Qualified homebuyers that purchase a principal residence can apply for up to an $8,000 tax credit from the Federal government.  To be eligible, you must go under contract on a principal residence by April 30, 2010.  You need to close on this property prior to June 30, 2010.

This credit DOES NOT need to be repaid unless the home is no longer your principal residence for a period of three years after you purchase it.

The tax credit can be claimed on your 2008 tax return that was due April 15, 2009 if you have already received an extension.  Otherwise, it can be claimed on your 2009 tax return, due April 15, 2010.

WHO QUALIFIES AS A HOMEBUYER UNDER THE ACT?

This is a buyer who has not owned a principal residence in the three-year period prior to closing on your home.  If you are married, it applies to both you and your spouse.  Neither of you can have owned a principal residence in the prior three years.  Under the extended bill, if you have lived in a principal residence for five of the past eight years, you are also eligible now!

HOW IS THE TAX CREDIT AMOUNT DETERMINED?

It is equal to 10% of the home's purchase price with a maximum of $8,000.  So to claim the entire $8,000, the home must be $80,000 or above.  If you purchase a home for $55,000, your credit will be $5,500.  If you are a move-up buyer, you are eligible for a credit of $6,500.

WHAT TYPES OF HOMES QUALIFY?

Any home qualifies as long as it is a principal residence (not an investment property or vacation home).  Single-family, townhomes, condos, and mobile homes all qualify.

IS THIS CREDIT THE SAME AS A TAX DEDUCTION?

No.  If you receive this credit, you don't owe anything back to the IRS.  A tax deduction is an expense incurred that reduces the amount of taxes you pay based on your income bracket.