The Real Deal Miami

First-time homebuyers have lost more than they gained with tax credit

May 11, 2011 04:40PM

First-time homebuyers who rushed to take advantage of the government’s $8,000 tax credit before it expired last year have already lost nearly twice that much to falling property values, according to Smart Money. The tax credit program, which was in place between January 2009 and April 2010, prompted a surge in activity in the U.S. housing market (and later a drop-off, after the program expired). But according to the Zillow Home Value Index, which released its data for March this week, home prices have fallen by an average of $15,000 over the last year, and $20,000 since two years ago, meaning that those who got $8,000 credits have actually lost money. Meanwhile, the Internal Revenue Service says the homebuyer tax credit program cost the country $26 billion, which includes some $513 million worth of fraudulent claims to buyers who either filed for the credit twice, weren’t actually eligible or didn’t even buy homes at all. [Smart Money]