First-Time Homebuyer Credit

Congress recently approved a tax credit for first-time homebuyers that can be worth up to $7,500. The credit, however, acts more like a no-interest loan because it must be repaid to the government over 15 years.

The First-Time Homebuyer Credit can be claimed on Form 5405, which is filed with your 2008 or 2009 federal tax return.

IRS Notice 2009-12 has instructions for non-married persons who co-own a house and want to take the credit.

The IRS will be watching closely during the filing season for abuse of this credit.