Reading Taxgirl has once again tipped me off to an interesting situation in the world of the housing market. This time, it’s the fact that the first time home buyer tax credit is (gasp) being abused. This isn’t terribly surprising; criminals will always find a way to profit dishonestly from just about anything. But with talk of extending the deadline for the first time home buyer tax credit, it becomes to figure out just how rampant this fraud is. Here is what Taxgirl reports on the situation:

The IRS announced earlier this week that it is investigating more than 100,000 “doubtful claims” related to the credit. In fact, to date, the IRS has instigated 107,000 civil claims related to the credit – about 8% of the taxpayers who’ve applied for the credit. A quick turn of the math shows that to be up to $800 million in potentially false credit.

That’s a lot of money. And it could also mean that some people who have bought homes may have to repay their tax credit. If you figure that in, it becomes clear that more foreclosure are on the horizon, since repaying the tax credit is probably something that these fraudsters can’t afford to do.

And, of course, there is likely to be taxpayer outrage over this whole thing. After all, it’s our money that is being wasted on these fraudulent schemes.