Pay It Back When You Sell It

Avery bought a house in December 2008 with the $8,000 tax credit. He has to repay it over 15 years. Avery wants to know if he should include that remaining portion he hasn't paid back in his debt snowball.

QUESTION: Avery in Indiana bought a house in December 2008 with the $8,000 tax credit. He has to repay it over 15 years. Avery wants to know if he should include that remaining portion he hasn’t paid back in his debt snowball.

ANSWER: It’s not really debt because they can never really collect it. It’s just a tax burden for you that has no interest associated with it. I’m just going to ride this thing. I wouldn’t consider that a debt in your debt snowball. Ride it on out. And of course if you sell the house prior, you’ll pay back the balance at that point.