Tax credit at a glance.(Mortgage Lending)

WHO IS ELIGIBLE TO CLAIM the tax credit? First-time homebuyers buying any kind of home, new or resale. The home purchase must occur on or after Jan. 1, 2009, and no later than Nov. 30, 2009

Who is a first-time homebuyer? A buyer who has not owned a principal residence during the three-year period prior to the purchase.

How is the tax credit determined? The tax credit is equal to 10 percent of the home's purchase price up to a maximum of $8,000.

Are there income limits for claiming the tax credit? The income limit for single taxpayers is $75,000; the limit is $150,000 for married taxpayers filing a joint return. The tax credit amount is phased out for buyers with higher modified adjusted gross income and zeroes out at $95,000 (single) or $170,000 (married).

How is this homebuyer tax credit different from the tax credit that Congress enacted in July 2008? The most significant difference is that this tax credit does not have to be repaid. Because it had to be repaid, the previous "credit" was essentially an interest-free 15-year loan. The new tax incentive is a true tax credit, not a deduction. However, homebuyers must use the residence as a principal residence for at least three years or face recapture of the tax credit amount.

What types of homes will qualify for the tax credit? Any home that will be used as a principal residence will qualify for the credit. This includes single-family detached homes, attached homes like townhouses and condominiums, manufactured homes (mobile homes) and houseboats.

If I'm qualified for the tax credit and buy a home in 2009, can I apply the tax credit against my 2008 tax return? Yes. The law allows taxpayers to choose to treat qualified home purchases in 2009 as if the purchase occurred on Dec. 31, 2008. This means that the 2008 income limit (modified adjusted gross income) applies and the choice accelerates when the credit can be claimed (tax filing for 2008 returns instead of for 2009 returns). A benefit of this election is that a homebuyer in 2009 will know his 2008 modified adjusted gross income with certainty, thereby helping the buyer know whether the income limit will reduce his credit amount. Taxpayers buying a home who wish to claim it on their 2008 tax returns, most of which have already been submitted to the IRS, may file an amended 2008 return claiming the tax credit.

Source: National Association of Home Builders, www.federalhousingtaxcredit.com.

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