How does the new tax credit work for first time buyers? Can we use the money for our closing cost?

 There is a formula for determining how much “tax credit” you may actually receive based on your income. The maximum credit is $7,500. It is only a credit on your tax return, so there is no actual cash that can be applied toward your purchase.

 

Worse, you have to pay it back over 15 years (interest free) or when the property is sold. To qualify, neither you nor your spouse may have owned a home in the past three years.

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