Almost half of homeowners who have claimed the first-time homebuyer tax credit on their 2009 tax returns are required to return their money to the government.

According to the Inspector General for Tax Administration, about 950,000 homeowners are required to repay the government after it was found out that homebuyers who qualified for the program were eligible for two different credits depending on when their homes were bought. Base on the rules, those who purchased properties in 2008 were to deduct either up to 10% of the home’s purchase price or $7,500, which was actually a no-interest loan that is repayable within 15 years. Those who purchased homes in 2009, on the other hand, were entitled to a bigger refund – not a loan.

An audit carried out by the Inspector General this year revealed that the Internal Revenue Service, or IRS, could not easily identify homebuyers who made purchases in 2008 from those who bought homes in 2009. This raised concerns that there might be some buyers who deliberately tampered with the date of their purchases to qualify for bigger tax breaks.

To address the issue, the IRS is now creating a strategy that will enable the government to single out the 2009 taxpayers who are required to repay the credit. It is also checking out some 1,326 taxpayers who reportedly received credits despite having listed as dead by the Social Security Administration.

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