FIRST-TIME HOME BUYER CREDIT

First-time home buyers can receive a 'refundable' credit of up to $ 7,500 on their 2008 tax return. By 'refundable' it means that even if your tax is zero, you get a check for $ 7,500, so what is the catch?

The credit is 'recaptured' over the next 15 years. That means you will have to keep dealing with it for the next 15 years beginning in 2010. Of course it is an interest-free loan, but it is like having your mortgage payment increased by $500-per-year.

The credit may be less than $ 7,500 depending on the price of the house and your filing status, and you would have to fit the IRS's definition of a 'first-time' home buyer.

Like a lot of tax legislation it is a form of social engineering to encourage home ownership, stimulate the mortgage business and the home-building business.

On the flip side, it means that either everyone except first-time home buyers pay more tax for 2008 or the IRS collects less tax plus giving those 'refunds' to people with zero tax. Of course, there is always that old standby, deficit spending, to make up the difference.