Looks like last year’s first-time homebuyer tax credit-the one the housing industry pooh-poohed because it required buyers to pay it back over 15 years-is doing a lot better than most people expected.

According to very preliminary figures from the IRS, some 567,685 taxpayers claimed more than $3.9 billion worth of first-time homebuyer credits on their 2008 tax returns. Even though 38,158 may be disqualified because the IRS has found they had ownership In a personal residence within the past three years, the total will certainly exceed the $4.6 billion estimated by Congress last year. The preliminary figures were from returns received by March 6-five weeks before 2008 returns were due.

These preliminary returns suggest means the credit helped to make possible at least ten percent of the roughly 5 million new and existing home sales last year. No doubt it was a deal maker in many of those transactions.

Imagine what the new, improved tax credit will do?

Earlier this year Congress sweetened the credit by raising it from $7500 to $8000, made it permanent and eliminated the repayment requirement. Congress estimated the new credit would cost $6.638 billion over ten years. That may turn out to be on the low side.

With the markets still flooded with inventory, many of them for sale at distressed price discounts, with prices continuing to fall, with rates still low and financing increasingly available, with five states now offering some sort of additional tax incentive to first-time buyers…., it’s no wonder that first-time buyers currently account for more than half the transactions of existing homes, according to NAR.