7OYS: Free Money for Homebuyers

Elli Swift is on the shopping trip of a lifetime.

"I am buying my first home."

And now may be the best time in her life to do it.

"It is the best year to buy a house, maybe ever," said Austin accountant Chris Lynch.

That's because the IRS is offering two huge tax credits for first-time homebuyers. It's an effort to turn around the struggling real estate market.

"That's fantastic," said Swift.

Which credit you qualify for depends on when you purchase your home.

If you already bought in 2008, you qualify for $7,500. But there are two big catches:
- It only covers homes sold after April 8.
- You have to pay the money back.

"It was basically an interest-free loan," said Melanie Fenelon with WIlson Goldrick Realty.

You have to pay back 500 dollars a year for the next 15 years. Accountant Lynch said, very few of his clients were interested.

"Most people didn't jump on the old credit."

If you're like Elli Swift -- househunting this year -- you're in luck. The government has a much better deal for you. For homes bought in 2009, the tax credit is up to $8,000. And this one, you don't have to pay back.

"The buyer just has to stay in the home for three years," said Fenelon.

Plus, in a rare move, the IRS will let you can claim a house you buy THIS year on your 2008 taxes. That means you don't have to wait for the money.

"It's to get people to buy homes right now," said Lynch.

But you have to act fast. To get the money, you must purchase your home by December 1. That's when the tax credit expires.

"So get on it!", urged Fenelon.

Even with the free money, reatlors report that many people aren't buying. They are nervous about losing their jobs and getting locked into a house payment.

"I think it's going to start kicking in," said Fenelon. "I think people have been hesitant -- you know, kind of watching the economy, watching and seeing what's going on."

But Elli Swift couldn't turn down what could be the chance of a lifetime.

"Eight thousand dollars of free money just to buy my first house?", she said. "I mean, why not take it?"

If you already filed your taxes and you buy a house later this year, you can still claim the tax credit. Just file an amended return along with IRS form 5405.
 

LINK: 2008 Tax Credit Info

LINK: 2009 Tax Credit Info