The Foreclosure Prevention Act of 2008, recently signed without fanfare by President Bush, contains provisions that will, according to insiders, complicate tax returns for years ahead.The tax portion of the bill, the Housing Assistance Tax Act of 2008, contains over $15 billion in tax incentives that are offset by a number of revenue raisers.
The act gives first-time homebuyers what amounts to an interest-free loan in the form of a tax credit of 10 percent of the purchase price of a principal residence, up to $7,500. The credit must be repaid in equal installments over 15 years, beginning with the second year after the year of purchase. The credit is effective for homes purchased on or after April 9, 2008, and before July 1, 2009, and phases out for taxpayers with adjusted gross income over $75,000 ($150,000 for joint returns).
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