous five years.

That one had me scratching my head. But here is the real kicker. Anyone who takes the credit doesn’t have to repay after 2008 if they live in the house for the next three years. Only people who took credit or a loan in 2008 have to repay — no one else does. So we are now buying houses for people who can’t afford it, adding more mountains of debt.

Will somebody please stop the merry-go-round? I want to get off.

Richard Francke

Bartlett