If you are a ‘First-Time Home Buyer’, defined as someone who has not owned a principal residence during the last three years prior to purchase, you are eligible to receive a federal tax credit equal to 10% of the home’s purchase price, up to a maximum of $8,000. For example, if the purchase price of a home is $60,000, then the buyer would be eligible for a $6,000 tax credit.

In order to claim the tax credit, the purchased home must have closed after Jan. 1 of 2009, and on or before Nov. 30, 2009 (extended to April 30,2010). The purchaser would file IRS form 5405 with their form 1040 tax return, attesting to the purchase.

And as long as the property is held for a minimum of three years, the tax credit does not have to be repaid. This differs from the previous $7,500 tax credit available in 2008 in that the 2008 tax credit had to be repaid in 15 years.

There are income limitations where the tax credit begins to phase out for people who have an adjusted gross income over $75,000 individually, or $150,000 if filing jointly. As an example, if you are an individual with an adjusted gross income of $85,000, you would get half of the tax credit. If you hit $95,000, then you would no longer be eligible. You can go to IRS.gov for more information.

The $8000 tax credit creates an excellent opportunity to realize the American Dream of homeownership and help our housing market recover in the process. There are a lot of homes available now in a variety of price ranges. Including Foreclosed, Short Sale and Normal sales. It’s definitely a buyers market.