About That $8000 Tax Credit, What If I Foreclose Before 3 Years Occupancy?

Remember that fun little $8000 tax credit the government was handing out to boost our economy? Well, what if you can’t stay in your home long enough to avoid paying it back?

If you were a first time homeowner in California, and received the $8,000 credit. To keep from having to pay it back, one is supposed to live in that home for three years. What if that house goes into foreclosure? (Loss of job, injury that prevents work, etc.) If one is not able to make the payments, how is one expected to repay $8,000?

My suggestion would be to talk to a Certified Public Accountant (CPA), and try to sell the property. If you don’t want to put it on MLS, you can try PocketListings.net. Hopefully the property value hasn’t decreased too much and you wouldn’t have to do a short sale or foreclose on it, but it sounds unlikely.

This reader is located in Clear Lake, California, as is the property. Why is that important? As I said to the reader, “It’s a lot easier to sell a home in San Francisco than it is in Clear Lake.”

The reader’s reply,

“Tell me about it. When I first moved here I had a lady come up to me and say, why would I move here! I told her I liked it at first, but now I want out. She said “Once you move here, you don’t never leave.” It made the hair stand up on my arms. What a scary thought! Yikes!

Any help/advice from any readers is always appreciated.

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