The deadline to benefit from a federal tax break for home buyers is rapidly approaching.  The deal must be signed by April 30, and close within 60 days (as late as June 30) in order to qualify.  The tax break in question means up to $8000 for first-time buyers and $6500 for repeat buyers.

Positive effects of the tax credit include an increase in sales and a stabilizing affect on home prices.  Home sales have risen as much as 48 percent in certain markets.  Real estate agents in those markets are enjoying a surge in sales to new buyers, who have been stimulated into entering the market.

The United States Treasury Dept. and the real estate industry have termed the program a success, which has helped 1.8 million people have purchased new homes.  Many tax policy experts, however, doubt the overall cost-effectiveness of the credit.  They claim that even though $12.6 billion in credits have been disbursed, most were collected by people who would have purchased homes anyway, or even by people who were not legally eligible.

The home buyers’ tax credit actually began as three separate programs.  Initially, it was issued as a $7,500 tax credit back in 2008, that taxpayers were required to repay over a 15-year period.  Taxpayers would be required to include the repayment on their tax returns until the debt was settled.

But after the economic crisis that ensued in the following months along with taxpayer rage over the hundreds of billions of dollars used to bail out banks and other financial institutions, Congress decided to repeal the repayment requirement.  At the time there was broad political appeal for subsidies for every-day middle class home owners.  Not only did taxpayers not have to repay the credit, the amount was increased to $8000.

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Disclaimer:  The information contained in this article is in no way intended for use as legal tax advice.  No assumption should be made that a tax attorney, enrolled agent or former IRS employee was involved in the creation of any content herein.  Advice on personal or business tax matters can be obtained by contacting Advanced Tax Help at (800) 970-8704, or by logging on to www.advancedtaxhelp.com