For this couple, the $6,500 acted as a "second chance" at government aid. Unlike the original 2008 credit, which was essentially an interest-free loan that had to be paid back over 15 years, the 2010 version was a . This meant if they kept the home for at least 36 months, they never had to pay it back. However, the process was notoriously complex:
In 2010, the U.S. housing market was still reeling from the 2008 recession, with home prices plummeting at nearly 20% annually. To combat this, the introduced a unique "long-time homebuyer credit" to incentivize existing homeowners to move.
: The credit was only available for homes priced under $800,000 . long time homebuyer credit 2010
: Their joint modified adjusted gross income (MAGI) had to be below $225,000 to receive the full credit. The Benefit and the Paperwork
: They had to prove they owned and used the same home as their principal residence for any consecutive 5-year period during the 8 years leading up to their new purchase. For this couple, the $6,500 acted as a
Here is a look at how this credit worked through a typical scenario of the time. The "Step-Up" Story: Meeting the Deadlines
: They had to sign a binding contract by April 30, 2010 , and originally close by June 30, though this was later extended to September 30, 2010 . However, the process was notoriously complex: In 2010,
: The IRS required every claimant to file a paper return and attach Form 5405 along with a settlement statement to prevent fraud.